US firms face privacy backlash

17 September 2014

SAN FRANCISCO: Major players in the US technology sector run the risk of alienating consumers and regulators in other countries if they fail to tackle rising concerns over privacy, several leading executives have argued.

On the one hand, a backlash against the surveillance of internet and telephone communications by the American government has deepened suspicions of companies based in the country.

Moreover, the enormous influence that a small number of large US corporations hold over business and culture is the source of considerable disquiet.

Peter Thiel, a well-known investor and a director of Facebook, the world's biggest social network, thus sounded a note of warning while speaking to the Financial Times.

"Silicon Valley is quite oblivious to the degree to which this crescendo of concern is building up in Europe. It's an extremely important thing and Silicon Valley is underestimating it badly," he said.

Having been the subject of various privacy controversies in the past, Facebook is one firm now seeking to respond to differing priorities in specific geographies.

"We certainly don't think there's a one-size-fits-all. Facebook would like to be more sensitive to more local concerns," Thiel said.

Google, the search giant, has also come under pressure in the European Union about the "right to be forgotten", where individuals can ask that some links are removed from its pages.

Eric Schmidt, Google's chairman, revealed the dramatic shift in political opinion relating to US technology enterprises had been unexpected. "I was surprised it turned this quickly," he said.

But he also disputed the idea these organisations are not receptive to such changes in sentiment. "It's easy to blame the tech companies for being insufficiently sensitive – we are way sensitive, trust me."

Elsewhere, Marc Benioff, CEO of Salesforce.com – a leader in the tech solutions and cloud computing categories – agreed consumer internet firms had "paid a terrible price" for enforcing a US-led perspective overseas.

The Information Technology and Innovation Foundation, a think tank, has even suggested American businesses in the cloud-computing space may lose $22bn to $35bn in the next three years due to worries over surveillance.

"A lot of people have been caught off-guard," said Aaron Levie, CEO of Box, a cloud-based storage system. "I don't think it was what many people thought about as they built these companies and technologies."

Data sourced from Financial Times; additional content by Warc staff