How is it that so few people care about PRISM? The out of control surveillance state sooner or later is going to hit the most vibrant part of the United States economy, the tech industry, and hard. The shutdown of secure email providers Lavabit and Secure Circle is just the beginning.
Earlier this month The Information Technology & Innovation Foundation (ITIF) published a prediction that the U.S. cloud computing industry stands to lose up to $35 billion by 2016 thanks to the National Security Agency (NSA) PRISM project, leaked to the media in June. We think this estimate is too low and could be as high as $180 billion or a 25% hit to overall IT service provider revenues in that same timeframe. That is, if you believe the assumption that government spying is more a concern than the business benefits of going cloud.
Having read through the thoughtful analysis by Daniel Castro at ITIF, we commend him and this think tank on their reasoning and cost estimates. However the analysis really limited the impact to the actions of non-US corporations. The high-end figure, assumes US-based cloud computing providers would lose 20% of the potential revenues available from the foreign market. However we believe there are two additional impacts that would further be felt from this revelation:
1. US customers would also bypass US cloud providers for their international and overseas business - costing these cloud providers up to 20% of this business as well.
2. Non-US cloud providers will lose as much as 20% of their available overseas and domestic opportunities due to other governments taking similar actions.
We also agree with ITIF's recommendation that the US government needs to act quickly to set the record straight about what information it does and does not (already) have access to. And would add that it needs to reset the judicial-NSA relationship back to a more objective stance similar to what the founding fathers had in mind.