2013-12-10

The National Security Agency spying scandal could cost the top U.S. tech companies billions of dollars over the next several years, according to industry experts. In addition to consumer Internet companies, hardware and cloud-storage giants like IBM, Hewlett-Packard, and Oracle could suffer billions of dollars in losses if international clients take their business elsewhere. Now, the nation’s largest Internet companies are calling for Congress and President Obama to reform the U.S. government’s secret surveillance programs. Google, Apple, Microsoft, Yahoo, Twitter and Facebook are facing intense scrutiny following revelations from former NSA contractor Edward Snowden, who leaked classified documents about the NSA’s snooping programs. In particular, the tech giants have been stung by disclosures about a classified U.S. intelligence system called PRISM, which the NSA used to examine data — including e-mails, videos and online chats — via requests made under the Foreign Intelligence Surveillance Act (FISA). Snowden’s disclosures stoked privacy concerns about how the largest U.S. tech companies handle their vast troves of user data. Since then, the companies have strenuously denied that they give the NSA “direct” or unfettered access to their computer servers, and they’ve waged a public competition to demonstrate their commitment to transparency. But recent reports have described how the NSA taps directly into the networks of the tech giants, a disclosure that prompted outrage from top company executives, most notably Eric Schmidt, Google’s executive chairman. (MORE: AT&T to Shareholders: No NSA Snooping Data for You) After Snowden’s leak, the Information Technology & Innovation Foundation (ITIF), a non-partisan, D.C.-based think tank, published a report saying that U.S. cloud computing providers could lose as much as $35 billion by 2016 because of the NSA revelations. ITIF senior analyst Daniel Castro, the report’s author, wrote that Snowden’s disclosures “will likely have an immediate and lasting impact on the competitiveness of the U.S. cloud computing industry if foreign customers decide the risks of storing data with a U.S. company outweigh the benefits.” Analysts at Forrester, the respected tech industry research firm, went even further. In a blog post, Forrester analyst James Staten projected a net loss for

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