Two years after Snowden leaks, US tech firms still feel the backlash

Several foreign governments continue to push policies requiring that data generated in their countries be stored within their borders, said Yael Weinman, vice president of global privacy policy at the Information Technology Industry Council.

"We've all heard the metaphor -- data is the new oil," Weinman said at the Techonomy Policy conference in Washington, D.C., Tuesday. "Barriers to cross-border data-flows make doing business today ... much more difficult."

The first surveillance leaks from Snowden, a former contractor with the U.S. National Security Agency, came out two years ago, and the impact of the surveillance programs was part of the backdrop for several debates at the conference.

The continued pressure in some countries for data localization laws will hurt not only U.S. tech vendors, but vendors from other countries as well, because they will have to comply with the same regulations, Weinman said. A Russian data localization law is scheduled to go into effect in September, but companies are still waiting for regulatory guidance from the government there, she said.

Also Tuesday, tech-focused think tank the Information Technology and Innovation Foundation updated its estimates on the cost of U.S. surveillance programs to the country's businesses.

It's earlier estimate that backlash from the programs would cost U.S. tech companies between US $21.5 billion and $35 billion appears to be low, the think tank said in a new report.

"It has become clear that the U.S. tech economy as a whole, not just the cloud computing sector has under-performed as a result of the Snowden revelations," it said. "Therefore, the economic impact of U.S. surveillance practices will likely far exceed ITIF's initial $35 billion estimate."

In addition to the upcoming Russian regulation, France and Germany are creating their own dedicated national networks, and other countries, including China, Australia and India, have passed data localization laws, the ITIF report said.

Asked during the conference about ITIF's new estimates, Erich Andersen, deputy general counsel at Microsoft, questioned them. Even before Snowden's leaks, many countries had begun to press for new laws dealing with data security and privacy, and the leaks "galvanized" the debate, he said.

Panel moderator Robert Boorstin, senior vice president at Albright Stonebridge Group, suggested that it's difficult for governments to pass laws that keep up with the constantly changing technology industry.

But Andrea Glorioso, counselor for the digital economy for the European Union's delegation to the U.S., defended the EU's efforts to protect privacy and pass other consumer-protection regulations.

Some tech companies argue against regulation, saying they want "frictionless innovation," he said. "When you're in a car, friction is a very good thing, because it's what allows you to brake," Glorioso said. "A world without friction is a world in which you just go ahead, and you cannot stop, even when you want to."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.