How Snowden and CIA will poison the US business environment

The spy case with Edward Snowden will have much bigger than seen at the moment consequences. And most of them will be not political, but economical.

Just at the moment Apple and some other major corporations are under a tax attack by the government blamed that are using offshore combinations to avoid paying to Uncle Sam. So in this case we see the consequences of the stupid excessive tax burden in United States that simply leads to a… business run from United States.

With the Snowden case we will see another pressure on businesses and customers to go out of USA. People do not like being constantly watched. So they as customers will decide to use some competitive to USA companies services, to avoid having CIA and FBI in their computers. Logically, the corporations will go after them (as they depend on their spending) and will move part or all of their activities abroad.

Today Google, Yahoo, Apple and Facebook look like immortal almighty titans that no one can avoid to ignore. Yes it looks like this. But in fact all their services are replaceable, and competition was rising even before the Snowden scandal. Now the customers will have an extra reason to change the service provider.

For instance reading people’s e-mail is an extremely stupid decision, as free e-mail providers are thousands around the world and all they can offer a competitive to Google or Yahoo service. So it is very easy all these customers to be lost. And these are much and important customers.

Facebook looks like a monopoly. But what is Facebook? Just a site.  A popular one, but just a site. Much similar sites can be created and there is no way to keep the competitive advantage of Facebook.

Of course US corporations are not so stupid. They will not allow so easy to be kicked out of market. So they will simply move their operations abroad and will protect their servers under another jurisdiction that is out of White House control. It will not happen immediately, they will not confront the government directly. But just like Apple moved out of United States its money, the same will happen with the infrastructure. And this will mean much lost jobs.

While analyzing the giants in Internet, we must not forget for the ants. Millions of small internet businesses are using an infrastructure in United States and creating high paid jobs in hosting companies and service providers. Every doubt of such companies in USA business environment can move their sites and servers out of USA. And this will mean less jobs and less GDP.

Imagine you are a boss of a small Internet company that has located itself in a profitable niche and has some knowledge and trade secrets that guarantee the competitiveness. This company has the guarantee of the hosting or service provider that no one can access its servers and get the data. And now it becomes clear that government agents can do this with no control. So will this company continue keeping its information in USA? Imagine you have a database of 100 000 registered users of your product. You have worked hard for years to create this customer base and make it loyal to you. And at once, someone is copying this info and selling it to the competition :) Do you believe CIA and FBI agents – all of them, are 100% honest and will not try to make money of this?

So obviously the Snowden case will have long term consequences on the entire business environment in USA. It is a very risky case that hits one of the best and most profitable industries that provide high paid jobs. So Uncle Sam is ahead of crushing another part of its own economy…

June 24th 2013

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