US cloud providers to lose clients over surveillance fears

The US cloud computing industry could lose up to $US35 billion ($38.7 billion) in the next three years as revelations about wide-ranging government surveillance frighten customers away.

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: theage.com.au/it-pro