US cloud providers to lose clients over surveillance fears
If American cloud service providers lost 20 per cent of their overseas business due to the National Security Agency's electronic surveillance revelations but retained their share of the domestic market, they would lose $US35 billion by 2015, according to US think tank the Information Technology and Innovation Foundation.
In June, former security analyst Edward Snowden disclosed the agency was collecting telephone records of millions of US citizens. It was later revealed internet and technology companies had been collaborating with the agency on related programs.
The global Cloud Security Alliance became aware of the antipathy to hosting data in the US by surveying 456 organisations around the world. Of the 207 respondents from outside the US, 56 per cent were less likely to use US-based cloud providers after the revelations and 10 per cent had cancelled plans to use American services. About a third said the revelations would not affect their provider choice.
The foundation said non-US cloud services were already reporting big increases in business. Switzerland's largest hosting company, Artmotion, reported a 45 per cent increase in revenue in the month following Mr Snowden's exposure of the Prism surveillance program.
The shift could be greater if foreign governments put up trade barriers, the foundation suggests. "Already the German data protection authorities have called for suspending all data transfers to US companies under the US-EU Safe Harbor program because of Prism," it said.
A similar trend is evident in Australia, says Matt Healy, national executive, regulatory and government at Macquarie Telecom and chairman of cloud industry body, OzHub.
Full story: smh.com.au/it-pro
Frequently Asked Questions about this Article…
A US think tank, the Information Technology and Innovation Foundation, estimated US cloud providers could lose up to US$35 billion (about $38.7 billion) over three years if they lost 20% of their overseas business following NSA surveillance revelations while keeping domestic share.
Revelations that the NSA was collecting phone records and that internet companies had collaborated on surveillance programs made many organisations wary of hosting data in the US. A Global Cloud Security Alliance survey found 56% of non-US respondents were less likely to use US-based cloud providers after the disclosures, and 10% had cancelled plans to use American services.
The Cloud Security Alliance surveyed 456 organisations worldwide. Of the 207 respondents from outside the US, 56% said they were less likely to use US-based cloud providers after the surveillance revelations, 10% cancelled plans to use US services, and about one-third said the revelations would not affect their provider choice.
Yes. The article notes non-US cloud services were reporting big increases in business. For example, Switzerland’s largest hosting company, Artmotion, reported a 45% increase in revenue in the month following Edward Snowden’s exposure of the Prism program.
Yes. The Information Technology and Innovation Foundation warned the shift could be larger if foreign governments imposed trade barriers. The article cites German data protection authorities calling for suspending data transfers to US companies under the US–EU Safe Harbor program because of Prism.
Former NSA analyst Edward Snowden disclosed that the agency was collecting telephone records of millions of US citizens and that internet and technology companies had been collaborating with related surveillance programs, fueling global concern about hosting data with US providers.
According to Matt Healy of Macquarie Telecom and chairman of cloud industry body OzHub, a similar trend was evident in Australia, indicating local customers were also reacting to the surveillance revelations when choosing cloud services.
Investors should note the article’s key findings: surveillance disclosures have already changed customer behavior—survey data shows many non-US organisations are less likely to use US cloud providers; this could translate into substantial lost overseas revenue (the think tank’s US$35 billion estimate) and a potential market shift benefiting non-US providers like Artmotion.
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