Tech Reacts To The Demise Of Partial NSA Reform In The Senate

The failure of the Senate to advance NSA reform in the current Congress isn’t too popular with the technology community. The demise of the USA FREEDOM Act — a half-measure at best — in the Senate is another loss for the technology industry, which saw many of its leading companies repeatedly call for the bill’s passage.

The FREEDOM Act was aimed at ending the NSA’s collection of American’s telephone metadata, a controversial program that the Snowden leaks uncovered.

The Act was no panacea, but it did appear to be an achievable piece of legislation. The House passed a version of the bill that was mocked after it was neutered before passage. The Senate’s variant was stiffer. It was called a first step. Even that couldn’t pass.

“A Missed Opportunity”

Reaction by tech industry groups to the 58-42 has been negative. The group Reform Government Surveillance, which counts Google, Apple, Microsoft, and Facebook as members released a small statement saying that it was “disappointed in the Senate procedural vote.” The influential Business Software Alliance called it a “missed opportunity.”

The big tech companies appear content to speak through groups that they are members of, sparing them the need to directly criticize member of Congress that, in many cases, are about to take the majority position in the upper chamber.

“Extremely Disappointing”

Companies that have strong cloud focuses are particularly unhappy with the situation. Aaron Levie, the CEO of Box told TechCrunch that the vote was “extremely disappointing.” What is needed, according to the executive, is “any sign of progress that shows that the Senate and the government in general understand the gravity of the surveillance situation.”

He continued, stating that the “United States government failing to lead is leading to other governments thinking about Internet management.” In the wake of the NSA revelations, there have been fears that the Internet could split into regional pieces, with different rules and carving the larger Web into splinters. That wouldn’t be so good for companies that want to sell their services around the world.

Vineet Jain, co-founder and CEO of Egnyte, a company that provides cloud collaboration services to enterprises told TechCrunch that the failure of the FREEDOM Act sent “very strong message” to Americans “about our right to privacy.” He went to state that by “continuing to allow NSA surveillance, there is a new level of FUD (fear, uncertainty, doubt)” in the market that “is inhibiting [the technology industry] from progressive innovation.”

Jain also said that if privacy was better protected from government intrusion through legislative action, companies in tech could “reallocate valuable resources that have been put into NSA countermeasures.”

Ajay Patel, the CEO of HighQ, another company in the enterprise collaboration space, told TechCrunch that the failure of that Act implied that “U.S. policy on collecting individuals and corporations private information isn’t likely to change anytime soon.” He noted that United States-based companies will lose some business, as “corporations and governments will seek to contract with non-U.S. technology based companies that do not use U.S. domiciled data centers to escape the long reach of the Patriot Act.”

The Money Team

Not everyone is worried, however. I spoke to a number of venture capitalists this morning, and the tone of response was that the vote wouldn’t change much in the short term. Given that the failure of the FREEDOM Act is a continuance of the status quo, this is perhaps not too surprising.

But while the capital folks might not be looking to shake up their investment strategies, it doesn’t mean that they enjoy the government’s position, or actions. Jason Lemkin, a partner at Storm Ventures told TechCrunch that “the current environment is creating a ‘tax’ on many start-ups, especially [business-to-business] ones, where customers outside the U.S. are deeply concerned about trusting their data to U.S. web companies.”

That impact, he argued is “hard to see in the numbers,” given “the explosive growth of so many companies the past” two years. But that doesn’t mean that it doesn’t exist, certainly, or that it might not become an increasing point of friction in the future.

The Other Perspective

Not everyone is downcast, however. Several important voices in the privacy debate have been critical of the FREEDOM Act, and have thus been less perturbed over its defeat. Given that, there is perhaps some hope to the point that if the Act had passed, it could have blocked better reform in the next year, or Congress. Evan Greer and Emptywheel are the two must-reads here.

Technology companies with more than $1 trillion in market cap — far more — threw their weight behind a bill that many called too small, and it failed. When you additionally take into account the fact that the party that was most in opposition to the Act in the Senate will take up the majority in that chamber next year, the picture becomes a bit more dim.

Never say never, but for this year here’s where we ended. It’s been 531 days since the first Snowden revelation.