How U.S. Spying Hurts Google and Facebook

U.S. President Barack Obama must wish digital communications were never invented. In addition to the embarrassing healthcare.gov mess, he has to handle phone calls from irate European allies who see U.S. electronic spying on their turf as a breach of trust. Comical as such diplomatic tussles may seem, they carry a very real threat for U.S. Internet companies serving European markets.

There was not much Obama could tell a bristlingFrench President Francois Hollande or an outragedGerman Chancellor Angela Merkel. The French and German sides reported the calls differently than did the White House. They stressed their respective leaders' tough questions, while the U.S. played up Obama's soothing but noncommittal responses. He told Hollande that some of the news media reports on U.S. electronic surveillance in France contained unspecified distorted information and stopped short of denying that the National Security Agency ever tapped Merkel's phone, saying only that it was not doing so now and had no such plans for the future.