IBM Sued By Shareholders For Cooperating With The NSA... Decimating Sales In China

Legal Issues

from the economic-impact-of-nsa-spying dept

Mon, Dec 16th 2013 2:59pm — Mike Masnick

Ever since the Snowden leaks began, we've been talking about how the harm for the US economy -- and especially the tech industry -- was going to be massive (much more damaging than anything the NSA might possibly prevent with its spying). We've already seen Cisco attribute poor earnings to the Snowden revelations, and now a large IBM shareholder is suing IBM, claiming that its relationship with the NSA resulted in the company's disappointing third quarter results:

The plaintiff in the complaint, Louisiana Sheriffs' Pension & Relief Fund, said this threatened IBM hardware sales in China, particularly given a program known as Prism that let the NSA spy on that country through technology companies such as IBM.

The Baton Rouge pension fund said the revelation of Prism and related disclosures by former NSA contractor Edward Snowden caused Chinese businesses and China's government to abruptly cut ties with the world's largest technology services provider.

It said this led IBM on October 16 to post disappointing third-quarter results, including drops in China of 22 percent in sales and 40 percent in hardware sales.

As for the legal basis for the lawsuit, the pension fund is arguing that IBM should have revealed the potential of this kind of information coming public as a "risk factor." Chances are this lawsuit will go nowhere, but it does highlight, yet again, just how damaging the NSA's activities can be on the US. When compared to how little the NSA has actually accomplished, according to various folks in Congress who have been briefed, it certainly seems like the NSA is doing a lot more harm than good. Hopefully this leads other companies to be much stronger in pushing back on the NSA's demands, knowing that it can significantly harm their business prospects outside of the US.

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Filed Under: china, lawsuits, nsa, shareholders
Companies: ibm

26 Comments

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Anonymous Coward, 16 Dec 2013 @ 3:08pm

Shareholders: NSA committing economic espionage is OK. Good for profit. Wait, what, it hurts profit too? Sue the b**tards!
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Anonymous Coward, 16 Dec 2013 @ 3:09pm

Many of the contracts for services from US companies are long term. So the effect hitting those companies and corporations will be a long term drip effect. It is the sum total that will tell the tale. Already Finland is planning a new fiber optic cable that will bypass Sweden and go straight to Germany to avoid the NSA's spying habits in Sweden. That it was made a public announcement is a clue of what is coming. Increasingly the US will find it's backbone routers bypassed too, making it's spying that much harder.

People worldwide, not just in the US are unhappy with all these revaluations and it will result in changes not beneficial to the US.
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Anonymous Coward, 16 Dec 2013 @ 3:39pm

Decimating or Annihilating?
You *always* fuck that up, Mike.
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- Mike Masnick (profile), 16 Dec 2013 @ 4:47pm
  
  Re: Decimating or Annihilating?
  You *always* fuck that up, Mike.
  
  No, I like most of the world, recognize the modern meaning of the word, and don't stick lamely by the historical one.
  
  http://www.merriam-webster.com/dictionary/decimate
  http://www.thefreedictionary.com/decimating
  htt p://dictionary.reference.com/browse/decimate
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  - Anonymous Coward, 16 Dec 2013 @ 10:07pm
    
    Re: Re: Decimating or Annihilating?
    Dude, the deci is in the word.
    
    I'll just call this literally ironic and now we have the hat-trick of sadly misused words.
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    - Mike Masnick (profile), 16 Dec 2013 @ 11:30pm
      
      Re: Re: Re: Decimating or Annihilating?
      Things change. Try to keep up.
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Anonymous Coward, 16 Dec 2013 @ 3:41pm

Leave it to the spies to ruin the economy.
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out_of_the_blue, 16 Dec 2013 @ 4:01pm

The Federal Reserve undermining the country is far bigger.
Mike never mentions the Federal Reserve printing "money" ($85 bilion a month or more: no one's really sure as central bankers lie so much) and kiting stock market prices which will necessarily have BAD effects, as any "economist" would know. Mike doesn't use his alleged degree for anything complex or even useful: heck, can't even find a bio on the site where mentions the alleged degree!

