The NSA's spying has in fact hurt U.S. cloud providers

When Edward Snowden ripped open the curtain and began revealing details of the NSA's data vacuuming, IT analysts warned that an unintended consequence of the program was a huge blow to the credibility of U.S. cloud providers. After all, they asked, why would anyone who cares about the security of their data put it someplace where government snoops could access it?

At the time, the ITIF (Information Technology & Innovation Foundation) published a prediction that the U.S. cloud computing industry stood to lose as much as $35 billion by 2016. James Staten, a veteran Forrester Research analyst, suggested that the ITIF might be too low, saying the hit could be as high as $180 billion, or 25 percent of overall IT service provider revenues.

Nearly a year later, it appears that those fears were in fact justified, but not to the degree predicted. For example, Cisco Systems admitted during its recent earnings call that it has lost offshore business due to fears of NSA spying, and that recent RFPs (requests for proposals) from customers have explicitly excluded U.S. cloud providers as an option for Cisco to consider. Cisco's CEO attributed some of its weak European results to fears related to spying, but he declined to quantify the losses and in a later interview with the New York Times said that the NSA disclosures had not affected Cisco's sales "in a major way."