The NSA Economic Backlash

When the NSA spying revelations came out a couple months ago, one of my first thoughts, expressed here on this blog, was:  This could be bad for U.S. businesses.  If internet users have concerns about the privacy of their online activities, they may look for alternatives to Gmail, Yahoo and the rest.  I elaborated on this point here and here.

But I’m no expert on these industries, so I don’t have a sense of what the actual likelihood of this happening is.  How hard would it be to create a new email/browser/social network right now?  I’m not sure.

Perhaps this new proposal out of Brazil to create a competitor to the major U.S. email providers will provide a test:

The Brazilian government is planning to develop a national email system that is protected from the sort of espionage that the US National Security Agency carries out.

The government has already been working with the national postal agency Correios to develop the new commercial email system, providing an alternative to the likes of Gmail and Hotmail, which would guarantee the veracity of documents and offer functions such as a delivery certification showing when an email has been read by the recipient.

However, in the wake of whistleblower Edward Snowden’s revelations about the extent of US government digital surveillance, Brazil’s Communication Ministry has requested to extend the project into a national service.  The new system would include encryption and have servers based in Brazil.

American companies such as Google and Microsoft are obliged to share their users’ data with the NSA. In fact, in the last eight months of 2012, Hotmail, Google, Facebook, and Twitter provided law enforcement agencies with information on 64,000 users. The NSA can reportedly also tap into three-quarters of the data flowing through the US internet and has legal power to subpoena international communications.

This has led Germany’s Minister of the Interior to tell companies not to use services that go through American servers if they are concerned about privacy. The French government is also working to build a domestic cloud infrastructure to compete with the dominant US companies.

It will be interesting to see how this turns out, and if others pursue similar efforts.  Obviously, the governmental role in any such effort is an important consideration – other governments are capable of spying as well.