In the wake of the NSA spying scandal, I have been moving my data away from large US vendors and increasing my computer security. Both of these issues needed to be addressed but the NSA spying scandal has made them relevant for me – and I suspect many others. This will negatively impact earnings growth, particularly at Google and Facebook, particularly for international and business revenue.
When it comes to personal and business computing security, maintaining relationships with multiple vendors is just as important as basic security. However, now that we know definitively that the US government is tapping into the Internet backbone and coercing Internet companies to divulge user data, security will take a more pronounced anti-American, anti-large vendor, anti-cloud computing turn.
I am personally reviewing my data relationships to diversify my data vendors and to improve security and encryption where necessary in order to keep my data private. However, I believe businesses in particular will become more reluctant to turn their valuable data over to off-premises vendors that depend on the cloud for fear that this data will be collected and permanently archived by the US government. Non-US companies in particular should be concerned about this. As a result, we should expect a downshift in cloud adoption rates, particularly among large US companies that are targeted by the US government. Google, Yahoo, AOL and Facebook are most exposed here due to their dependence on the Internet for the totality of their revenue streams and because they are all part of the PRISM program. Amazon is not a part of PRISM and Apple, while a part of PRISM, derives a lot of revenue from data that is not in the cloud.
This story is still in its infancy but I think it is going to be an interesting wrinkle to how users adopt mobile technologies. Expect security-oriented technology companies to benefit.
Below are the tech links, with a particular highlight on the NSA spying scandal. Expect to hear more about the Telecom part of this because that’s where the meat lies. There are two big issues in my view: the telecom companies’ actively working with government on a massive scale to give real time data from their internet backbone facilities and the outsourcing of large portions of the US government surveillance and intelligence operations to private vendors. These are going to be the two most important issues going forward.
“we are more likely to shoot that unlucky messenger when they are an outgroup rather than ingroup member”
“NSA, FBI, CIA, DIA, etc analyst has access to query raw SIGINT databases, they can enter and get results for anything they want”
NSA – US
NSA – Foreign
The Germans are doing it too this article says.
According to this article the Germans have fabulous decryption capabilities
Given Amazon’s commitment to low prices and low margins, grocery retailers with large investments in physical stores should see this as a big threat.
I agree with this here. I wrote just last week that the Xbox 360 was overpriced and restrictive and that this would hurt Microsoft. I still believe this is true.