Economic cost of NSA spying versus the cost of China’s cybertheft

by Chris Zappone

wyden

In war, the saying goes, the first casualty is truth. And so it may be with the simmering digital competition between the US and China.

US Senator Ron Ryden is angry about the economic hit US tech companies are expected to take in response to revelations the NSA used US technology companies to access the data of other nation states.

An analyst at the Information Technology and Innovation Foundation, a Washington-based nonprofit group, says those technology companies like Yahoo and Microsoft may lose as much as $35 billion “in the next three years from foreign customers choosing not to buy their products because of concerns they cooperate with spy programs.”

Discussing the backlash toward American business overseas in the aftermath of the Snowden leaks, Wyden says:

“Nobody has looked at it from an economic standpoint, purely economics, dollars and cents…If a foreign enemy had inflicted the damage on the American economy — these cutting-edge, innovative companies — that the overreaching by the NSA surveillance brigade had done, people would be up in arms all over the United States.”

But isn’t that exactly what the White House is accusing China of doing? Cyber-theft of US technology and industrial companies costs the US economy from 0.1 per cent to 0.5 per cent of GDP by some estimates, or $25 billion to $100 billion per year, although the other economists put the losses lower.

Clearly, both can be true. There is a cost from the backlash against NSA-linked US technology overseas and there is a cost to the cyber-theft of US technology.

Senator Ron Wyden has been an excellent defender of American rights from well before the name Edward Snowden became a household name.

But it’s ironic that Wyden uses the economic argument to support his argument that US business must not cooperate with the US government when in fact, that just may be the new normal in the world as cyber-competition grows.