Snowden chill: Aftershocks hit Silicon Valley

Demonstrators hold placards featuring an image of former U.S. intelligence contractor Edward Snowden as they take part in a protest against the U.S. National Security Agency (NSA) collecting German emails, online chats and phone calls and sharing some of it with the country's intelligence services in Berlin on July 27, 2013.

NSA director Keith B. Alexander announced today that the agency will replace 90 percent of its systems administrators with computers. Edward Snowden was also a systems administrator at the NSA before he blew the whistle on the agency’s secret surveillance program PRISM. But the firing of his coworkers is just one of the many disruptions to governments and business all over the world that has been dubbed The Snowden Effect.

And it’s not just the NSA that’s downsizing as a result of the Snowden Effect. Take for example Silent Circle, a private encryption company. “We encrypt text messages. We encrypt phone calls. If you need to whisper in someone’s ear from a thousand miles a way we can help you do that” says Silent Circle co-founder Phil Zimmermann.

When it comes to email encryption Zimmermann no longer feels comfortable offering the same privacy guarantees that he did before the government surveillance program PRISM. So the company shut down that service. So did another encryption company -- Lavabit.

“They said we aren’t willing to do something but we can’t tell you what it is we weren’t willing to do. There’s gag orders that these companies are under,” says Daniel Castro.

He is an analyst with the Information Technology and Innovation Foundation which just released a study that said the U.S. cloud computing industry could lose up to $35 billion as a result of the NSA’a surveillance programs like PRISM

“Over the past few years there has been a lot of concern in a number of countries about the US dominance in this industry” Castro says. Even before Snowden’s big reveal, foreign companies were pushing for a larger share of the data storage business which is expected to reach $207 billion by 2016. Now those foreign companies have an effective new marketing slogan, “we won’t spy on you.”

But the U.S. has bigger problems, says Castro. “We’ve seen a German minister of justice call for an outright ban on U.S. companies providing data related services.”

Executives from Apple, Google, AT&T and members from civil liberties groups all voiced their concerns personally with President Obama in a hush hush meeting yesterday. In his speech today he said government will take steps to increase oversight and transparency in all the government surveillance programs. But he didn’t say anything about doing any less of that surveillance. 

About the author

David Weinberg is a general assignment reporter at Marketplace.

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