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

Cloud Security Alliance survey finds firms canceling contracts, looking elsewhere for cloud services

Non-U.S. clients of American cloud hosting companies are clearly rattled by revelations that the U.S. National Security Agency collects huge amounts of customer data from Internet Service Providers and telecommunication companies.

A Cloud Security Alliance (CSA) survey found that 10% of 207 officials at non-U.S. companies have canceled contracts with U.S. service providers following the revelation of the NSA spy program last month. The alliance, a non-profit organization with over 48,000 individual members, said the survey also found that 56% of non-U.S. respondents are now hesitant to work with any U.S.-based cloud service providers.

In the full survey, more than half of 456 representatives of companies in the U.S., Europe and Asia said they are less likely to use American cloud service providers because of concerns over U.S government access to their data.

The U.S. spy program, dubbed PRISM, was revealed in documents leaked last month to reporters by former NSA contract worker Edward Snowden, now seeking asylum in Russia and other countries in an effort to evade prosecution in the U.S.

Only about three out of 10 survey respondents said Snowden's disclosures will have no impact on their use of U.S.-based cloud services.

The online survey, seeking to gauge the potential impact of Snowden's disclosures on U.S.-based hosting companies, was conducted between June 25 and July 9s.

"The level of skepticism was greater than I expected," said Jim Reavis, co-founder and executive director of the CSA. "I had thought that more people would understand that these activities happen all the time in their countries as well."

A vast majority of survey respondents cited a need for more transparency about the U.S. government's use of secret orders from the Foreign Intelligence Surveillance Act (FISA) court to extract customer data from American Internet companies, Reavis said. Respondents from U.S. and foreign companies were nearly unanimous in calling for the U.S. to disclose more information about the level of cooperation extended by specific service providers to government requests for customer data.

Google, Microsoft, Yahoo and others that have been heavily subjected to FISA court orders, and are now demanding that they be allowed to disclose more details about such requests. The providers are now prohibited from disclosing information about such court orders.

The CSA survey found that customers want hosting providers to pressure the U.S. government to open the process, Reavis said. A majority of respondents said hosting companies should be allowed to disclose how many NSA and FBI requests they get for customer records, what kind of information is being sought and how much is provided, he said.

"Virtually everyone that responded said that providers need to provide at least aggregate information on what they are doing," Reavis said.

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 @jaivijayan, or subscribe to Jaikumar's RSS feed . His email address is jvijayan@computerworld.com.

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