In a recent letter to US President Barack Obama, Cisco Systems chief executive John Chambers requested that the National Security Agency (NSA) stop intercepting the company’s products to install devices for spying on foreign customers. This is the latest in a series of revelations of how US information technology (IT) firms have been enlisted, knowingly or otherwise, in the “War on Terror” — revelations that are threatening the US IT sector’s global dominance.
Since the scale of the NSA’s Internet eavesdropping came to light, governments and large companies outside of the US are questioning the capacity of US IT firms to guarantee their products’ security. The US’ central position in the world’s information economy, which seemed secure just two years ago, is now under threat — which should raise serious concerns for every entrepreneur, executive, employee and venture capitalist in US industry.
There is more than a little irony in this turn of events. The US’ global IT leadership, after all, can be traced directly to its national security apparatus. Following World War II, and especially after the Soviet Union’s launch of the Sputnik satellite in 1957, the US made massive investments in electrical engineering and, later, computer science.
Cost-plus contracting allowed what were then small technology firms such as Hewlett-Packard and Fairchild Semiconductor to charge the US Department of Defense for the price of research and development that none could pay on its own. This enabled the firms to create technology products that eventually created entire new markets and economic sectors.
The US government also made massive, continuous investments in university-based research, boosting the country’s supply of engineers and scientists. These highly trained people created countless new technologies, including computer graphics, semiconductors, networking equipment, groundbreaking software and the Internet itself.
The US government remains a critical supporter of scientific and engineering research to this day. In 2012, the defense department invested US$1.3 billion in electrical engineering and computer science alone, while the US’ National Science Foundation invested another US$900 million. The US military has provided a particularly large amount of funding to university researchers in computer security and encryption.
With so many of the US’ top entrepreneurs, executives and researchers having received support from the defense department, it is no surprise that Google’s founders and executives, for example, have exchanged friendly e-mails with NSA officials. Professional and personal connections made recruiting corporate leaders to the antiterror war relatively easy.
Few, it seems, considered the potential consequences of their participation.
The resulting relationship between Silicon Valley and Washington is remarkable for its longevity and depth.
For example, database software giant Oracle has been rumored to maintain close ties with the CIA. Similarly, the partly CIA-funded mapping firm Keyhole Inc was among the acquisitions that produced Google Maps. The CIA’s Silicon Valley venture capital operation, In-Q-Tel, is meant to ensure that the interests of the US’ national security apparatus are implanted in technology startups.
The consequence of these ties is that the US’ IT industry has become an agent of the national security state. This undermines consumers’ faith in firms’ willingness or ability to guarantee users’ privacy, while making it difficult for companies to claim the moral high ground when, say, China’s government restricts their domestic operations.
Given that the US’ IT sector is so far ahead globally, the impact of these perceptions will remain largely localized in the short term. However, as European and Asian IT firms catch up, the US’ advantage will gradually deteriorate.
Foreign customers’ search for alternatives is under way in both existing and emerging industries.
For example, Oracle is experiencing a slowdown in the Asia-Pacific region, where its main competitor, German company SAP, is thriving. The competition that Cisco faces from Huawei of China is likely what drove Chambers’ recent appeal to Obama.
In one of the newest IT fields, cloud computing, where US firms are pioneers, firms and entrepreneurs in many countries are exploring the creation of non-US alternatives.
Preventing this self-inflicted threat to the US IT industry’s preeminence will require strong action by the country’s political leaders, who are responsible for this dangerous trend.
First and foremost, Obama, with support from Congress, must demand the release of all information regarding interactions between national security agencies and US IT firms.
Furthermore, businesses and privacy advocates must be encouraged to use the court system to challenge government requests to install spy software in commercial products. If US government agents break privacy laws, at home or abroad, the US Department of Justice should prosecute them to the full extent of the law.
Given how extensively the NSA’s activities have degraded global trust in the US’ government and IT sector, nothing less than complete transparency is required. It is time for US leaders to place the well-being of the high-tech wealth machine — which cost US taxpayers tens of billions of dollars to build — above the illusory notion that the only route to safety is unfettered access to the world’s digital traffic.
Martin Kenney is a professor at the University of California, Davis, and a senior project director at the Berkeley Roundtable on the International Economy at the University of California, Berkeley.
Copyright: Project Syndicate
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