In October 2012 a House Intelligence Committee report raised allegations that telecommunications equipment from Shenzhen-based Huawei Technologies Co. might enable China to spy on the US and even disrupt power grids, financial networks or other critical infrastructure. As a result of this effective blacklisting Huawei lost important business from a key market. Since then it has been revealed that the National Security Agency (NSA) persuaded some US technology companies to build "backdoors" into security products, networks and devices to allow easier surveillance by the NSA - raising fears that US technology sales could suffer a similar loss of business from overseas markets.
China Daily retaliated by describing US companies, including Cisco, as a "terrible security threat" and some overseas governments began expressing the same doubts about U.S. technology as were expressed about Huawei. According to the Wall Street Journal, India may ban e-mail services from Google and Yahoo, Germany is calling for the use of its own national Internet and e-mail services and Brazil is questioning whether overseas companies could be violating its privacy laws. In November Cisco was already reporting delays to networking equipment orders and Forrester Research has suggested that the disclosures could reduce U.S. technology sales overseas by as much as $180 billion, or 25% of IT services, by 2016.
Cloud services in particular could take a hammering from the NSA's tarnishing of the reputation of the very national business it claims to be defending. German confidence in the cloud has suffered according to a PricewaterhouseCoopers survey suggesting that 22% of German companies now rate the risk of using cloud services as "very high" - before the NSA leaks the figure was 6%- while 54% rate the risk as high or very high.
Thirty-eight percent said they were now looking at email encryption and 25 percent at encryption of mobile communications while 15 percent want to switch to European tech providers that won't cooperate with American or British intelligence services.
A report by the Information Technology and Innovation Foundation suggests that US cloud service providers could lose up to $35 billion a year if overseas customers start avoiding them. Other opinions have suggested that these predictions are exaggerated, that business is less in awe of the damage that can be caused by blundering spooks and more concerned about the risk from cyber criminals and competitors.
Caveat vector - let the carrier beware
Whether these economic forecasts come true may not be the real issue, so much as the growing awareness that the data super highway is fostering a whole new and diverse population of "highwaymen". The difference is this: when it was gold and jewels in transit, you knew you had been robbed when the precious cargo went missing; but data can be leaked with no apparent loss. This makes it doubly important to choose the safest routes, and the safest harbours, for critical or sensitive data.