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The Patriot Act Is Cannibalizing America’s Economic Edge

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Editor’s Note: Amit Patel is the chief financial officer of HighQ.

You would think that when tech companies, the ACLU and the NRA unite for the same cause, the federal government would listen. That was not the case in this year’s USA FREEDOM Act vote where the Senate voted against reforms that would stop the NSA from collecting phone metadata.

The majority opinion prioritized protectionism—the idea that phone-record collection could stop threats like ISIS from endangering U.S. citizens—over economic growth. Such myopic attachment to the tools of defense, without consideration of their big-picture relevance, puts the $5.7 trillion U.S. IT industry in danger of losing its competitive advantage.

Risking the second-largest industry in the country will pose serious long-term consequences—not only to the economy, but, by association—to national security itself.

It’s time for legislators to ask themselves which laws matter most.

Running From The U.S. Cloud

With more than one exabyte of data now in the cloud worldwide, U.S. tech companies have a vested interest in being seen as safe places to store data. The SaaS model depends on it: companies charge by user or by amount of data stored. While players from Microsoft to Box built a strong initial user base with their cloud innovations, their potential for international growth is being curbed by international distrust. Why would you host your sensitive data under the auspices of a country with intact spying practices? Countries including the United Arab Emirates, Australia, Brazil and soon Germany have, to various extents, legislation preventing the hosting of data in countries where it could be breached—i.e. the United States.

The widespread perception of U.S. companies elbowing out local competition, practicing what one German politician called “brutal information capitalism,” doesn’t help the American cause. If aversive legislation isn’t laid to rest within the next couple of years, U.S. tech companies will lose significant ground.

Where Do You Host?

When we talk to prospects here in the U.K., the discussion of where data is hosted is the first thing that comes up. Companies who can ensure jittery enterprise and government prospects that their data won’t be hosted in the U.S. are winning business. Hungover from the initial wave of cloud hype, enterprises are now most interested in whether providers can offer on-premise storage and keep data out of the States. In 2008, their hesitations had to do with hackers and security. Today, they’re most concerned about the NSA.

The NSA concern is relevant to more than cloud storage or collaboration. The cloud enables parallel computing that is essential for the big data processing, machine learning and smart algorithms that enable ‘data-driven’ business.

Indeed, the next wave of cloud innovation has to do with data-driven workflows and personal productivity. Consider Microsoft Delve, a brilliant new Office 365 tool that mines your Microsoft data, such as emails, social networks and corporate documents, to recommend content to you and make your workday more efficient. It can only process data in the cloud—the U.S. cloud that is again subject to the Patriot Act.

Even if you’re not explicitly storing data in the cloud, you still need it for advanced processing. Therein lies the problem. How can U.S. companies proliferate their exciting new innovations globally if the clouds they’re on can’t be trusted?

The Sales Pipeline Is Drying Up

U.S. tech companies understandably want to prevent NSA practices from continuing to whittle away their global competitive advantage. It’s not too late yet.

Prospects are shying away from American companies, but the country still rules the cloud for now. That won’t always be the case. When you consider that data is an asset, and the more data a company hosts, the more money it makes, there are tens of billions of dollars in losses looming over providers in the States. IDC predicts that “the digital universe will double every two years” until 2020. Cloud-based Internet service, apps and enterprise IT productivity are the “key applications” fomenting this economic impact.

What if only a fraction of those services existed in the United States in 10 years? What if U.S. companies continue to be prevented by legislation from capturing and innovating on rapidly growing data? To say that the country’s innovation- and information-driven economy will be dented is putting it mildly.

The Problem And Solution Is In Politics

The only way to re-establish global trust is for the economic argument to gain political capital within the States. No amount of tech lobbying will change the way that the U.S. intelligence community perceives threats. Rather, the case must be made from within the government that economic strength is at stake, and will feasibly be a bigger threat to national security than blanket phone monitoring (which, incidentally, did not prevent the Boston bombings from happening). From ISIL to Al Qaeda, intelligence players will always have a reason to defend their practices. It is up to pro-economy players to convince them to implement that monitoring selectively, or under different terms. Otherwise the market decline will continue—and put the U.S. economy on severely uncomfortable footing.