Tarnished by Association with Ongoing U.S. Surveillance Policies, Tech Sector Likely to Lose More Than $35 Billion in Sales

New Report Surveys Rising Toll; Points to Urgent Need for Reform Beyond USA Freedom Act
June 9, 2015

WASHINGTONShortly after Edward Snowden revealed extensive U.S. government surveillance, the Information Technology and Innovation Foundation (ITIF) estimated that the U.S. tech sector could lose between $21.5 billion and $35 billion over three years if U.S. cloud computing providers saw even a modest drop in their foreign market share due to concerns about electronic surveillance. Since then, it has become clear that the U.S. tech industry as a whole, not just the cloud computing sector, has under-performed as a result of these spying concerns. Therefore, the total economic impact of U.S. surveillance practices will likely far exceed ITIF’s initial $35 billion estimate.

ITIF is releasing a new report today, Beyond the USA Freedom Act: How U.S. Surveillance Still Subverts U.S. Competitiveness, which catalogues a wide range of specific examples of the economic harm that has been done to U.S. businesses as result of unreformed government surveillance practices, and it proposes a series of reforms designed to improve security, protect transparency, and increase cooperation and accountability in the global technology ecosystem.

“Foreign customers are increasingly shunning U.S. companies, and governments around the world are using U.S. surveillance as an excuse to enact a new wave of protectionist policies. This is bad for U.S. companies, U.S. workers, and the U.S. economy as a whole,” notes Daniel Castro, Vice President of ITIF and co-author of the report. “Now that Congress has passed the USA Freedom Act, it is imperative that it turn its attention to reforming the digital surveillance activities that continue to impact our nation’s competitiveness.”

The report recommends policymakers level the playing field for the U.S. tech sector by implementing a series of reforms such as increasing the transparency of its surveillance practices, opposing government efforts to weaken encryption or introduce backdoors in software, and strengthening its mutual legal assistance treaties with other nations. In addition, it should combat anti-competitive practices by other nations through the establishment of international legal standards for government access to data and pushing for trade agreements to include bans on digital protectionism.

“Over the last few years, the U.S. government’s failure to meaningfully reform its surveillance practices has taken a serious economic toll on the U.S. tech sector and the total cost continues to grow each day,” adds Castro. “Other countries are scrambling to take advantage of this opportunity, and if policymakers fail to address this issue head on, these losses will be locked in permanently.  Ultimately, Congress must decide how many American jobs it is willing to sacrifice in pursuit of intelligence gathering and find a better balance between economic interests and national security interests.”

Read the report