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Let's Thank the NSA for Showing Us the Real Cost of Big Data

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The leak of NSA information demonstrates how global companies are at risk of being turned into national assets.

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Several weeks ago, the Washington Post and the Guardian ran stories about the NSA, revealing the agency's forays into "big data" and its attempts to acquire ever-larger quantities of that data off of corporate servers. The big revelation was PRISM, a partnership with American tech companies -- alleged to include Google Inc (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), Yahoo! Inc. (NASDAQ:YHOO), Facebook Inc (NASDAQ:FB), and others -- through which they provided the government with, if not a backdoor, at least a back window. This information was leaked to the media by former NSA contractor Edward Snowden, who argued that "the public needs to decide whether these programs and policies are right or wrong."

That may be, but the public also needs 20 gigabytes of free cloud storage. Having sacrificed privacy for the convenience of social media and the cloud, it's unlikely that we'll draw a line in the sand when it comes to security. The Patriot Act is 12 years old, polls suggest that Americans don't mind surveillance so long as it's their party doing it, and a cynic might argue that criticism of the NSA has more to do with the next election cycle than with any qualms over privacy.

The fallout may be more severe overseas, where American tech companies were under political pressure long before PRISM came to light. In Europe, ongoing concerns over data privacy have now been vindicated, while China finds itself in a position to retaliate for actions taken by Congress last year.

In October 2012, two Chinese conglomerates – Huawei Technology Co Ltd (SHE:002502) and ZTE Corporation (SZSE:000063) – were condemned via Congressional report, and effectively banned from selling network equipment in the US. This came several years after the NSA reportedly scuttled a deal between Huawei and AT&T Inc. (NYSE:T), over fears that the Chinese government would use Huawei's infrastructure "to monitor US communications." China responded with reprisals against American companies, and Cisco Systems, Inc. (NASDAQ:CSCO) was ousted from one of the country's backbone networks. Several months later, Apple Inc. (NASDAQ:AAPL) came under attack in state media. The NSA leak provides China with ammunition for further action against American companies, the only question being whether – and when – they'll decide to use it.

Europe, meanwhile, has taken data privacy more seriously than we have in the US, with Brussels adopting a regulatory approach over the last few years. The tech industry has lobbied hard -- and with some success -- to soften the EU's stance, but NSA-gate comes at an inconvenient time, and rubs a tender spot. American tech firms do much of their business across the Atlantic, but US law affords little protection to European customers. This worries the EU, which earlier this year attempted to block FISA (the Foreign Intelligence Surveillance Act) from applying in its territory. The existence of PRISM seems to justify their concerns. When details of the program were revealed, Facebook and others issued press releases, stating that they had only followed US law -- which, the NSA was quick to point out, protects US citizens. This was tantamount to an admission that foreigners were the primary target.

No law requires American companies to make it easy for the government to seize information -- and Google, at least, has denied that it did -- but Washington wouldn't find it difficult to compel them to do so. Silicon Valley is the frequent target of antitrust lawsuits, cyber bills are a common occurrence in Congress, and government contracts drive a large amount of revenue. It might be hoped that the NSA has no sway over the other branches of government -- and we might similarly hope that the IRS is impartial -- but then, AT&T was threatened with the loss of its public sector business in the dustup over Huawei.

The leak has some larger implications. It demonstrates how global companies are at risk of being turned into national assets. No government ever needed to be convinced about the virtues of protectionism, and with the arrival of big data, foreign firms have become a security risk. Can we trust them not to share information with their governments? Can they trust us? We're finding that these are serious questions even in today's relatively peaceful world. At a more difficult time, they would become pivotal.

Big data is now used to foil terrorist attacks, and to decide elections. It might just as well be used to win a war. For governments and businesses both, it has become something irresistible. Its presence guarantees its use, and there is little at this point to distinguish use from abuse, or to discourage the latter. The advantages of big data could prove to be ephemeral, as the companies that collect it find themselves marginalized internationally, and the individuals who provide it become more discrete. On the other hand, the costs -- to openness, personal autonomy, and the competitiveness of global tech companies -- will probably be sticking around.

See also:

Will Apple Inc.'s 'iOS in the Car' Upend the Entire Auto Industry?

For Now, NVIDIA Corporation Leads Tech's Race to Cross 'Uncanny Valley'

Google CEO's Reaction to PRISM Surveillance Allegations: 'What the ...?'
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