The US digital dilemma
11 June 2015 | 0
If someone was asked to list the greatest threats to the pre-eminence of US-based companies in the global technology industry five years ago, it’s highly unlikely they would have replied: “The US government.” And yet, if estimates by the Information Technology & Innovation Foundation are anywhere near correct, it would appear that the US government, through the tireless efforts of the National Security Agency (NSA), really has had a hugely detrimental effect on the competitiveness and financial well-being of many US technology companies.
In a report headlined Beyond the USA Freedom Act: How US surveillance still subverts US competitiveness, the ITIF argues that the US tech industry has under-performed as a result of the revelation that the NSA was involved in pervasive digital surveillance. A revelation, incidentally, which would never have been made public if it hadn’t been for the whistleblowing efforts of Edward Snowden.
In 2013, the ITIF argued that “a modest drop in the expected foreign market share for cloud computing stemming from concerns about US surveillance could cost the United States between $21.5 billion and $35 billion by 2016”. In its latest report, the organisation admits the effects have spread beyond cloud computing to the US tech industry as a whole, and warns that “the economic impact of US surveillance practices will likely far exceed ITIF’s initial $35 billion estimate”.
The ITIF says failure to reform “many of the NSA’s surveillance programmes has damaged the competitiveness of the US tech sector and cost it a portion of the global market share”. It claims that foreign companies “are shunning [US] companies” as a result.
The report details a number of companies, including Salesforce, Cisco and Qualcomm, that have blamed the revelations about NSA spying for loss of business outside the US. In addition, it says competitors in other countries are using concerns over US government surveillance as part of their marketing strategies, citing the examples of F-Secure, Cloudwatt and Hortnetsecurity. Germany and France have also started to create dedicated national networks.
While the ITIF accuses foreign countries and companies of seeking to exploit fears over US surveillance to promote a form of digital protectionism, it readily accepts that the US government “cannot go to other nations and tell them to not discriminate against US tech firms if the US intelligence system continues to follow policies that threaten their citizens and businesses”. The ITIF says it is “incumbent on the Congress and the Obama administration to take the lead in showing the world the best standards for transparency, cooperation, and accountability”.
The organisation says the US government “should set the gold standard for international transparency requirements, so that it is clear what information both US and non-US companies are disclosing to governments at home and abroad”. In addition, Congress should pass legislation “banning any government efforts to introduce backdoors in software or weaken encryption” and the US should engage with trade partners to develop a ‘Geneva Convention on the Status of Data’.
The report’s authors, Daniel Castro and Alan McQuinn, come down firmly in favour of trade agreements such as the Trans-Atlantic Trade and Investment Partnership (TTIP) and the Trade in Services Agreement (TISA) to eliminate protectionism. But public opposition is mounting to TTIP in Europe, particularly with regard to ISDS (investor-state dispute settlement), the provision to allow investors in foreign companies to sue EU countries (in an alternative judicial system) if their domestic regulatory policies result, or could result, in loss of profit.
Public disquiet is unlikely to have been assuaged by the release of a number of documents from the TISA negotiations by Wikileaks concerning e-commerce and internet issues. According to Public Citizen, the leaked text reveals “US negotiators are pushing for new corporate rights for unrestricted cross-border data flows and prohibitions on requirements to hold and process data locally, thus removing governments’ ability to ensure that private and sensitive personal data is stored and processed only in jurisdictions that ensure privacy”.
Lori Wallach, director of of Public Citizen’s Global Trade Watch slammed what she described as “a dangerous trend where policies unrelated to trade are being diplomatically legislated through closed-door international ‘trade’ negotiations to which industry interests have privileged access while the public and policy experts promoting consumer interests are shut out”.
To their credit, Castro and McQuinn acknowledge that trade agreements are not a means to bypass or over-ride concerns in foreign countries about the US government’s surveillance activities. Whatever provisions are included in the final texts of TTIP and TISA, they argue that if the US tech industry “is to remain the leader in the global marketplace, then the US government will need to set a new course that balances economic interests with national security interests”.
Inaction will lead to “a wave of protectionist policies that will systematically weaken US technology competiveness in years to come”, they warn. “Only by taking decisive steps to reform its digital surveillance activities will the US government enable its tech industry to effectively compete in the global market.” In a perfect world, that’s exactly what would happen but the danger is the US government will seek instead to use treaties and the charge of protectionism to get foreign countries and companies to “agree” with its perspective rather than reforming its surveillance policies to assuage their concerns.