IT Firms Lose Billions After NSA Scandal Exposed By Whistleblower Edward Snowden

IT firms lose billions after NSA scandal exposed by whistleblower Edward Snowden (Independent, Dec 30, 2013):

The National Security Agency scandal exposed by whistleblower Edward Snowden has cost American technology companies billions of dollars in lost revenue as governments and companies in its important export markets of Asia refuse to entrust the handling of sensitive data to US companies. An analysis of financial filings from technology giants IBM and Cisco by The Independent on Sunday reveals the two businesses have seen sales slump by more than $1.7bn (£1.03bn) year-on-year in the important Asia-Pacific region since Mr Snowden revealed in June that US companies had been compromised by the NSA’s intelligence-gathering in the clandestine Prism programme.

“US companies have seen some of their business put at risk because of the NSA revelations,” said James Kelleher of equity research firm Argus Research.

China is high on the list of those countries now shunning US companies. Mr Kelleher said this may be payback for the US government saying it did not trust China-based Huawei to be independent from Chinese military and intelligence agencies. Despite operating in every other major country, Huawei, the world’s biggest manufacturer of telecommunications equipment and a privately owned Chinese company, has been prevented from winning major communications contracts in the US.

IBM, one of the world’s largest information technology suppliers, saw sales in its Asia-Pacific region drop 15 per cent from mid-August to mid-October, compared with the same period in 2012. That was twice as severe as the decline in “pre-Snowden” quarters.

Revenue declines at Cisco, the San Francisco-based communications manufacturer, were even more pronounced, with sales down 8.75 per cent in the quarter after the Snowden allegations, compared with just 2.84 per cent in the three months before.

Cisco warned in November that its sales could fall as much as 10 per cent this current quarter, as new orders in emerging markets declined. Chief financial officer Frank Calderone said that the NSA spying had been cause for a “level of uncertainty or concern” with Cisco’s international customers, and part of the reason for weakening demand.

IBM declined to comment but stressed that it was not one of the companies named as having provided customer data to the NSA. Mr Kelleher said that the effects of the NSA allegations added to tougher sales conditions in China, whose economic growth rate has slowed during the year.

However, the American firms’ revenue losses may not be confined to Asia. The German government has called for home-grown email and internet providers and there have been talks between several countries of creating network infrastructures that bypass the US.

A survey by the Cloud Security Alliance, an industry standards organisation in the US, predicted the Prism programme could cost cloud computing firms between $35bn and $45bn in lost orders over the next three years. It said that Canada, Germany, France and other European countries have rules requiring companies to guarantee data privacy.

Jean-François Audenard, the cloud security adviser to France Telecom, has said: “It’s extremely important to have the governments of Europe take care of this issue…. If all the data of enterprises is going to be under the control of the US, it’s not really good for the future of the European people.” France has already invested ¤135m (£113m) in cloud technology with French businesses.

Earlier this month, technology company executives from America’s biggest firms, including Apple, Google, Yahoo, Microsoft, Twitter and Facebook, had a meeting with President Barack Obama to rein in the electronic spying campaign amid concerns about its impact on their reputations.

Apple, which is among the companies asked by security services to hand over personal data, has been particularly insistent, recently demanding the right at least to explain how it co-operates with US intelligence. Currently, it is effectively gagged by them from explaining how much information on its customers it hands over to the NSA.

The reason behind Apple’s concerns became clear last week when it emerged just how huge was the deal it was negotiating with China Mobile. The partnership it announced on Monday with the largest mobile phone carrier in the world will be worth billions of dollars of extra sales of the iPhone 5 and 5c.

Views are split among investors, but some analysts suggest that the deal could boost annual revenues by as much as $10bn.

1 thought on “IT Firms Lose Billions After NSA Scandal Exposed By Whistleblower Edward Snowden”

  1. Good. I have to laugh at China’s boycott of US firms for spying, but the more world leaders shun the US for NSA spying, the better chance we have of forcing some much needed change. China is a nation that suffers at least 200 uprisings a day due to high unemployment and growing poverty of it’s people. Like the US and Euro, the greedy guts are grabbing everything, and the rest of the people are getting nothing. People are finally striking back.
    Every time there is an uprising, China shuts down the Internet and TV news. I guess it is okay for them, but nobody else?
    Underlying all of this distrust by the US of it’s own people and other nations are bigger problems. Other nations no longer respect the US, and the real problem is a world war against the US being waged right now. It is economic, and started in June of 2010 by Hugo Chavez.
    Two nations tried to get the US dollar removed as the world reserve currency due to the excessive abuse of it’s standard by the FED and the corrupt politicians. One was Iraq, the other was Syria. We know what happened to them.
    Hugo Chavez was far more crafty. He set up the world’s first electronic currency for his tiny alliance of third world nations in South America. The South American Trade Alliance also includes Cuba. June of 2010, the Sucre was introduced for the use and convenience of member nations. For the first time, members could trade with each other directly using their own currencies, leaving the US dollar out. The Sucre simply translated the value of each member currency, and conversion to any world reserve currency was rendered obsolete. Their entire GDP was about half a billion, very small, and flew under the radar. It was an immediate success.
    Russia and China quickly followed suit, establishing trade agreements with each other leaving the dollar out. They went on to recruit other nations in the middle east, South America and Africa. When the US put more sanctions on Iran this last year, Japan and India joined with them.
    Recently, New Zealand and Australia dumped the dollar.
    In June of 2010, 100% of international trades between nations were concluded with the US dollar. Today, it is about 50%. That is a huge blow to the power and value of the US dollar.
    One other thing to note is Iran. Thanks to the Iraq war, Iran is now a very rich country, and is a fruitful and valued trading partner to major first world nations. US propaganda that Iran suffers from their endless sanctions is pure spin….Iran has been accepting most currencies and gold for years.
    Since 2010, once it became clear the US would do nothing to clean up its markets or leadership after causing the worst global economic collapse in a century, the world began to move away from the US. That is why I say the real world war is economic, and it is happening very quietly around the world. The US is losing, that is one of the reasons their false news broadcasts cover no truth at all.
    The US is feeling the pinch. That is one reason they have become the world bully. But, like all bullies, they are playing a cowardly game. When Obama was going to invade another nation that has done nothing to us in the middle east a few months back, Putin pushed back hard, and the US folded like a cheap tent.
    The US ascended like a rocket over the past 160 years, and it is falling even faster.
    Happy New Year.


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