Infographic: The Cost of NSA Surveillance

Katrina Power

Katrina Power

April 22, 2016

With stories like Apple’s legal dispute with the FBI dominating the privacy headlines in 2016, it’s easy to dismiss Edward Snowden’s leaks about NSA surveillance as old news.

That, however, would be a huge mistake.

While reports of Snowden’s disclosures have decreased since he dropped the first bombshells surfaced a few years back, the impact of said revelations–especially that on the economy–has only grown. Not only that, but it’s gone largely unnoticed by the American public.

I’ll catch you up to speed.

The Cost of NSA Surveillance
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Lost Revenue Due to NSA Surveillance

When the NSA surveillance revelations first came to light in 2013, experts over at the Information Technology and Innovation Foundation (ITIF) estimated that the scandal would cost cloud computing companies such as Microsoft, Amazon, and Verizon between $21.5 billion and $35 billion in lost revenue in the three years to follow. Market research think tank Forrester even one-upped ITIF by saying that the loss could be as high as $180 billion–a 25% drop.

True to both of their predictions, cloud computing companies began to under perform in both domestic and international markets due to concerns about privacy and American surveillance.

Their plummeting revenue was cause for ITIF to publish a follow-up report in June 2015, in which they announced that not only the cloud computing sector, but the US tech industry as a whole had suffered since the NSA disclosures, and warned that “the economic impact of US surveillance practices will likely far exceed ITIF’s initial $35 billion estimate”.

New numbers from Forrester confirmed ITIF’s fears. Although the hit wasn’t as hard as they had initially predicted, it still topped ITIF’s original estimate at a staggering $47 billion.

NSA’s Surveillance Effect on the Global Market

In addition to costing it a good chunk of its once thriving international revenue, NSA surveillance disclosures have been constantly cited as one of the primary reasons behind the US tech industry losing its competitive edge in the global market.

The effect was both immediate and gradual.

Directly following the disclosures the US lost or significantly damaged a number of high-profile deals and business ambitions, including but not limited to Verizon’s contract with Germany, Boeing’s bid in Brazil, and Cisco’s Chinese market.

It didn’t stop there.

Forrester reported that 28% of businesses in non-US locations halted or reduced spending with American companies for Internet-based services due to security concerns, with 34% of those who answered affirmateivley citing the NSA as the reason for their reservations.

NTT Communications provided even more troubling numbers, deducing in a wide-scale survey that 88% of people changed their cloud-buying behaviour as a result of the leaks and 31% of businesses moving data to locations that were proven to be safe from NSA spying.

Data Sovereignty?

Silicon Valley used to have the tech world in the palm of its hand, but since Snowden’s revelations it has lost its leading voice in global debates regarding internet governance, and has struggled to regain it since.

This has had a number of repercussions, most significantly the ushering of data sovereignty across the globe. While still in its infancy, it is undoubtedly the way of the future, with more and more countries introducing new protectionist policies in order to keep their citizen’s data inside their country borders–and away from the prying eyes of the NSA.

One of the most notable examples of which would be Europe’s rolling in of the EU Data Protection Directive, which is expecting to have a significant effect on both American businesses and consumers alike.

What’s more, while data centers used to be housed within US borders, American companies such as IBM are now expending significant resources on building them overseas in order to adhere to new data policies and give their international clients more peace of mind.

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