Did Obama Just Destroy the U.S. Internet Industry?

Linkedin – by David Kirkpatrick

News about the National Security Agency’s PRISM program and its privileged access to internal user data at 9 U.S. Internet companies has unleashed a torrent of justified anger and hand-wringing. But the worries do not go far enough. Almost everybody is still looking at this through a narrow domestic lens. Our values and goals may be more challenged than you think.  

The implications are not just about what happens to the privacy of Americans and to the future of American political due process. There are potentially vast negative global consequences. Giving the U.S. government special rights to data from U.S. companies sets a terrible precedent, and is hugely short-sighted.

The Internet is intrinsically a global business and social landscape. Yet up until now American companies have overwhelmingly dominated it. They have done so with astonishing innovation and technical achievement. Apple, Facebook, Google, Microsoft, Skype, Yahoo, and YouTube — all companies said to be participating in PRISM — are the world’s most important digital platforms for communications and information. The economic and political benefits both to the U.S. and to the world of this domination are obvious. Not only are they by far the world’s most valuable set of businesses for investors. They have created extraordinary value for their users by fostering an openness and landscape for free expression and dialogue that is unprecedented.

How much of this astonishing success are we willing to sacrifice on the altar of domestic security?

The citizens of the world can look up anything on Google and can communicate anything to their friends on YouTube and Facebook, regardless of its political sensitivity. The result has included Arab Spring, the Iranian Green Revolution, the popular protests against President Putin in Russia, and recently the extraordinary outpouring of citizen protest against Turkey’s Prime Minister Erdogan.

The largest group of people likely to care about the NSA’s intrusions are non-American customers of U.S. Internet companies. Facebook alone has more than one billion of them. Google completely dominates search in most of the world, with its market share across Europe significantly exceeding 90%. And its YouTube distributes citizen videos worldwide. It will be hard now to ever again assure users of these services that their behavior or opinions can be protected from the U.S. government. Some reports on the NSA surveillance suggest that the court orders given these companies can be as broad as forcing them to turn over all traffic to and from a specific country.

As the author of The Facebook Effect [http://www.amazon.com/The-Facebook-Effect-Company-Connecting/dp/1439102120] I am especially well-acquainted with that company’s strategy and achievements. More than two-thirds of Brazil’s 90 million Internet users are regular users of Facebook. It is similarly among the most important platforms for Internet communication in Indonesia, Nigeria, South Africa, Turkey, and most other countries large and small. Google’s Gmail, Microsoft’s Hotmail, Skype, Yahoo and Apple’s services are also hugely important around the world.

Because Facebook gives users a broadcast tool to send messages to their friends, it is routinely the tool ordinary people use when they are dissatisfied or seek to make a political statement. This is true in almost every country on earth.

It’s quite possible that Obama has undermined the effectiveness and attractiveness for political speech and protest of what have been the most potent communications tools for activism in history. Political and commercial opponents of the U.S. in every country as well as governments themselves will likely alert citizens to the potential that U.S. companies could pass their info back to US authorities. This will seriously conflict with these companies’ aim to maintain their platforms as neutral global environments. It could dramatically slow their global growth.

While these services have not seemed very American, of course they are. In many countries Facebook is not perceived to be an American service at all, since it operates completely in the local language. Now being American becomes potentially a concrete commercial and political disadvantage. To be an American service is now to be a tool for U.S. surveillance.

Do we really want to impair such powerful tools for spreading dialogue, political discourse, and U.S. values? Is it worthwhile to impair the extraordinary financial and commercial success of these great flagships for the American economy? Does Obama want Facebook et al just to be seen as tools of American power? That is certainly not the way the average user in Bolivia sees it. They see it as a tool of their own personal power, and they don’t want governments interfering with that.

The global influence and long-term commercial success of U.S. Internet companies may depend on how Obama handles this from now on. Unfortunately to undo the damage he has caused he may have to completely disavow the program, which seems highly unlikely.

Don’t believe there are not alternatives to the U.S. Net collossi. Companies worldwide are already relentlessly working on alternatives. The second largest search service worldwide is China’s Baidu, with more than 8% of searches globally at the end of last year according to ComScore. Russia’s Yandex is at close to 3%, more than Microsoft’s own search product. In social networking, China’s Tencent has had a stunning recent success with its WeChat product, which by some counts has over 450 million users worldwide, including many tens of millions outside China. Most major Chinese Internet companies have global ambitions.

It’s easy to see why leaders in Washington presume Chinese networking equipment company Huawei must be spying on us through its products. Apparently in their eyes it makes perfect sense to take advantage of any domestic asset to achieve geopolitical aims. Of course, they think, Huawei and the Chinese government would be doing that. We do. Obama and the NSA now seem determined to give Facebook, Google, and the other American Internet companies the same reputation internationally that Huawei has here. Huawei, incidentally, recently decided to forsake the giant U.S. market because of the condemnations of politicians, despite little evidence of actual espionage. This may foreshadow the experience of American companies elsewhere.

Facebook CEO Mark Zuckerberg has never wavered in his ambition to make Facebook a tool for literally every citizen on the planet. Aside from China, where his service is barred by the government, he has until now been making steady progress. His arguments that governments there and elsewhere ought to allow Facebook just became a lot less persuasive.

(For more from David Kirkpatrick, follow him at Techonomy.com and subscribe to the newsletter there.)

http://www.linkedin.com/today/post/article/20130609225334-16549-did-obama-just-destroy-the-u-s-internet-industry