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U.S. cloud firms face backlash from NSA spy programs

July 23, 2013 06:21 PM ET

Snowden's revelations in June that the NSA is collecting vast amount of phone call metadata as well as customer records from many major Internet companies has focused global attention on U.S. surveillance activities. The NSA, the FBI, and the Obama Administration insist that the data monitoring activities are fully compliant with U.S. law and vital to protecting the U.S. against terrorists.

Others in the U.S. see it as a threat to privacy and constitutionally protected rights against unreasonable search.

In Europe and elsewhere, Snowden's revelations resurfaced long-standing concerns about the U.S. Patriot Act and other anti-terror statutes being used to gain access to customer data hosted by Internet service providers. Prior to Snowden's disclosures, in fact, European regulators published a report warning about how FISA can be used to target non-US individuals located outside the U.S

The scope of the surveillance authorized under FISA goes beyond the interception of communications. The act also covers data in cloud environments, the E.U. report cautioned. FISA "can be seen categorically as a much graver risk to E.U. data sovereignty than other laws hitherto considered by E.U. policy makers," the report said.

Following Snowden's leaks, the E.U. Parliament voted overwhelmingly to investigate the privacy and civil rights implications of the NSA spy programs on European citizens, and to seek more information from U.S. authorities.

Finland-based security firm F-Secure, which provides a range of hosted security services has felt some of the ripple effect from the recent disclosures.

"Ever since the PRISM scandal started in June, prospects in Europe, Middle East and Asia, are asking whether the ownership of the company is in U.S. or whether we host customer data in U.S.," said Mikko Hypponen, F-Secure's chief research officer.

"Right now, there are many customers who don't want to buy American -- or to buy from a NATO country in general," Hypponen said. "Then again, there are many customers who don't want to buy Chinese, Russian or Israeli either. In a situation like this, it's good to be a solution provider coming from a fairly neutral country."

Jaikumar Vijayan covers data security and privacy issues, financial services security and e-voting for Computerworld. Follow Jaikumar on Twitter at Twitter@jaivijayan, or subscribe to Jaikumar's RSS feed Vijayan RSS. His email address is

Read more about Privacy in Computerworld's Privacy Topic Center.

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