The NSA scandal hits America's bottom line

As many had predicted, the NSA snooping scandal, revealed by Edward Snowden, is now having a dramatic impact on US technology companies.

• Last month Cisco warned that a backlash against its products, after revelations that it may have engineered 'back-door access' to them for the NSA, was drastically affecting orders and profits;
• IBM is being sued for allegedly hiding the impact to its turnover caused by the scandal, which has apparently caused a $12 billion decline in the company's market value;
• HP and Microsoft are now also reporting declines in orders from China for their products, again attributed to the NSA scandal;
• Nor are information technology companies the only ones to be affected.  Brazil has just snubbed Boeing by ordering Swedish fighter aircraft instead of the former's F/A-18 Super Hornet, in a deal valued at $4.5 billion.  Brazil's decision has been openly ascribed by some commentators to its outrage over the NSA's spying on its leaders and politicians.

Furthermore, US and European interests, official and commercial, have long portrayed Chinese IT and communications technology companies such as Huawei as a security risk, alleging that its hardware and software could potentially contain 'back doors' allowing them to be used by Chinese hackers to endanger the security of Western communications networks and the companies that use them.  Britain has gone so far as to have its GCHQ communications intelligence establishment tear down Huawei hardware and analyze its software at source code level to check for such dangers - with the company's co-operation, let it be said.  However, it's been claimed that the NSA arranged for US companies to insert similar 'back doors' into their hardware and software, potentially allowing the agency to spy on companies and networks in countries and companies using it.

This situation appears to be backfiring on all US high-technology companies - and it's far from over.  For example, what if China insists on the same tear-down process for Cisco, IBM and HP hardware and software before it allows it to be sold into its market?  I see no rational reason why sauce for the Western goose should not be sauce for the Oriental gander.  That would expose the West's latest technological developments to the eager eyes of its biggest and fastest-growing competitors . . . not a very comforting thought.

As Newsmax points out:

A congressional committee’s effective blacklisting of Huawei Technologies Co.’s products from the U.S. telecommunications market over allegations they can enable Chinese spying may come back to bite Silicon Valley.

Reports that the National Security Agency persuaded some U.S. technology companies to build so-called backdoors into security products, networks and devices to allow easier surveillance are similar to how the House Intelligence Committee described the threat posed by China through Huawei.

Just as the Shenzhen, China-based Huawei lost business after the report urged U.S. companies not to use its equipment, the NSA disclosures may reduce U.S. technology sales overseas by as much as $180 billion, or 25 percent of information technology services, by 2016, according to Forrester Research Inc., a research group in Cambridge, Massachusetts.

“The National Security Agency will kill the U.S. technology industry singlehandedly,” Rob Enderle, a technology analyst in San Jose, California, said in an interview.

There's more at the link.  Bold underlined text is my emphasis.

I'm sure the NSA will protest that it never intended any of these consequences . . . but that didn't stop them from happening.  Will anyone at the agency be held accountable for them?  Or will those responsible evade, avoid and skate out from under any punishment?  My money's on the latter.

One hopes the recent recommendations for reform of the NSA will bear fruit.  Unfortunately, I don't think they go far enough.  By now you've got a culture embedded in the NSA that regards any opposition to its self-defined mission as enemy action.  I no longer regard the agency as trustworthy in any shape or form.  I think the only solution is to break up the NSA once and for all, dispersing its functions among different agencies.  I'd also like to ensure that none of those who had any hand in its gigantic, unconstitutional, unethical and immoral snooping activities are ever again given any position of authority in politics, public administration, or the executive branch as a whole.





Peter