Obama Panel to Address Online Companies’ NSA Concerns

President Barack Obama tomorrow will create a panel to examine how data-collection efforts like the National Security Agency’s spy programs affect Internet companies and privacy rights, said two people familiar with White House deliberations.

Microsoft Corp., Yahoo! Inc. and Facebook Inc. have lobbied Obama to be able to disclose details about government orders for customer data and the number of user accounts affected. It’s unclear if Obama will grant that request. Both people asked not to be named because they weren’t authorized to discuss the decisions.

Revelations about the extent of NSA spying have “created a crisis of confidence” when it comes to users trusting U.S. Internet companies and undermines potential economic growth, Kevin Bankston, policy director for the Washington-based Open Technology Institute, told reporters on a conference call today.

The government’s collection and storage of phone and Internet communications data have been among the most contentious issues following disclosure of the NSA’s surveillance programs by former government contractor Edward Snowden. Obama is seen as leaving the phone and Internet data collection largely in place when he announces tomorrow some changes to the programs -- and punts the most difficult issues to Congress and advisory panels.

Customer E-Mails

Snowden exposed a program called Prism under which the NSA compels Internet companies through court orders to provide customer e-mails and other Internet activity. The companies are prohibited from disclosing or discussing the orders.

Documents he leaked also showed the NSA spied on foreign leaders including German Chancellor Angela Merkel, hacked into fiber-optic cables to get data from Google Inc. and Yahoo, and intercepted Americans’ communications without warrants.

AOL Inc. and Microsoft had no comment on Obama’s NSA plan. Several technology companies that set up a website urging changes to U.S. surveillance are expected to make a joint response tomorrow following Obama’s remarks.

A White House advisory panel recommended in a report last year that Internet companies be permitted to disclose the data. Obama has already rejected some of the panel’s other recommendations, such as splitting the NSA and U.S. Cyber Command. He also won’t call for ending the NSA’s ability to collect bulk metadata, such as phone records, according to a person familiar with the plans who spoke on condition of anonymity.

Verizon, AT&T

In a victory for Verizon Communications Inc. and AT&T Inc., Obama plans to let the NSA keep bulk phones records instead of requiring the telecommunications companies to store the information and ask Congress to decide the matter, the person said.

“What matters is not so much the fact that they won’t be required to hold those records, but rather just to be out from any kind of requirement one way or another,” said Charles Golvin, an independent technology industry analyst. “That’s a big win for the carriers.”

Congressional leaders are divided on the phone record issue, raising the possibility they won’t pass legislation. Senator Dianne Feinstein, a California Democrat, wants the data programs to continue without forcing companies to collect and keep the records. She said last week it would cost U.S. carriers as much as $60 million a year.

‘A Failure’

Senator Patrick Leahy, a Vermont Democrat, and Representative James Sensenbrenner, a Wisconsin Republican, have introduced legislation to bar the NSA from collecting the phone records, as has Senator Rand Paul, a Kentucky Republican.

The NSA, or Federal Bureau of Investigation, would have to get a court order on a case-by-case basis to seek records from the phone companies under their bills.

Civil liberties advocates told reporters on the conference call today that they’re prepared to take their fight to Congress if Obama doesn’t announce significant reforms.

“It is impractical to presume the executive branch will hold itself fully accountable,” said Angela Canterbury, director of public policy for the Washington-based nonprofit Project on Government Oversight and Accountability.

It will be “a failure” if Obama doesn’t adopt a recommendation from the advisory panel that the NSA’s collection of metadata be stopped, said Michelle Richardson, legislative counsel of the ACLU. “That will be the true test about whether he is sufficiently dealing with this NSA scandal,” she said.

Third Party

A third party that could store the data doesn’t yet exist. An administration official familiar with the president’s thinking said Congress would have to enact legislation that would enable a third-party to retain the records.

AT&T Chief Executive Officer Randall Stephenson said he was “anxiously awaiting” Obama’s plan. Speaking at a Christian Science Monitor breakfast yesterday in Washington, Stephenson declined to disclose his position on keeping the records.

“At the end of the day, the data needs to be provided only pursuant to a court order or a subpoena or a warrant,” Stephenson said. “So where the data is housed probably isn’t that important, as long as the rules are clarified and we know exactly what we’re looking at.”

Stewart Baker, a former general counsel for the National Security Agency, said in an interview that Obama has been pulled back by his advisers from taking radical steps to curb spy programs.

“He came in with a set of views but he listened very hard to the interagency and all of the intelligence agencies and they moved him considerably on the value of the programs,” said Baker, now a Washington-based partner at Steptoe & Johnson LLP.

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