Report: Prism Could Cost U.S. Cloud Computing Companies Up To $35 Billion

That's according to a new report from the Information Technology and Innovation Foundation issued today.

Yuri Arcurs / Shutterstock.com
Yuri Arcurs / Shutterstock.com
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The recent revelations about the National Security Agency’s extensive data collection program known as Prism could cost U.S. cloud computing companies between $25 and $35 billion over the next three years.

That’s according to a new report from the Information Technology and Innovation Foundation issued today.

Foreign companies could decide that the risks of storing data with U.S. companies could outweigh the benefits, putting the domestic industry at risk of losing its leadership standing in the industry.

The U.S. is by far the leader in cloud computing. According to the ITIF, a survey published this year by the Cloud World Global Insights found that 71 percent of respondents ranked the U.S. as the leader in cloud computing, and nine out of 10 respondents named cloud computing as key to their country’s economic competitiveness.

Other countries are playing significant catch-up given the stakes. These latest revelations could damage the competitive standing of U.S. firms and even allow an opening for other countries to gain a foothold in the market, the ITIF states.

The passage of the USA PATRIOT ACT already stoked the concerns of foreign companies. And the European Union has talked openly about their intentions to make a play in this industry, going so far as to create their own standard for cloud computing as a way to bypass American servers whose data could be compromised by the U.S. government.

Significant revenue is at stake. The global revenue estimates for cloud computing stands at becoming a $207 billion industry by 2016; Global spending on cloud computing is expected to grow by as much as 100 percent between 2012 and 2016, whereas the global IT market will grow by 3 percent.

The ITIF makes two primary recommendations for the U.S. cloud computing industry: Continue to de-classify information about the Prism program so that companies are clear about what information the government is trying to access; and the U.S. should create international transparency guidelines so that U.S.-based and non-U.S. based companies are releasing to domestic and foreign governments.

Do you think Prism could damage the competitiveness of U.S. firms?