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U.S. tech business losses foreseen if NSA spying isn't curbed

U.S. technology companies are in danger of losing more business to foreign competitors if the National Security Agency's power to spy on customers isn't curbed, researchers with the New America Foundation said in a report Tuesday.

The report, by the foundation's Open Technology Institute, called for prohibiting the NSA from collecting data in bulk, while letting companies report more details about what information they give the government. Senate legislation introduced Tuesday would fulfill some recommendations by the institute, a Washington-based advocacy group that has been critical of NSA programs.

Citing concerns from top executives of Microsoft Corp., Cisco Systems Inc. and other companies, the report made a case that NSA spying could damage the $150 billion industry for cloud computing services. Those services are expanding rapidly as businesses move software and data to remote servers.

Microsoft is hearing from customers "that they care more than ever about where their content is stored and how it is used and secured," said John Frank, deputy general counsel for the Redmond, Washington-based software maker.

The company hasn't seen a significant business impact yet, Jack Evans, a Microsoft spokesman, said in an email.

Microsoft joined with Yahoo! Inc., Google Inc. and other companies in a coalition calling for broad restrictions on NSA spying.

The Senate bill "will help restore trust in the Internet by ending the government's bulk Internet metadata collection and increasing transparency around U.S. surveillance practices," the coalition said in a statement yesterday.

ServInt Corp., a Reston, Virginia-based company that provides website hosting services, has had a 30 percent decline in foreign customers since the NSA leaks began in June 2013, said Christian Dawson, its chief operating officer.

"It ends up being death by a thousand paper cuts," Dawson said.

Confidence in technology companies began to be tested a year ago when former NSA contractor Edward Snowden leaked documents that revealed a program called Prism, under which the U.S. compels companies through court orders to turn over data about their users.

International cloud providers are using the NSA revelations as a marketing tool, said Dawson.

U.S. technology companies may lose as much as $35 billion in the next three years from foreign customers choosing not to buy their products over concern they cooperate with spy programs, according to an earlier study by the Washington-based Information Technology and Innovation Foundation.

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