Tech Companies Lose Out Due To U.S. Surveillance Practices

U.S. tech companies are still dealing with the backlash that came with former NSA contractor Edward Snowden's revelations that the government had been collecting data in huge volumes from the unknowing public.

Snowden's leak has contributed to major reforms in the way the U.S. government can use the public's data, but it has also had a detrimental effect on the tech sector as trust in U.S. firms' security has deteriorated.

A $35 Billion Loss

A report from the Information Technology and Innovation Foundation, a nonprofit think tank funded by Intel Corporation INTC and Microsoft Corporation MSFT, showed that foreigners' broken trust has had very real implications on U.S. tech firms. The report estimated that U.S. companies will have lost over $35 billion worth of foreign business by 2016 due to international fallout from US surveillance practices.

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A Level Playing Field

Foreign firms have capitalized on the mistrust following Snowden's revelations and accusations that the U.S. government was unlawfully spying abroad. The result has been a push to convince customers that data is safer if it is kept at home rather than being sent abroad. This has been an advantage for foreign firms which were previously unable to compete with U.S. giants like Google Inc GOOG and Amazon.com, Inc. AMZN.

Changing Laws

Consumer opinions can be detrimental, but a major issue stemming from U.S. surveillance practices has been changing regulations in foreign countries. Many nations now require data to be stored locally in order to limit exposure to spying. For that reason, companies like Belkin International Inc. and Salesforce.com CRM have had to shell out big bucks in order to relocate its data in order to comply with new regulations.