EU/US : NSA SPYING SCANDAL PUTS WASHINGTON ON DEFENSIVE.

This summer's revelations of mass-scale US government monitoring of e-mails and phone calls of ordinary citizens has put Washington on the defensive in its dispute with the EU over data protection norms. With EU-US talks for a free trade agreement successfully launched in July, this issue is gaining increasing prominence. US President Barack Obama, on 9 August, announced a series of actions aimed at increasing oversight and constraints on the National Security Agency's (NSA) spy programmes, which NSA contractor Edward Snowden exposed in May. The US tech industry, meanwhile, is trying to dispel the notion that US data protection norms are weak, fearful that this perception will encourage companies to move cloud computing operations to Europe.

"The US is not listening to, or reading, everything that is said by citizens of other countries," insisted Cameron Kerry, general counsel at the US Department of Commerce, speaking at the German Marshall Fund, on 28 August. Kerry, the younger brother of Secretary of State John Kerry, said he wanted the EU and US approaches to data privacy to "achieve outcomes that are compatible". He admitted that "bridging the gaps has gotten harder" following the Snowden disclosures. It would be a "sad outcome," he said, if EU countries responded by erecting a "series of walled gardens where governments hold the key to locked gates". Washington opposes moves by other governments to force companies to host data on their territory, he stressed.

CLOUD COMPUTING MOVING TO EUROPE?

The American IT industry is nervously watching these developments. The Information Technology & Innovation Foundation (ITIF), a Washington-based think tank, recently published a policy paper, which claims that governments like France and Germany are trying to exploit the NSA scandal in order to promote domestic cloud computing industries. ITIF felt that the US cloud computing providers were in danger of ceding market share, with potential losses of between US$21.5 billion and US$35 billion by 2016. "Europeans in particular are trying to edge out their American counterparts and they are enlisting their governments to help," it said. The global market of the cloud computing industry will be...