FindCloudHost.com > Cloud Web Hosting News

Think Tank ITIF Suggests PRISM to Cost US Cloud Sector $22 to $35 Billion by 2016

August 06, 2013
by Staff Writer

Washington, DC-based think tank Information Technology and Innovation Foundation (ITIF) has suggested that the recent PRISM affair in the United States is set to cost the country's cloud computing sector between $22 to $35 Billion over the next three years.

PRISM is a secret mass data collection program operated by the United States National Security Agency (NSA). The program, officially called SIGAD US-984XN, has been in operation since 2007. It became widely known when the Guardian and Washington Post newspapers published stories based on the disclosures of Edward Snowden, an NSA contractor. Mr. Snowden's revelations suggested the agency tracked "nearly everything a typical user does on the Internet" including collecting emails and chats. What was most damaging was Snowden's suggestion that data was derived from key cloud providers.

ITIF is a non-partisan research and educational institute that formulates and promotes public policies to "advance technological innovation and productivity internationally, in Washington, and in the states". Recognizing the importance of technology to the United States' economic prosperity, the organization's mission is to "help policymakers around the world better understand the nature of the new innovation economy and the types of public policies needed to drive innovation, productivity and broad-based prosperity". The organization's report, entitled "How Much Will PRISM Cost the U.S. Cloud Computing Industry?" outlines the damage caused by the affair.

The report suggest that in the wake of PRISM the United States' foreign cloud computing customers are now considering the potential risks and benefits of storing data with an US company, a situation foreign providers are likely to exploit to build inroads into the USA's nearly $130 billion cloud computing industry.

“Many foreign customers are now deciding whether the risks of storing data with a U.S. company are worth the benefits, and foreign cloud service providers will ruthlessly exploit this perceived weakness to gain market share,” explained the report's author and Senior ITIF Analyst, Daniel Castro. “In addition, some countries may use PRISM as an excuse to enact a series of protectionist policies to restrict access to their markets and promote their domestic cloud providers.”

Castro's preliminary estimate, based on a survey of foreign customers, suggests the United States could lose 10%-20% of the "foreign cloud market" by 2016 - a global industry that is expected to grow to $200 billion by that time. The survey suggested that PRISM revelations had caused 10% of respondents to cancel projects with American-based cloud computing providers. This figure is likely to grow, and Castro cites Germany's data protection authorities calling for the suspension of all data transfers to American companies.

Castro suggests that US government transparency is required to restore confidence in the sector. “There is huge growth potential in cloud computing right now in foreign markets, and U.S. businesses run the risk of being sidelined at a crucial moment,” Castro concluded. “In addition to the privacy and civil liberties debates going on, we need to have a serious conversation about the potential economic costs of electronic government surveillance.”

Comment News

Connect with