Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=240156491
U.S. Internet companies are now being viewed in a different light, one that could dim the prospects of business from abroad.
Already, according to Russian media company RT, Russian MP Ilya Kostunov has sent letters to the heads of the country's defense and communications ministries seeking support for punishing civil servants' use of U.S. social networks and Internet services under a recently broadened treason law.
Viviane Reding, Commissioner of Justice for the European Union, meanwhile announced on Wednesday that she intends to raise the issue of U.S. data collection at a meeting with U.S. Attorney General Eric Holder on Friday. In a statement, she expressed concern about the business implications of mass surveillance. In other words, loss of individual privacy is not the only thing at stake.
[ Would knowing more about how the NSA combs data ease your privacy concerns? Read Defending NSA Prism's Big Data Tools. ]
"Trust that the rule of law will be respected also is essential to the stability and growth of the digital economy, including transatlantic business," she said. "This is of paramount importance for individuals and companies alike."
Time will tell whether this is political posturing or a sea change that limits the commercial opportunities of U.S. technology companies abroad in the same way that national security concerns last year limited the ability of Chinese telecom equipment maker Huawei to compete for U.S. government contracts. But the U.S. companies implicated in the NSA surveillance scandal are not waiting to find out whether they need to address a loss of customer confidence.
Google on Tuesday asked Attorney General Eric Holder and FBI Director Robert Mueller to allow the company to publish information about the full range of government demands for user data that it receives.
Google already publishes partial information in its semi-annual transparency report, but it does not include data demands related to national security, apart from a count of National Security letters received.
Google chief legal officer David Drummond explained in an open letter that the recent revelations about the U.S. government's information collection activities have been accompanied by claims that U.S. authorities have free access to Google's vast store of data.
"Assertions in the press that our compliance with these requests gives the U.S. government unfettered access to our users' data are simply untrue," Drummond's letter says. "However, government nondisclosure obligations regarding the number of FISA national security requests that Google receives, as well as the number of accounts covered by those requests, fuel that speculation."
Facebook general counsel Ted Ullyot in a statement said, "We urge the United States government to help make that possible by allowing companies to include information about the size and scope of national security requests we receive, and look forward to publishing a report that includes that information."
Jack Lerner, associate professor of law at the USC Gould School of Law, specializing in Internet privacy and technology, said in a phone interview that although it was plausible that the NSA's surveillance activities would make it harder for U.S. cloud computing companies to attract foreign customers, it wasn't probable. "These services have such a large degree of penetration that I don't see a mass migration away," he said. "But on the margin, it could be an issue."
At the same time, Lerner characterized efforts by Internet companies to report government information demands more fully as a double-edged sword. "If a company says it's getting lots of FISA requests, foreign customers could find that disturbing," he said.
Lerner argues that greater awareness of the extent to which the U.S. government accesses information from Internet companies has the potential to prompt a reevaluation of free business models. "This may change the equation, the perception by consumers that free services are really free," he said.
And in the business world, the need for due diligence has never been greater.
"When you have a cloud service that says we're going to use third-party storage or third-party transmission for hosting, or unencrypted transmissions, anyone who deals with privileged material, trade secrets or foreign clients will have to think hard about who is going to be collecting and storing all that data and what they will do with it," he said.