Serious action is needed to undo NSA's damage to U.S. cloud providers

As U.S. cloud providers face customer backlash, the feds treat the electronic spying controversy as merely a PR problem

President Barack Obama said last week that the NSA electronic spying scandal gave the world the wrong impression about U.S. data surveillance programs. In response, he defined a plan to correct what the government considers to be a PR issue.

As a result, we might see more transparency around the court orders that allow the surveillance and even an oversight committee to monitor approaches to surveillance.

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However, it won't get better any time soon. As InfoWorld's Robert X. Cringely points out, "Yesterday, two 'secure' email service providers decided they'd rather close up shop than cooperate with the United Spooks of America."

Smaller cloud providers could do the same, if they think that running a cloud service could mean they have to hand over their customers' data. Larger providers will have to put policies in place to reassure customers that they will not dish out data willy-nilly, even if it means a few legal battles.

Moreover, a report by the Information Technology and Innovation Foundation says that NSA spying could cost U.S. cloud companies between $22 billion and $35 billion, as customers outside of the United States take their business elsewhere. The federal government caused the problem, so it needs to fix it. Although Obama's speech is a step in the right direction, quick reform is needed just to do damage control.

This means there are now clear questions marks around the value of cloud computing, at least for most U.S.-based companies. However, in my travels, I've found that U.S.-based companies aren't giving the recent events much notice. Indeed, most have already decided to move to private cloud models with limited use of public cloud resources. These strategies typically predate the NSA scandal.

Outside of the United States, it's anybody's guess at this point. Although foreign enterprises consider this issue a convenient way to push back on U.S. tech dominance, there are not a lot of choices when it comes to pervasive public cloud providers that aren't based within our shores.

This article, "Serious action is needed to undo the NSA's damage to U.S. cloud providers," originally appeared at InfoWorld.com. Read more of David Linthicum's Cloud Computing blog and track the latest developments in cloud computing at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.

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