The NSA and the cloud – dispatches from the front line


The Germans are still up in arms, Obama’s attempting some reforms, Ray Wang’s making recommendations and Larry Ellison’s airing his views – another week in the NSA scandal.

Not happy with developments

The NSA PRISM scandal rumbles on with the prospect of damage to the US cloud industry still top of the agenda as the German government called this week for greater support to create favorable European alternatives to US providers.

With federal elections less than six weeks away and an eye on the ballot box, the German economy minister Philipp Roesler called for more secure cloud computing and better links between tech start-ups and established business.

He declared:

“We need a strong European information technology industry which can offer alternatives.”

That’s hardly revolutionary stuff – indeed it’s just a basic menu of things that make sense regardless of the NSA scandal.

But it’s pitched as response to mounting tensions between the US and the rest of the world over its surveillance of online data which has become a major electoral issue in Germany.

(Incidentally Germany’s foreign BND intelligence agency confessed this week that it has been using scanning software provided by the NSA since 2007 to intercept internet data from satellite links.)

Back on the home front

Meanwhile in the US, a newly released document claims that the NSA only reviews 00004% of Internet traffic on a daily basis – the size of a dime on a basketball court according to  The National Security Agency: Missions, Authorities, Oversight and Partnerships document.

The NSA states:

According to figures published by a major tech provider, the Internet carries 1,826 Petabytes of information per day. In its foreign intelligence mission, NSA touches about 1.6% of that.

However, of the 1.6% of the data, only 0.025% is actually selected for review. The net effect is that NSA analysts look at 0.00004% of the world’s traffic in conducting their mission – that’s less than one part in a million.

Put another way, if a standard basketball court represented the global communications environment, NSA’s total collection would be represented by an area smaller than a dime on that basketball court.

Put like that, it all sounds relatively harmless.

But that’s not going to quell the privacy campaigners or calm the nerves of the US cloud industry.

Ray Wang

Over at Constellation Research, Ray Wang reckons he knows of over 50 contracts that have been put on hold or cancelled in the past 30 days alone. He notes:

“All signs point to an anti-US stance until the security issues is addressed.

“The odds on the US government moving fast on this issue are as good as Major League Baseball players or Tour de France Cyclists honoring a performance enhancement drug use ban.”

And chiming with my own concerns about European political opportunism using this row as a lever to promote personal agendas, Wang adds:

“With the EU’s Nellie Kroes already sounding the alarm bells in a way she only can, cloud buyers have taken notice.”

Wang offers some tips to those buyers including encrypting everything, moving to private clouds and making good use of Virtual Private Networks.

He also floats the ultimate sanction: think about going back on premise!

“Many CXOs who have been cloud evangelists, have had to reevaluate their on-premises software footprint. The non-US CXOs must abide by their national interests and desire to keep their data away from the spooks in the US.”

With that in mind, Wang expects the cloud industry in the US to start taking its own protective measures:

“US-based cloud providers will not sit still and have been addressing concerns as customers have slowed down their purchasing cycles.”

US IT industry reaction 

In one interesting development, US website Politico suggested this week that President Obama – who remains committed to the NSA program – secretly met with various IT leaders, including Apple CEO Tim Cook and Google’s Vint Cerf.

The White House has to date refused to confirm that the meeting took place.

Obama did appear to blink somewhat last Friday when he suggested a series of reforms to the NSA program shaped by what he called a:

“high-level group of outside experts”.

Unfortunately by Monday it had emerged that this group of outside experts would be set up by James Clapper, the US Director of National Intelligence, who hit the headlines in March when he gave Congress false testimony about the full extent of the NSA spying initiative.

The White House has since gone into defensive mode on that appointment, insisting that Clapper’s role would be limited and that:

“The panel members are being selected by the White House, in consultation with the intelligence community.”

What does Larry think? 

EllisonAs an aside, the views of one Silicon Valley giant on this subject were aired on TV this week in the US when Oracle CEO Larry Ellison gave a rare interview to CBS broadcaster Charlie Rose.

Asked his reaction to the NSA story, Ellison said:

“The great thing is that we live in a democracy. If we don’t like what NSA is doing, we can just get rid of the government and put in a different government.”

He went on to make a point that he’s made in various contexts for many years:

“We’ve been collecting this information for so long – long before NSA was collecting it. Let me tell you who was collecting it. American Express. Visa. All of your credit card data, all of your financial records.”

Ellison added:

“This whole issue of privacy is utterly fascinating to me. Who’s ever heard of this information being misused by the government? In what way?”

Stating that he would be troubled if similar tactics were used by political parties within the US to spy on one another rather then hunt for terrorists, he concluded that overall he regards the NSA actions as essential:

“President Obama thinks it’s essential. It’s essential if we want to minimize the kind of strikes that we just had in Boston. It’s absolutely essential.”



The CBS interview with Ellison – below – is well worth a look by the way. Aside from the headline grabbing stuff about the NSA and whether Google is evil or not, Ellison talks about Steve Jobs, his best friend for a quarter of a century. The resulting comments are genuinely moving and reflective of the private Larry Ellison rather than the public Silicon Valley titan.



Disclosure: at time of writing, Oracle is a premium partner of diginomica. 

    Comments are closed.

    1. says:

      Government mis-using data? Oh yes – there have been reported cases of the IRS doing exactly that, some argue for quasi-political purposes. 
      I’m not sure where Ray’s getting his data or in what circumstances but Aneel Bhusri, co-CEO Workday was on TV recently saying that if the government came to his company he could not help them as it is not his data but theirs. WDAY has no ownership over any of it and so could not comply with any request.

    2. GHCro says:

      I agree with Mr Wang. Private clouds are the next big thing. On a consumer level, there’s already the Cloudlocker ( that is a plug n play cloud you keep in your house. It’s not directly accessible like a hard drive, but can only be accessed via web browsers or its mobile apps, so it functions like a mini-cloud server that happens to reside in your house where they still need a warrant and probable cause to look inside. 
      I think we’re going to see more of these as well as enterprise versions coming out real soon in response to the NSA scandal as well as Ellison’s observations about  the credit card companies and banks.

    3. says:

      @Stuart – having come back to the post and watched the video (required IMO), it is reflective of an Ellison I remember in private moments back in the 90s. Dang – I wish there were more of those. Whatever anyone thinks of him as a public person, in private he is truly engaging in a way that isn’t charismatic but intensely human.

    4. Diginomica Stuart says:

      That was my reaction as well. The more non-Titan (if there’s such a term) moments over the years stick in my mind. One incident in particular where he went out of his way to assist me with something despite it busting his schedule. I’ve gone on record before: it’s not a case that if Larry didn’t exist we’d have to invent him. We couldn’t invent him.

    5. BrandtHardin says:

      The dystopian fantasies of yesteryear are now a reality.  We’ve allowed the coming of an age where the civil liberties our forefathers fought so hard for are being eroded by the day.  Freedom of Press, Freedom of Speech and Freedom of Assembly are mere ghostly images of their original intent.  We’ve woken up to an Orwellian Society of Fear where anyone is at the mercy of being labeled a terrorist for standing up for rights we took for granted just over a decade ago.  Read about how we’re waging war against ourselves at