PRISM Fallout: U.S. Internet Companies Stained By Intelligence Actions

It was bound to happen sooner or later: faced with mounting global criticism on its use of Internet data to monitor international denizens for intelligence reasons, the U.S. is now starting right up there with China as safest places to store data on the Web. If trust in U.S. web and data services continues to erode, the future of global cloud computing will be a much different place than what is currently envisioned.

The AP is reporting today that German Interior Minister Hans-Peter Friedrich is warning anyone on the Internet to avoid using U.S.-based services such as those from Facebook, Google or Microsoft.

… Friedrich told reporters in Berlin on Wednesday that "whoever fears their communication is being intercepted in any way should use services that don't go through American servers."

Germany is only one of several nations that are particularly angered by revelations that the U.S. apparently is engaging in wide-scale intelligence gathering using data collected directly from private Internet firms via the so-called PRISM project. If the allegations implied by the leaked PRISM documents are true, then PRISM would seriously jeopardize business relations between the U.S. and other countries. The European Union may be the first relationship to get damaged.

In order to comply with strict E.U. data laws, which essentially prevent data being stored outside an E.U. member nation's borders, the E.U. and the U.S. have established a Safe Harbor agreement that enables data to be stored in U.S.-based cloud services so long as the U.S. service providers self-regulate themselves to maintain strict standards of privacy protections.

Recent assertions show that U.S. intelligence services may actually have on-site equipment on PRISM participants' property, despite repeated denials from those services, which also include Yahoo, PalTalk, AOL, Skype, YouTube and Apple. If the information from the leaked PRISM documents is true, this would be a serious breach of their Safe Harbor agreement.

Even if PRISM turns out to be fictitious, just the hint that something like PRISM could exist could evaporate a large amount of trust and business for U.S. cloud vendors—even ones not named in the PRISM documents.

Friedrich's comments today are a sharp reminder of just how fast the relationship between E.U. and U.S. companies could deteriorate.

Bound by law not to discuss what they are doing to help intelligence services, the named PRISM companies and services are facing a P.R. nightmare, where all they can do is deny and hope the problem goes away.

International policy makers are growing increasingly angered at what they see as U.S. arrogance. (Yesterday's search of Bolivian President Evo Morales's plane by Austrian authorities in Vienna for Edward Snowden, the self-identified leaker of the PRISM documents, probably does not help that perception.)

We may very well be heading for a new geo-fenced world of data isolationism, where the storage of data across international borders will not be so commonplace as it is today. If that becomes the case, how will the Internet landscape work then? Will apps that sell on an international scale be forced to maintain separate Balkanized data collections for each nation served?

Or will any Internet-based company now be forced to lock down their data in direct defiance of state-sanctioned data collection operations?

Neither choice seems palatable, but to regain the trust and business of a global audience, any Internet company may have to take such drastic measures. What's your picture of a post-PRISM Internet future?

 

Image of German Interior Minister Hans-Peter Friedrich courtesy of Wikipedia.