So unless you’ve been living under a rock, chances are you’ve seen the news about NSA’s “PRISM” program. If what we’ve been led to believe is as bad as we think (it might not be – see the “everything we know about PRISM” link from the Washington Post above), it’s pretty scary stuff.
Like most of us, I’ve been reading a lot of coverage about this over the past few days. We’re still in the “breaking story” portion of the news cycle, so details are highly speculative at this point: we don’t know exactly what is involved, what is being requested from whom, and what the details are about how they obtain it. So expect the story to change as more details surface. That being said, the most astute points I’ve seen to date has been these observations from Forbes about the impact of this program on US competitiveness:
Trust is the very foundation of all commerce. Once lost it is almost impossible to regain. This week’s revelations that the NSA has blanket data harvesting arrangements with Verizon, ATT, Sprint-Nextel, Google, Microsoft, Apple, Skype, Yahoo, FaceBook and even credit card processors, will have immediate repercussions. Non-US customers of any US business will immediately evaluate their exposure to these new risks and look for alternatives. European, Canadian, and Australian tech companies will profit from this. Competitors in those regions will offer alternatives that will also draw US customers away from the compromised US services.
While the FBI and NSA leverage the dramatic intelligence opportunities of a digital world, their Orwellian actions are crushing opportunity for tech giants and startups in the United States.
TLDR version is that these actions could will have a stifling effect on the ability of US firms to compete in the global marketplace. Meaning, given the choice between two products (one hosted in the US and one hosted elsewhere) firms outside the US are less likely to purchase the US-based one when all other variables are equal. Now you might say that maybe the PRISM stuff isn’t so bad and that the details (once they surface) might be more benign than initially reported. That could be true. But the marketing impact is over. Meaning, it almost doesn’t matter now what the actual details of the program are: the perception right now is so bad that the competitiveness effects are already written. For example, remember the whole “horse meat” scandal from a while back? Does it really matter if it turned out (upon closer scrutiny) that “beef” you bought is a mere 10% horse – as opposed to some larger percentage as you initially speculated? Not really, right? Same with this. So, ”Alea Iacta Est”, as they say.
The folks at Forbes didn’t explicitly draw this out in their piece, but I’m interested in this as it relates to the actions of NSA (via PRISM) compared to the actions of China’s PLA in their activities (via APT 1). Specifically, the PLA activities seem to be primarily focused on just one thing: increasing China’s competitiveness in the global marketplace. They do this by bolstering China-based IP and incorporating the “competitive advantage” of the firms they target (allegedly). The effects of this are more beneficial to the manufacturing sector – so in light of the specifics of the Chinese economy (~39% manufacturing), there’s a bolstering effect. The impact of the PRISM economic impact is likely to be most strongly felt in services (which is 80% of the US economy). So that’s not good.
I guess time will tell what the full impact will be… but it does seem (to me anyway) like the competitiveness impact is the most salient point.
<Note: The views presented are my own and are not necessarily those of my employer.>