Who Are the Losers in the NSA Spying Scandal?

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Nov. 1 (Bloomberg) -- Bloomberg Contributing Editor Richard Falkenrath and Bloomberg Businessweek's Brendan Greeley discuss alleged NSA spying on Bloomberg Television's "Bloomberg Surveillance." (Source: Bloomberg)

Trust the cloud?

Were so that europe can trust our cloud?

It is not simple, it is different depending on which side you sit on the planet.

The most important thing is to keep a safe harbor agreement in place.

This is from the clinton administration.

U.s. companies have permission to do business with european origin data and not to comply with all the various european data protection laws.

Instead, to certify themselves to the u.s. department of commerce.

If that goes away, as some politicians are threatening, it would be a huge regulatory burden for every u.s. company.

Let's name some names.

Who stands to lose the most because of what is being revealed from the nsa?

Google, facebook -- all the household names, leaders of cloud computing.

These are all the ones you have heard of.

Cloud computing is growing and dominated by u.s. industry.

Their ability to go into other countries, particularly europe and south america, is constrained by this.

Europeans are already putting in place privacy laws against these companies.

They have very different privacy laws.

What they are now talking about is reducing some of the exceptions that u.s. companies have had.

I will go to my security analyst keanu reeves.

The matrix.

Keanu reeves.

The matrix, you have the servers, the boxes.

Is it as simple as the boxes, where are they located?

In the u.s. or are they elsewhere?

Is the box in europe the same as a box in manhattan.

They keep multiple copies in multiple places.

The architectures are built up in different to geography.

There may be a copy of the data in norway or iceland or ireland, and in new jersey.

In this modern day -- jargon alert.

Package switching takes the data and breaks it into millions of package and reassembles it.

It is unpredictable.

When you have one file and you move it to frankfurt, it is not living as a single file, it is broken up and switched around.

The government of brazil, if they have a server in brazil, do they feel better than a server in frankfurt or palo alto?

What is going to happen, one of the things you have seen with the chinese market, they have got all sorts of roles for server somatically in -- for servers domestically and china that has prevented u.s. companies from expanding.

You can look at that as a trade barrier.

Companies that have national -- nascent web industries will try to have security concerns as an inhibitor to trade so they can have their own companies.

Protectionism?

Internet security can be another word for protectionism.

Don't we have the most advanced servers?

So could take the market share overseas from google and oracle?

There are a small european companies that could step in.

They could take advantage if it goes the way of an economically protected cloud computing in europe, these are the companies.

Drummond came out front and center at google yesterday with a quote on what google needs to do.

"we have been concerned about the possibility of snooping, we are outraged at the lengths to which the government has gone." is he shocked?

The revelation on wednesday, he was probably shocked.

They were shocked?

A couple things going on, they cooperate with the nsa by court order and through the fbi.

They have no option.

The revelation on monday concerns the hacking of a third- party that was involved in connecting their data centers together.

You know, i don't know exactly, this was different than the sort of things they have experienced

This text has been automatically generated. It may not be 100% accurate.

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