Feeds

Report: NSA spying deals billion dollar knockout to US cloud prospects

Fourth Amendment? Meh. Privacy? Yawn. Corporate profits? PANIC!

Next gen security for virtualised datacentres

Updated Sustained violations of civil liberties at home and abroad? Yawn. The manifestation of Orwell's nightmares? Snooze. The potential loss of scads and scads of money? Egad, we should really do something about this!

That's the gist of a report published on Monday assessing the likely commercial fallout for the US cloud computing industry because of the NSA data-slurping revelations.

Spying by the NSA could cost the US cloud computing industry between $22bn and $35bn over the next three years, according to Washington think tank, the Information Technology and Innovation Foundation (ITIF), whose website happens to be down this Tuesday morning.

In a report entitled "How Much Will PRISM Cost the US Cloud Computing Industry?" ITIF analyst Daniel Castro predicts that "the disclosures of the NSA's electronic surveillance may fundamentally alter the market dynamics" for US cloud companies in Europe and elsewhere.

Non-US cloud companies have been able to sow fear, uncertainty, and doubt (FUD) about US clouds due to the data-slurping provisions in the USA PATRIOT Act, but the NSA revelations now give these cloud naysayers more ammunition than ever before.

Castro reckons US companies could lose out between 10 and 20 per cent of the foreign cloud market to European or Asian competitors by 2016.

The estimates are based on a Cloud Security Alliance survey that was conducted this June and July, which found that 10 percent of non-US resident companies had cancelled a cloud project due to NSA concerns, and 56 percent said they were less likely to use a cloud service. This combines with a few European cloud providers crowing about an uptick in subscribers plus overall numbers on the differing sizes of markets and projected growth rates to create ITIF's estimate.

Due to the clandestine nature of the cloud industry – Amazon, for example, submerges AWS revenue in a nebulous "other" category, and Microsoft has buried Azure so deep in its balance sheet its impossible to get a rough estimate on that cloud's revenue – making these predictions is difficult. "We don't have great data on what this could be," Castro tells The Register.

However, while writing the report Castro did speak with some cloud providers. "There's no one on the record that I want to quote in the paper, but I've heard anecdotally that companies are already hearing about this issue from clients," he says. Few companies want to be quoted publicly about this, though a month ago the chairman of cloud integration company SnapLogic did tell us that the spying revelations were "killing us in Europe."

To deal with the fallout and help US companies make more cash, the US government should declassify more information about the NSA spying programs, Castro suggests. Given the cognitive disconnect between the spy apparatus and declassification, we wonder how likely this is.

The fortunes of US cloud companies are, for the time being, cloudy. ®

Update:

When asked whether Amazon Web Services had detected any concern among its cloud customers, a spokesperson told us: "Amazon is not a participant in the [PRISM] program but I can tell you that the demand for AWS services worldwide, including Europe and Asia, has never been greater."

Huddle, a cloud-based collaboration platform, told us that it has been on buyers' minds, but co-founder Andy McLoughlin said via email: "Huddle... offers customers a choice of data domain in which to store their data; US or European. We think this will become increasingly important as customers become more sophisticated and data privacy laws become more complex."

5 things you didn’t know about cloud backup

More from The Register

next story
The Return of BSOD: Does ANYONE trust Microsoft patches?
Sysadmins, you're either fighting fires or seen as incompetents now
Microsoft: Azure isn't ready for biz-critical apps … yet
Microsoft will move its own IT to the cloud to avoid $200m server bill
Oracle reveals 32-core, 10 BEEELLION-transistor SPARC M7
New chip scales to 1024 cores, 8192 threads 64 TB RAM, at speeds over 3.6GHz
Docker kicks KVM's butt in IBM tests
Big Blue finds containers are speedy, but may not have much room to improve
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
Gartner's Special Report: Should you believe the hype?
Enough hot air to carry a balloon to the Moon
Flash could be CHEAPER than SAS DISK? Come off it, NetApp
Stats analysis reckons we'll hit that point in just three years
Dell The Man shrieks: 'We've got a Bitcoin order, we've got a Bitcoin order'
$50k of PowerEdge servers? That'll be 85 coins in digi-dosh
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.