Leading VC: NSA's Activities Are 'Corroding Silicon Valley'

from the a-question-of-trust dept

Techdirt has already run a couple of stories about the longer-term damage the recently-revealed activities of the NSA are likely to have on the US computer industry. Bloomberg is reporting on how the growing distrust of US services is taking a new form:

Some companies are apparently so concerned about the NSA snooping on their data that they're requiring -- in writing -- that their technology suppliers store their data outside the U.S.

In Canada, a pharmaceutical company and government agency have now both added language to that effect to their contracts with suppliers, as did a grocery chain in the U.K., according to J.J. Thompson, chief executive officer of Rook Consulting, an Indianapolis, Indiana-based security-consulting firm. He declined to name the companies, which are using Rook to manage the segmentation and keep the data out of the U.S.
Significantly, that was before Der Spiegel detailed the incredible range of backdoors and vulnerabilities that the NSA is able to exploit in key software and hardware. As well as being terrible news for our privacy and freedom, this is likely to have huge knock-on consequences for the US computer and communications industries. Even though many of the companies named in the Der Spiegel piece have been quick to deny that they had any knowledge of the backdoors, their products are now inevitably tainted by the suspicion that they are compromised, and therefore cannot be trusted.

Some worry that the damage runs even deeper than a few tarnished brands. For example, the well-respected investor Michael Dearing has written an excellent post expressing his fears that:

the NSA's version of patriotism is corroding Silicon Valley. Integrity of our products, creative freedom of talented people, and trust with our users are the casualties. The dolphin in the tuna net is us -- our industry, our work, and the social fabric of our community.
As he explains:
Billions of people let Silicon Valley into their daily lives and they hug it close. They trust our products to find information, to get work done, to talk to each other, to buy and sell stuff, and to have fun. That trust is a decades-old endowment built up by inventor-founders from Robert Noyce and Gordon Moore through to the present day. The magic of compound growth works in our favor when trust is accumulating. But now we are making trust withdrawals every day as people around the world learn how the NSA has woven surveillance, search, and seizure into and around our products. This is the painful flip side of compound growth: the trust withdrawals compound too.

Silicon Valley's promise to people is simple and compelling: "We'll build a bunch of things. Try our work; keep what you love, dump what you don't love. We'll learn from it and build on the stuff that you like best." Sadly, the NSA undermines the promise at its foundation.
What that means is that the true cost of the NSA's reckless and illegal attempts to "collect it all" and "get the ungettable" may turn out to be not "just" tens or even hundreds of billions of dollars in lost business, but the far more serious loss of trust in Silicon Valley itself.

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Filed Under: economic damage, michael dearing, nsa, silicon valley, surveillance, tech industry


Reader Comments

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  • icon
    silverscarcat (profile), 6 Jan 2014 @ 6:18am

    Obligatory

    Thanks Obama/Bush/Clinton/NSA!

    link to this | view in chronology ]

    • identicon
      Anonymous Coward, 6 Jan 2014 @ 8:06am

      Re: Obligatory

      send your thanks rather to their primary campaign "donators". mostly the same companies on all of their contributor lists.

      They are all corrupt as shit, bought and paid for, they only do as they are told by their owners.

      link to this | view in chronology ]

      • identicon
        Anonymous Coward, 6 Jan 2014 @ 8:45am

        Re: Re: Obligatory

        Taking it out on (most) of the donors isn't really the answer either.

        If we have presidents from both parties (Bush, Obama, and maybe even earlier presidents) doing the exact same thing, then what option do us against the NSA's illegal spying have in a 2 party system?

        This is why lately I've fallen in love with parliamentary systems and wish the US would ditch congress and switch to a parliament, and also elect presidents like nations with a parliament do (with runoff elections).

        link to this | view in chronology ]

        • identicon
          Anonymous Coward, 6 Jan 2014 @ 9:07am

          Re: Re: Re: Obligatory

          The problem is not solved by changing the details of the electoral system. It requires changing the people that stand for election, probably by dismantling the party system.

          link to this | view in chronology ]

          • identicon
            Anonymous Anonymous Coward, 6 Jan 2014 @ 11:36am

            Re: Re: Re: Re: Obligatory

            Here here! Along with taking the money out of politics (nobody can buy a political ad except the electorate sanctioned candidates with government provided credits that the government can negotiate with media) this will go a long way to cleaning up the political system in the US.

            link to this | view in chronology ]

  • icon
    scotts13 (profile), 6 Jan 2014 @ 8:08am

    I'm sure there are XXXX people (how many workers does the NSA employ?) out there gritting their teeth, as we've got it all wrong: It's not the spying, it's that people know about it. Edward Snowden is single-handedly eroding Silicon Valley!

    link to this | view in chronology ]

  • icon
    TasMot (profile), 6 Jan 2014 @ 8:08am

    But, but, but, you have NOTHING TO FEAR if you are not doing anything wrong...... They told us so.

    link to this | view in chronology ]

  • identicon
    S. T. Stone, 6 Jan 2014 @ 8:09am

    Well, it'll all be worth it to the MPAA if this ends up killing Netflix — and really, isn't that the important thing to think about here?

    link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Jan 2014 @ 8:18am

    What if those Silicon Valley companies stopped selling their products to the NSA? I'm betting all the orders from the NSA don't make up for lost revenue from elsewhere...

    link to this | view in chronology ]

    • icon
      DannyB (profile), 6 Jan 2014 @ 8:54am

      Re:

      The problem with that is, how are you to know that you are really selling it to the NSA?

