25th Oct 2016

Snowden scandal to cost US cloud companies billions

  • Reding: Member states are stalling on EU data protection reforms (Photo: ec.europa.eu)

The US cloud industry faces up to €25.8 billion in lost revenues following revelations about US-led snooping on EU citizens.

“The surveillance revelations will cost the US cloud computing industry USD 22 to 35 billion in lost revenues over the next three year,” said EU justice commissioner Viviane Reding on Sunday (19 January) at the Digital Life Design Conference in Munich.

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Reding drew her estimates from a report by the Information Technology and Innovation Foundation, a think tank based in Washington.

Global surveillance programmes and the bulk processing of data by the US and UK intelligence agencies means people are losing trust in US-based cloud businesses, says the report.

Cloud computing allows people to store, manage and process personal data via a network of servers hosted on the Internet

The National Security Agency (NSA) is said to have blanket access to personal data held by top US firms like Google and Microsoft through its Prism programme.

The wider snooping scandal prompted US President Barack Obama to launch reforms to increase oversight of the controversial spy programmes.

In a speech last week, Obama said there is no evidence the NSA sought to violate civil liberties.

But he also noted the legal safeguards that restrict surveillance against US citizens without a warrant “do not apply to foreign persons overseas.”

Meanwhile, the value of people’s data in Europe is on the rise.

Estimates by the commission suggest data on EU citizens was worth some €315 billion in 2011 and is likely to increase to €1 trillion by 2020.

“Only if people are willing to give out their personal data will companies reap the full rewards of our digital single market,” said Reding.

Reding said EU data protection reforms - currently under legislative review by member states - would help restore trust by minimising the amount of data stored by businesses and by imposing big fines for unlawful breaches.

EU insiders say the Snowden scandal helped secure a more data-rights friendly reform package in the European Parliament.

The euro-deputies have, for instance, re-inserted an article aiming to end the legal confusion of companies caught between competing US and EU jurisdictions.

But member states in December were reluctant to commit to a key provision in the package that would harmonise decision-making across the bloc and allow people to file data abuse complaints more easily.

“EU heads of state and government have committed to a ‘timely’ adoption of the new framework. But in real terms there has been little action,” said Reding.

Germany, along with the UK, Denmark, Hungary, and Slovenia are said to be delaying the package.

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