Surveillance Costs: The NSA’s Impact on the Economy, Internet Freedom, and Cybersecurity

Press Release
July 28, 2014

As a new version of the USA FREEDOM Act surveillance reform bill is expected to be introduced in the Senate this week, the debate about the National Security Agency’s surveillance programs still tends toward a simplistic focus on striking the right balance between national security and individual privacy. But a new 60-page report released today by New America’s Open Technology Institute (OTI) catalogues the significant costs of the NSA programs beyond their impact on privacy and liberty, describing how the NSA’s actions are also affecting the U.S. economy, American foreign policy, and the security of the Internet as a whole. The report, Surveillance Costs: the NSA’s Impact on the Economy, Internet Freedom & Cybersecurity, attempts to quantify and categorize four different types of impact:

The direct economic costs to U.S. businesses that have lost consumer trust and major contracts internationally, particularly the cloud computing and telecommunications industries; The economic and technological costs of data localization and data protection proposals now being floated by foreign governments concerned about NSA spying; The political costs to U.S. foreign policy and especially America’s “Internet Freedom” agenda, and Cybersecurity costs as a result of the NSA weakening encryption standards, inserting backdoors into commercial products, stockpiling security vulnerabilities, and using these exploits to create a massive network of compromised computers around the world.

“Too often, we have discussed the National Security Agency’s surveillance programs through the distorting lens of a simplistic ‘security versus privacy’ narrative,” said Danielle Kehl, a policy analyst at OTI and the primary author of the report. “But if you look closer, the more accurate story is that in the name of security, we’re trading away not only privacy, but also the U.S. tech economy, Internet openness, America’s foreign policy interests, and cybersecurity. What we found in our paper is that the NSA’s surveillance programs could cost the technology industry billions of dollars in the next few years, undermine the U.S. ‘Internet Freedom’ agenda, and damage the architecture and security of the Internet itself. When you weigh those costs against the dubious benefits of many of these programs, the need to rein in the NSA and restore international confidence in America and its stewardship of the Internet becomes clear.”

After discussing the costs at length, the paper lays out a series of eight recommendations for reform, urging the U.S. government to:

Strengthen privacy protections for both Americans and non-Americans, within the United States and extraterritorially; Provide for increased transparency around government surveillance, both from the government and companies; Recommit to the ‘Internet Freedom’ agenda in a way that directly addresses issues raised by NSA surveillance, including moving toward international human-rights based standards on surveillance; Begin the process of restoring trust in cryptography standards through the National Institute of Standards and Technology; Ensure that the U.S. government does not undermine cybersecurity by inserting surveillance backdoors into hardware or software products; Help to eliminate security vulnerabilities in software, rather than stockpile them; Develop clear policies about whether, when, and under what legal standards it is permissible for the government to secretly install malware on a computer or in a network; Separate the offensive and defensive functions of the NSA in order to minimize conflicts of interest.

“We literally cannot afford to continue ignoring these costs,” said Kevin Bankston, OTI’s Policy Director and an author of the report. “The USA FREEDOM Act—a new and strengthened version of which is expected in the Senate this week—would go a long way toward stemming the costs of the NSA’s spying programs and restoring trust in the American Internet industry, by prohibiting bulk records collection and providing substantially more transparency around the NSA’s surveillance programs. But ensuring that a strong version of USA FREEDOM becomes law is only the first step toward repairing the damage that the NSA has done to America’s tech economy, its foreign relationships, and the security of the Internet itself.”

Bankston continued, “We desperately need more comprehensive reforms to address the mass Internet surveillance being done inside the United States under Section 702 of the FISA Amendments Act and outside of the country under the President’s authority. Congress also needs to protect the security and popularity of U.S. tech products and services by prohibiting the NSA from weakening them with surveillance ’back doors,’ a prohibition that the House of Representatives supported by a vote of nearly three to one just last month.”

This study on the serious costs of the NSA programs follows the New America National Security Studies Program’s report on the dubious benefits of those programs, Do NSA’s Bulk Surveillance Programs Stop Terrorists? It also builds on the discussions at two New America panel events from earlier this year, National Insecurity Agency: How the NSA Undermines Internet Security and Surveillance Costs: The NSA's Impact on The Economy, Information Security, and Internet Freedom. A short six-page preview version of the report was also distributed to members of Congress two weeks ago at the Capitol Hill briefing The NSA Surveillance Programs: Assessing the Damage to U.S. Commerce, Confidence & Credibility sponsored by the Congressional Internet Caucus.

Read the full report.