      How many fake names, companies, small offices, and shell companies do you think the NSA or other spy agencies have?

      link to this | view in chronology ]

      • icon
        Charles (profile), 6 Jan 2014 @ 10:22am

        Re: Re:

        Your reply reminded me of the time I hired a handyman to look in my attic at an electric rooftop vent. I went with him to look. He told me the manufacturer was a front for the CIA. He was ex-military.

        I have know idea if what he said was true, but he said it.

        Cheers.

        link to this | view in chronology ]

      • identicon
        Anonymous Coward, 6 Jan 2014 @ 11:02am

        Re: Re:

        Probably more a question of subcontractors of subcontractors of contractors of NSA doing the trading.

        It is very hard to find a company 3 steps out that doesn't have an indirect connection to NSA, so fake positives would make finding out if you are trading with NSA completely impossible...

        It is thick irony for NSAs metadata minimisation system!

        link to this | view in chronology ]

  • identicon
    me@me.net, 6 Jan 2014 @ 8:22am

    Snowdens the traitor.....

    yet the NSA is damaging the economy, hmmmmmm

    link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Jan 2014 @ 8:43am

    Yes, clean up the NSA's "digital detritus". Of course, that does nothing about what almost certainly has been inserted by the intelligence services of every other developed nation.

    link to this | view in chronology ]

  • identicon
    UnOranged, 6 Jan 2014 @ 8:46am

    You would think Michael Dearing's post/site would at least offer a better https option for those that want it. Here is what happens in FF when using https:

    www.harrisonmetal.com uses an invalid security certificate. The certificate is only valid for the following names: *.bluehost.com , bluehost.com (Error code: ssl_error_bad_cert_domain)

    Hummm.

    link to this | view in chronology ]

  • icon
    DannyB (profile), 6 Jan 2014 @ 8:56am

    Cost benefit analysis

    Yes, the NSA may be destroying the economy, but the NSA's budget (not even counting other agencies') is far higher than the damage caused by 9/11. So there.

    link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Jan 2014 @ 9:42am

    I don't like logging into Linkedin or Gmail anymore. I'm afraid I might be Quantum inserted, and I don't like the sound of that.

    I feel like my cellphone's main function is to provide someone with a log of everyone I know, and everywhere I go. I'm concerned the microphone on my phone, or anyone's phone, might be turned on and recording the conversations of everyone in the room.

    link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Jan 2014 @ 10:31am

    "The dolphin in the tuna net is us"
    And the terrorists are minnows...

    link to this | view in chronology ]

  • icon
    Krish (profile), 6 Jan 2014 @ 12:24pm

    Let's not pretend (like Michael Dearing seems to be doing) that everything was hunky-dory in the "social fabric" of Silicon Valley before the NSA got involved.

    link to this | view in chronology ]

    • identicon
      Anonymous Coward, 6 Jan 2014 @ 2:41pm

      Re:

      It is a good point. Security has always been a joke in the most used software.

      Maybe we should thank NSA for, maybe inadvertently, exposing the all but safe systems in current generation software?

      As long as they operate under the same conditions as hackers, I see no problem with their methods (You as a computer user should have used better software and the software developer should have fixed vulnerabilities faster etc. If you can keep out hackers, you can keep out NSA and vice versa).

      The problems arise as soon as they actively promote extra holes or vulnerabilities, abuse more or less purposeful legal holes to minimize their minimization procedures or use companies as spies for gathering intel in friendly cooperating countries. Those abuses are the real problem.

      link to this | view in chronology ]

      • icon
        John Fenderson (profile), 6 Jan 2014 @ 2:43pm

        Re: Re:

        As long as they operate under the same conditions as hackers, I see no problem with their methods


        I totally agree, as one of those conditions is "go to jail when you get caught".

        link to this | view in chronology ]

  • identicon
    Aerilus, 6 Jan 2014 @ 2:16pm

    These people realize the premise of the internet is that everything is connected right? it doesn't matter where the data is as long as its plugged into the internet it is reachable by the nsa.

    link to this | view in chronology ]

  • icon
    Feldie47 (profile), 6 Jan 2014 @ 2:50pm

    Think this is a problem? What if they finally manage to break RSA encryption? Who will bank online, buy online, or trade stocks online then? The whole internet economy (read 'BIG')is based on the belief that RSA is currently unbreakable.

    link to this | view in chronology ]

    • icon
      John Fenderson (profile), 6 Jan 2014 @ 3:16pm

      Re:

      Who will bank online, buy online, or trade stocks online then?


      Most people will. Never underestimate the power of denial.

      The real issue is what businesses would be willing to take the risk of offering such services?

      link to this | view in chronology ]

  • icon
    Feldie47 (profile), 6 Jan 2014 @ 5:12pm

    At that point we would have an actual broken internet. Almost inconceivable, yet truly worrisome.

    link to this | view in chronology ]

  • icon
    amjugle2014 (profile), 6 Jan 2014 @ 7:05pm

    how many workers does the NSA employ

    link to this | view in chronology ]

  • icon
    btr1701 (profile), 7 Jan 2014 @ 2:52pm

    Backwards?

    Not sure I get why these companies and government think that putting a requirement for data storage outside the US is any kind of solution.

    The only restriction on collection that the NSA has even acknowledged to exist-- in theory, if not in practice-- is that collection/spying on purely domestic data exchanges is not allowed. If it's on foreign soil or in transit outside the borders of the US, it's open season as far as the NSA is concerned.

    Requiring data to be stored where the NSA feels it has no restrictions whatsoever as opposed to the one place it at least claims it's not allowed to spy seems kinda backward to me.

    link to this | view in chronology ]


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