NSA Surveillance Could Cost U.S. Cloud Providers Billions

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.

A couple of weeks ago I wrote that NSA surveillance probably wouldn’t have a big effect on American communications and social media companies. Habits were too entrenched and global networks were too important. A tech-savvy friend emailed to agree with a caveat:

Except one. The public cloud is a big growth area in American business. It accounts for a lot of Amazon’s meager profits, and Rackspace and Dimension Data and so many other Public Cloud infrastructure companies are growing fast because companies want to have access to on-demand compute infrastructure without capital investment.

Now it’s a slightly more complex choice — private cloud still requires an investment in hardware and data center resources that the public cloud doesn’t, but with the existence of platforms like VMWare and Openstack it’s not as onerous as it once was….But while those investments will be a boon to some vendors, the overall increase in infrastructure costs is an unnecessary drag that represents a certain level of at least opportunity costs.

His suggestion is that a lot of companies will ditch public cloud providers like Amazon and start building their own private clouds, free of bulk NSA surveillance. That’s one option. Another is to switch to non-U.S. providers. Derek Mead points us to a new study today that estimates U.S. cloud providers could see a 10-20 percent drop in business:

What is the basis for these assumptions? The data are still thin—clearly this is a developing story and perceptions will likely evolve—but in June and July of 2013, the Cloud Security Alliance surveyed its members, who are industry practitioners, companies, and other cloud computing stakeholders, about their reactions to the NSA leaks. 16 For non-U.S. residents, 10 percent of respondents indicated that they had cancelled a project with a U.S.-based cloud computing provider; 56 percent said that they would be less likely to use a U.S.- based cloud computing service. For U.S. residents, slightly more than a third (36 percent) indicated that the NSA leaks made it more difficult for them to do business outside of the United States.

This amounts to $20-30 billion. Not a gigantic amount, but still a headwind that U.S. companies could do without.


Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

payment methods

We Recommend