A new report suggests that concerns around NSA surveillance could drive up to $35 billion of cloud business away from the US over the next three years.
According to the report by non-profit the Information Technology and Innovation Foundation, Europeans are moving away from US cloud providers due to privacy and surveillance concerns, and the impacts on US-based providers could be huge.
Since cloud is a rapidly growing industry, cloud providers in the US have to not only keep current customers, but recruit new customers as well, which could be challenging amidst these concerns.
On the low end, US cloud providers could lose $21.5 billion by 2016, which assumes the US would eventually lose about 10 percent of foreign market to European or Asian competitors. On the high end, US cloud providers could lose $35 billion over the same time period, which would mean the US eventually loses 20 percent of the foreign market to competitors.
The basis for these assumptions include data from a recent survey by the Cloud Security Alliance which showed that 10 percent of its member respondents indicated that they had cancelled a project with a US-based cloud provider, and more than half said they would be less likely to use a US-based cloud service after learning of the NSA’s PRISM program.
The report shows that foreign providers are already seeing success; Artmotion, a Swiss hosting company, reported a 45 percent increase in revenue the month after PRISM came to light.
“And the percentage lost to foreign competitors could go higher if foreign governments enact protectionist trade barriers that effectively cut out US providers,” Daniel Castro, senior analyst with the Information Technology and Innovation Foundation and author of the report said. “Already the German data protection authorities have called for suspending all data transfers to US companies under the U.S.-EU Safe Harbor program because of PRISM.”
The report suggests that the US government should be more transparent and proactively set the record straight about what data it collects.
Transparency in the cloud has been top of mind for Europeans as well, with the European Commission recently looking to establish a formal expert group to help clear up terms in cloud computing contracts.