Can Microsoft Outwit the NSA?

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Last year, Edward Snowden pretty much turned the way the world views data security on its head. By leaking a series of classified documents to the press, Snowden revealed that government security agencies — and, in particular, the U.S. National Security Agency — had obtained a previously unimaginable level of access to the data collected and stored by companies such as Google (NASDAQ:GOOG), Apple (NASDAQ:AAPL), Yahoo (NASDAQ:YHOO), and Microsoft (NASDAQ:MSFT).

The revelations created a stink for the U.S. technology industry that will be hard to wash away. It has become painfully apparent to both the American people and the world that the U.S. Department of Defense, under whose umbrella the NSA falls, has been engaged in what many consider extreme security measures whose cost (real or perceived) has been privacy. Consumers, unsurprisingly, don’t want to pay this cost. Sensitive to privacy concerns, consumers — and, in some cases, governments — have advocated for a boycott of U.S. Internet and technology companies whose security networks are suspected to be compromised by the NSA.

Having the NSA’s nose in its servers is, quite fundamentally, bad for business. Google, Apple, Yahoo, Microsoft, and most other Internet companies can only operate within a context of some reasonable degree of information security. People would not use Gmail if they felt it was vulnerable to snooping, people would not use Google Documents if they felt their files were unsafe, etc.

Perhaps the most visible example of a business that has been harmed by the NSA snafu is Lavabit, an encrypted email service used by Snowden that chose to shut down operations instead of comply with requests from the government.

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