But Mike does re-write the original story with the exact same take! Wow, it's like lighting a candle in the full noon sun! Yet another shining example of his easily imitatable style of keeping up with last week.
The real if not only purpose of central banks is to get gov'ts so deep into phony debt that it can be used as excuse to enslave the people.

12:01:40[n-2-4]
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- Bpat, 16 Dec 2013 @ 4:54pm
  
  Re: The Federal Reserve undermining the country is far bigger.
  While printing money is something dumb. It is off topic.
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  - Anonymous Coward, 17 Dec 2013 @ 9:25am
    
    Re: Re: The Federal Reserve undermining the country is far bigger.
    It's a defense mechanism. He pulls it it in cars like this one where corporation working the way it legally does might lead to a net positive for everyone.
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btr1701 (profile), 16 Dec 2013 @ 4:09pm

Sales Drop
> including drops in China of 22% in sales
> and 40% in hardware sales.

Wow, that's a lot more than just a decimation in sales!
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Anonymous Coward, 16 Dec 2013 @ 5:15pm

You mean there's a world outside the US? ;P

Many American's don't seem to understand that there's a world outside their borders (unless there's a war to keep them entertained... ). Will this begin to wake them up?
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- Anonymous Coward, 16 Dec 2013 @ 5:36pm
  
  Re:
  NO!
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- out_of_the_blue, 16 Dec 2013 @ 7:17pm
  
  what is 'world'
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Ac, 16 Dec 2013 @ 6:16pm

Bye Bye NSA
Time for your government to get rid of the NSA, they are causing your country nothing but trouble.
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- Anonymous Coward, 16 Dec 2013 @ 6:52pm
  
  Re: Bye Bye NSA
  Sorry but America is fresh out of spines... can we borrow yours?
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Alana (profile), 16 Dec 2013 @ 11:53pm

So, another lawsuit trying to argue "lost profits"?
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- Anonymous Coward, 17 Dec 2013 @ 3:41am
  
  Re:
  Maybe IBM shareholders can sue US government for lost (future) profits under one of the ISDS clauses in any trade agreement...
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- Anonymous Coward, 17 Dec 2013 @ 3:43am
  
  Re:
  Or even better...let IBM do the sueing.
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- Anonymous Coward, 17 Dec 2013 @ 9:23am
  
  Re:
  I assume by 'another' you're referencing corporate sovereignty but this is nothing like that. It seems like exactly the sort of thing shareholders should be able to sure over.
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Ninja (profile), 17 Dec 2013 @ 1:08am

Wait till it snowballs. I wonder if the financial costs are worth keeping up with all the bs. I'd argue that upholding the Constitution is cheaper atm. Of course some people won't be earning much money if the Constitution is upheld.
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Anonymous Coward, 17 Dec 2013 @ 4:47am

the NSA, government nor other security agencies gave a toss what was happening before they got exposed, they give even less now. all they are doing is using Snowden as a scapegoat, taking none of the blame themselves. the USA economy is in worse shape than most other countries which were hit by the financial crisis. using any excuse they can think of, including doing totally one-sided 'deals' with other countries seems to be the only way they can bail themselves out. sooner or later these other countries are, hopefully, going to tell the USA to take a hike!
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quawonk, 17 Dec 2013 @ 4:51am

Good. I think a couple of these big tech companies should go under as a warning to the others. You cooperate with authoritarian governments to fuck the people, the people will fuck you back! Choose the right side next time.
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btrussell (profile), 17 Dec 2013 @ 9:28am

"...according to various folks in Congress who have been briefed,..."

Pretty much guaranteed that de-briefing was tried first.
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Jay Are, 17 Dec 2013 @ 10:32am

okay, so if we know how the NSA thinks by now, then it should come as zero surprise when they respond to this calamity with something like:

"This is even more reason to blame Snowden. Look what he's done, if we had been allowed just keep doing what we were doing clandestinely, all would be right with the world."

Now we can say that we predicted it.
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gorehound (profile), 17 Dec 2013 @ 2:01pm

Louisiana Sheriffs' Pension & Relief Fund !!!

you got to laugh at this one bigtime ! Law Enforcement who would be the ones to break down your door are complaining but before their money felt threatened they said nothing at all.
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