US-Based Cloud Hosting Companies to Lose Billions

US-Based Cloud Hosting Companies to Lose BillionsGovernment internet surveillance in the United States is troublesome. What might be even more troublesome is economic impact that recent NSA news will have on the cloud computing industry in the USA. Some numbers coming from the ‘Information Technology and Innovation Foundation' point to billions in losses thanks to NSA surveillance.

A Huge Cloud Computing Revenue Loss

The US Government can tap into any Internet activity that takes place through US-based cloud providers. This information alone is enough for companies outside of the US to cancel contracts with US-based cloud providers, and that's exactly what's happening.

Major companies like Microsoft, Amazon, and Google are all attempting to maintain foreign customers that are now worried about the reach of the US Government. The NSA and other US Law Enforcement agencies are using The Patriot Act and the Foreign Intelligence Surveillance Act to tap into any Internet activity. According to the Information Technology and Innovation Foundation, the NSA Prism program will

“…probably have an immediate and lasting impact on the competitiveness of the US cloud computing industry if foreign customers decide the risks of storing data with a US company outweigh the benefits.”

That means a massive loss of revenue for major US-based cloud hosting companies. Prior to the NSA news, cloud companies in the United States cornered the cloud hosting market, but that dynamic is about to change.

New Cloud Hosting Openings

Now that businesses don't trust US-based cloud hosting companies thanks to government surveillance, cloud hosting companies in other countries are being sought. European and Asian cloud hosting companies are setting up shop, and these businesses are expected to take over a good chunk of the cloud market. Experts estimate that 10-20% of the market currently held by US-based cloud hosting companies will soon dissipate.

Just to prove those estimates to be true, a Switzerland-based company, Artmotion, reported a major increase in revenue one month after the NSA story broke. Already, companies are looking outside of the United States for cloud hosting options that don't come with a side of government spying. But, how realistic is this, really?

US-Based Cloud Hosting Companies to Lose Billions: What You Don't Know…

Until news of the NSA's Prism program broke, companies doing business in the USA had no idea that the government was tapping into data. Is it really to unrealistic to think that other governments across the world are spying on Internet data as well? It's quite possible that we just haven't heard of those foreign government programs yet, or that no whistle-blowers dare stand up.

While it may seem safe to do business with cloud hosting companies that are not US-based, this could be nothing more than an illusion. The US Government could help major cloud hosting companies like Amazon from losing revenue by letting the world know what companies will and won't be audited, but that's not likely to happen anytime soon.

In the meantime, major cloud hosting companies that are on American soil can expect some tough competition, and a decent revenue loss in the coming months. What are you thoughts? Speak up here or comment wherever you are viewing this article.

One thought on “Projection: US-Based Cloud Hosting Companies to Lose Billions

  1. Tech companies have notified Congress for reform to section 215 of USA patriot act. Letter is undersigned by group members with Google, Apple, Microsoft, and Facebook, as well as a range of privacy and rights advocates. This act will expire on June 1. Group wants to reform the act which will protect both national security and individual privacy. They said that bill must contain transparency and accountability mechanisms for both government and company. They wants government surveillance practices should be limited, more transparent and accountable.

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