How the NSA is threatening the future of Google, Facebook, Amazon and others

NSA Prism

When I read government arguments in defense of the NSA, an oft-repeated line was:

We’re not targeting Americans. We’re targeting foreigners.

Foreigners.

I really dislike that word.

And I’m sure companies like Apple, Google and Facebook do as well.

Why?

Because 80% of Google’s customers are foreigners.

More than 50% of Microsoft’s revenue come from foreigners.

Most of Facebook’s users are foreigners.

Apple gets more than 12% of its revenues from China.

And now these foreigners are well aware that their emails and texts and Facebook posts may have been scanned by the US intelligence industry.

I was asked by a tech company recently about what factors could disrupt their current globalization plans in the years ahead.

The NSA was at the top of my list.

We now see a rush of new and established tech companies around the world to create services that are located entirely out of reach of the US government (no matter how impractical this may appear). According to this WSJ article (reg required):

Three of Germany’s largest email providers, including partly state-owned Deutsche Telekom AG teamed up to offer a new service, Email Made in Germany. The companies promise that by encrypting email through German servers and hewing to the country’s strict privacy laws, U.S. authorities won’t easily be able to pry inside. More than a hundred thousand Germans have flocked to the service since it was rolled out in August.

So what does the COO of Facebook have to say about this?

“We should all be nervous when countries impose costly new requirements on companies as a condition of serving their citizens,” says Facebook Chief Operating Officer Sheryl Sandberg. “It means fragmenting the Internet and putting the economic and social opportunities it creates at risk.”

The companies that are most nervous are the large established players, like, um, Facebook.

For start-ups around the world, this news is actually good news. From the same article:

For small German companies competing against big ones—like online-security company Symantec Corp. and Amazon.com Inc. which provides corporate cloud services—the NSA surveillance program “is a present from heaven,” says Oliver Dehning, chief executive of antispameuropeGmbH, which builds spam-protection software. “It’s kind of an opportunity to strike back and protect our home market.”

The fact is, the Balkanization of the Internet is not a new trend, but the NSA (no thanks to Snowden) accelerated it.

Do foreigners care about their email being scanned?

If the Germans are a leading indicator, perhaps so.

Though this article would indicate that Europeans largely are not concerned about the goings on of the security agencies. After all, it wasn’t just the US government at work here; there were other governments involved.

But I think the threat to US-based tech companies is real (perception, after all, is reality). I think the impact will be felt years from now, when there are new and competitive service providers taking a distinctly local approach to their offerings. This is where global service providers get uneasy. It’s difficult to compete with a “local by design” business when you are a “global by design.”

The sad part about all of this is that China — the poster child of Internet privacy violators — suddenly doesn’t look all that bad.

UPDATE: US tech leaders visited Washington, again, and warned of the Balkanization of the Internet.

 

A global look at Mary Meeker’s Internet Trends report

Mary Meeker, a Kleiner Perkins Caufield & Byers partner, recently provided another healthy dose of data and trends, along with a number of predictions.

But the media largely overlooked the web and software globalization implications of many of these slides.

So allow me to chime in on the slides that jumped out at me.

Let’s begin with this slide:

Mary Meeker intl usage

So the “Made in USA” websites are leading the world in overall visitors. But what doesn’t get noted is that the top-7 websites average 91 languages.

That’s right, 91 languages —  an average skewed heavily by Wikipedia.

Here are my language counts:

Website Languages
Wikipedia 285
Google 145
Facebook 75
Microsoft 48
Yahoo! 47
Apple 32
Amazon 10

These “Made in the USA” websites have been “Localized for the world.” And that’s a major reason they’re so successful outside the USA.

Next slide:

Mary Meeker sharing global trend

Americans aren’t global leaders in “sharing” — though we’ve been unintentionally sharing quite a lot of our data with the NSA (a rant for a future day).

Now, I’m not sure  how different cultures define sharing, which has to be a major caveat to this slide.

Nevertheless, the fact that different cultures share different types and quantities of information is a major globalization challenge.

This isn’t just a Facebook or Google+ issue, it should factor into the degree to which you wish to integrate social networks into your website (as well as your expectations regarding engagement). Privacy concerns could very well be one of the most significant issues of the next decade and beyond.

Next slide:

China mobile trend

This slide is pretty easy to grasp. But a question that often comes up when looking at mobile trends around the world is “How many of X country’s mobile users are using smartphones?”

See below for the answer:

Mary Meeker global smartphone growth

I love this slide because it helps clarify exactly how many mobile users may actually be able to browser your mobile website (or download your mobile app).

China is a significant smartphone market while Russia is not (yet).

So when thinking global about your mobile strategy, you need to also think about smartphones vs. feature phones (those that offer poor or nonexistent web browsing).

So those were the slides that jumped out me. Let me know if something jumped out at you.