Akamai’s German Business May Be Hit by NSA Spying Scandal

The U.S. National Security Agency’s eavesdropping on foreign heads of state will probably hurt Akamai Technologies Inc. (AKAM)’s business in Germany, Chief Executive Officer Tom Leighton said.

Akamai, which helps corporate customers deliver online content faster, is caught up in the growing backlash against American Internet companies, he said.

Allegations that the NSA gained access to e-mails between world leaders, including German Chancellor Angela Merkel and Brazilian President Dilma Rousseff, and their staffs, have raised questions about the data being held and managed by U.S. Internet companies. Akamai operates computer servers across the globe to speed up the distribution and delivery of Web content, which means that data being tracked by the NSA or any other authority most likely passes through its network.

“It’s clearly bad for American companies,” Leighton said yesterday at The Year Ahead: 2014, a two-day conference in Chicago hosted by Bloomberg LP. “It’s particularly bad now in Germany, where it’s really being played up, to whip up anti-American corporate sentiment. We’ll probably lose some business there.”

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Documents gathered by former NSA contractor Edward Snowden revealed U.S. authorities hacked Merkel’s mobile phone in 2010. European lawmakers are considering penalties for companies that share unauthorized information.

“We’ve had customers ask for the ability to keep the data in country or outside certain countries,” Leighton said. “There’s a lot of concern about that now.”

Overseas Operations

Akamai’s European sales made up 17 percent to 18 percent of total revenue in 2010, 2011 and 2012, the Cambridge, Massachusetts-based company said in its latest annual report. No single country outside of the U.S. accounted for 10 percent or more of sales in any of those years, Akamai said.

Brazilian lawmakers were under orders from President Rousseff to pause all other legislative proceedings until they hashed out a proposal that would require Google Inc. (GOOG) and other providers of online services to keep local-user information in data centers within the country.

Google said the data-center requirement would hinder expansion in Brazil, the world’s sixth-largest market for Internet users, because the infrastructure would be complicated to develop. Violating the rule would cost Google 10 percent of its annual sales in Brazil, where it is the most-visited website, according to research-firm ComScore Inc. (SCOR)

To contact the reporters on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net; Erik Schatzker in New York at eschatzker@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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