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.
"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.
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?As 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."
"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.