IBM Rejects Spying Claims and Calls for More Transparency

International Business Machines Corp. said it hasn’t disclosed client data to the U.S. government under a National Security Agency surveillance program and would challenge any order to do so.

The world’s largest computer-services provider said the government should deal directly with a client if it wants access to that client’s data, Robert Weber, IBM’s senior vice president for legal and regulatory affairs, wrote in a letter posted on the company’s blog today. If the U.S. government were to impose a gag order prohibiting IBM from notifying a client of such a request, IBM would challenge the order, including taking legal action, he wrote.

The U.S. has come under increased scrutiny for its surveillance at home and abroad using the NSA’s collection of telephone and Internet metadata. Last year, documents leaked by former federal contractor Edward Snowden showed that technology companies were providing data at the request of government agencies, prompting questions about their role in U.S. spying. Google Inc. and Apple Inc. were among such companies that recently won permission to disclose aggregate numbers of orders under the NSA’s so-called Prism program.

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IBM said it’s different from companies that have been associated with the surveillance programs because its customers are other companies, rather than individual consumers.

The U.S. government should have a “robust debate” about surveillance reforms, the Armonk, New York-based company said.

Public Trust

“Technology often challenges us as a society,” Weber wrote. “Data is the next great natural resource, with the potential to improve lives and transform institutions for the better. However, establishing and maintaining the public’s trust in new technologies is essential.”

IBM also said it hasn’t given access to information stored on servers outside the U.S. to the U.S. government under a national security order. The company said it doesn’t build “backdoors” into its products for the NSA or any other government group.

In December, an IBM shareholder sued the company, accusing it of defrauding investors by hiding that sales in China dropped after Snowden disclosed technology companies were cooperating with the NSA’s eavesdropping program. At the time, Weber, who is also IBM’s general counsel, said the suit was “pushing a wild conspiracy theory.”

IBM Chief Financial Officer Mark Loughridge said in October that Chinese sales dropped more than 20 percent in the third quarter as the country worked on a plan for economic policy.

In January, IBM agreed to sell most of its low-end server business to China’s Lenovo Group Ltd. for $2.3 billion. The deal still has to clear a U.S. national-security review.

To contact the reporter on this story: Gerrit De Vynck in Toronto at gdevynck@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net John Lear

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