The impact that the Snowden revelations had on private businesses is one of the most overlooked stories in the Snowden saga, particularly the impact on technology and Internet communications companies such as Apple, Google, Verizon, and Cisco. In my opinion, the Snowden revelations impacted businesses’ willingness to work with the government and the trust foreign countries have in the products and services these companies offer.
The first Snowden leak revealed the National Security Agency’s Prism program. According to published reports, this program provided the NSA with direct access to data gathered and used by U.S. based Internet companies. While the report does not confirm whether these companies willingly cooperated with the NSA, the implication is that any data users put into those systems may have been available to the National Security Agency and the larger American intelligence apparatus. Understandably, revelations such as this shake customer confidence; not only the confidence of Americans but people across the world.
This revelation – among others along a similar vein – appears to have had a negative impact on companies implicated in the Snowden revelations. Understandably, the American public is concerned about the privacy of their communications, particularly as it relates to powerful law-enforcement and intelligence agencies allegedly having unfettered access to their data. Regardless of the accuracy or inaccuracy of Snowden’s claims, the idea that the Government had access to Americans’ data at all sowed distrust among the public in the companies tasked to store and secure their communications and Internet activities. The issue became one of public perception, and as such, it is logical that companies would be far less willing to work with the federal government or law-enforcement agencies, even if they are compelled to do so by law.
One simply needs to look at the battle Apple had with the FBI regarding access to the iPhone data of Syed Rizwan Farook, the terrorist behind the mass shooting in San Bernardino. The FBI tried to force Apple to write new software to bypass the encryption and security procedures in place. Cooperating with such a request would not only completely shake customer confidence in Apple domestically, but it would also impact their sales and customer relationships overseas.
While it is purely conjecture, we are left to wonder if Apple would have put up much of a fight had the Snowden revelations not occurred. Americans, as well as consumers worldwide, have been keenly sensitive to privacy issues involving the U.S. government ever since Snowden. It appears likely that without the Snowden spotlight shining on everything involving government and private industry interaction, Apple could have very quietly, without anyone knowing, worked with the government, and no one would have been the wiser.
Furthermore, Snowden’s revelations damaged the trust foreign nations and their citizens had in U.S. company products. With the rapid rise of an interconnected world dominating our lives and the resulting security and privacy issues, foreign governments have been spending billions of dollars to invest in IT systems and security. Prior to Snowden, these were huge opportunities for U.S. based firms who had the advanced technology, security, and expertise necessary to successfully implement and secure their infrastructure. However, in the last three years, many countries passed laws requiring or encouraging the use of local companies and keeping sensitive data within their borders.
In 2015, Russia passed Federal Law 526-FZ stipulating that Russians’ personal data must be stored inside Russia. That same year, the Safe Harbor framework that was designed to securely permit the flow of sensitive data between private companies in Europe and the United States was invalidated by the European Court of Justice due to security and privacy concerns. The economic impact of Snowden’s revelations is estimated to be at least $35 billion annually, according to the Information Technology and Innovation Foundation.
The cases of Huawei (a Chinese technology company) and Cisco are prime examples of such an economic impact. In October 2012, a Congressional report described security threats and risks associated with Huawei network devices. The reported close ties between the Chinese government and Huawei caused a deterioration of trust in Huawei products. China has long been active in the cyber domain and uses that domain as an arm of its intelligence apparatus. The risk of a backdoor, malicious code, or any other sort of vulnerability intentionally embedded in Huawei products was too great. As a result, Huawei was banned from bidding on U.S. government contracts.
Eight months later, the Snowden leaks had a similar international impact on U.S. companies. For instance, Cisco Corporation took a major hit in its international business, particularly in China. In late 2013, Cisco reported a 10 percent revenue drop and publicly cited backlash from China as part of the reason. China reportedly used the Snowden incident as additional justification for producing and using its own technology rather than relying on foreign companies like Cisco.
Nevertheless, the Snowden revelations also have had a positive impact on IT companies focusing on privacy. Many U.S. Internet companies scrambled to reassure users of their privacy and implemented secure products and services. For example, Google introduced an end-to-end encryption extension to protect users. Privacy and security are big business, and that is partly due to Snowden.
While the American tech industry today is quite healthy, both domestically and internationally, Snowden’s impact continues to be felt. Regardless of what one’s opinion is of what he did, we cannot deny that he started a global conversation on privacy and anonymity; a conversation that placed U.S. business and its relationship with the U.S. government squarely in the center.
Disclaimer: The opinions expressed herein are purely those of the author and do not reflect the opinions or view of NSA/CSS.
