Future of US Cloud Tech Companies Bleak due to NSA Surveillance Fears

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By Rachel Ranosa | August 27, 2013 4:53 PM EST

Edward Snowden's exposé on the surveillance program of the US National Security Agency (NSA) has cast dark skies over the future of the American cloud computing industry, a think tank reveals.

The Information Technology & Innovation Foundation (ITIF) reports US technology companies stand to lose up to $US 35 billion in three years if offshore customers pull back due to risks to data privacy. The move could have an "immediate and lasting impact" on an industry that is said to be worth more than $200 billion by 2016.

From the Information Technology and Innovation Foundation

The ITIF survey shows that more than half of the 207 respondents outside of the US are "less likely" to do business with an American cloud company.

The US, which is the world leader in cloud technology, also faces the possibility of losing 10% to 20% of its overseas market share to rivals.

Revelations that the NSA gathers Internet traffic through the surveillance program Prism have stoked fears among global customers and resulted in the backlash against US businesses.

UK and European companies are becoming cautious about dealing with organisations that might surrender their data over to the NSA. Germany, for one, is pushing for the suspension of data transfers to US companies.

Despite the shift in the global sentiment toward US cloud companies, the Australian Government remains set to establish its own National Strategy for Cloud Computing, which aims to use the technology as the primary data storage for the government and business sectors. But critics have opposed the plan after Australia was identified as one of five countries where the NSA has set up surveillance sites.

From a business perspective, why should Australia rely on offshore cloud companies anyway?

Matt Healy, Chairman of OzHub and National Executive, Macquarie Telecom, believes Australia has the potential to establish itself as "the hub for cloud" in the Asia-Pacific region - a strategy that could indeed cast dark skies over the future of US cloud companies.

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