Cloud giants' reputation in gutter post-NSA, claims report

Think tank urges US government to reform NSA as cloud giants suffer

The US government must clean up the act of its National Security Agency (NSA) if trust in cloud providers is to be restored, according to a think tank.

In its Surveillance Costs: The NSA's Impact on the Economy, Internet Freedom and Cybersecurity report, the New America Foundation (NAF) claims US cloud firms have borne the brunt of the NSA scandal.

"Trust in American businesses has decreased since the initial reports on the PRISM programme suggested that the NSA was directly tapping into the servers of nine US companies to obtain customer data for national security investigations," the report said.

"Given heightened concern about the NSA's ability to access data stored by US companies, American companies that offer cloud computing and web-hosting services are experiencing the most acute economic fallout."

According to Forrester research conducted soon after the scandal broke, the NSA snooping allegations are predicted to cost the cloud computing industry between $22bn (£12.96bn) and $180bn over the next three years.

NAF said the impact of the scandal has been wide reaching.

"In November 2013, Cisco became one of the first companies to publicly discuss the negative impact of the NSA on its business," it said. "Qualcomm, IBM, Microsoft, and HP have all reported that sales are down in China as a result of the NSA revelations and industry observers have questioned whether companies such as Apple and AT&T will face increased scrutiny in overseas business.

"The NSA disclosures are putting a variety of US companies at a disadvantage."

NAF acknowledged the initial work the US has done to move on from the scandal – some measures have been taken to increase transparency – but it said "much more work" needs to be done.

"We recommend that the US government should strengthen privacy protections for both Americans and non-Americans, within the US and [internationally]," it said. "The NSA's mass surveillance under the Patriot Act... have had the most immediate impact on consumer trust in the American tech industry.

"Narrowing the scope of collection under these authorities, as well as limiting the manner in which the collected information is retained, used and disseminated, will be critical to regaining the trust of governments, companies, and individuals around the world."