- Update 2 - Permalink to update at: "An example of how the surveillance state is hurting the U.S. economy: Ladar Levison confirms that he will be forced to move his business overseas".
- Update 3 - Link to Business Insider at: "The NSA Revelations Are Destroying IBM Hardware Sales In China"
Being from Canada, interested in technology and the markets, and a privacy advocate, BlackBerry, formerly known as Research In Motion (RIM), has been on my radar for a number of years, so I would like to add my two cents regarding its demise (2, 3, 4, 5).
The two most important things we need to keep in mind about the “timeline of the company from RIM to Blackberry” are that: first, “when phone systems failed in New York and DC on 9/11, it was the BlackBerry network that provided backup communication”; second, contrary to popular belief, apps were never meant to be the feature selling point for its products, it was its security and privacy, the way it encrypted communication across its network that made it the only game in town.
In 2010, when governments threatened to “block encrypted BlackBerry corporate e-mail and messaging services if its security agencies were not granted access to them”, BlackBerry’s reply was:
“RIM also said it has drawn a firm line by insisting that any capabilities it provides to carriers for ‘lawful’ access purposes be limited by four main principles: Such access has to be legal, it must not exceed access imposed on RIM's competitors, it does not change the security architecture for Blackberry enterprise customers, and does not require a country-specific deal that does not conform to RIM's global standard for lawful access.”Unfortunately, I haven’t heard or read a single word about this from the pundits on mainstream media, that BlackBerry’s selling point was its guarantee to privacy, i.e., its network was so secure that even BlackBerry didn’t have access to its users emails, which made the company what it was. That, however, changed when nations, starting with some of the most oppressive regimes in the world, demanded that the company provide backdoors to their networks so that they could spy on their customers:
“The home ministry, which has time and again shared with DoT its concerns over the security agencies' inability to de-crypt messages shared over BlackBerry, has now asked DoT to sound out Research in Motion (RIM), the Canadian firm that makes the BlackBerry device, that its services in India will face shutdown if its e-mail and other data services do not comply with formats that can be monitored by security and intelligence agencies.”BlackBerry held out for as long as they could, making them unique when it came to protecting their customers privacy, but when the United States demanded the same, it was the final nail in the coffin for the company – the main feature that made them the envy of the industry and lead to customer loyalty was taken away from them. As Glenn Greenwald pointed out in a 2012 piece entitled, “How America's Surveillance State Breeds Conformity and Fear” (emphasis added):
“I think the most interesting, and probably revealing, example that I can give you about where we are in terms of surveillance in the United States is a really ironic and unintendedly amusing series of events that took place in mid-2011. What happened in mid-2011 was that the governments of Saudi Arabia and the United Arab Emirates, which as we know are very, very oppressive and hate freedom, they said that what they were going to do was ban the use of Blackberries and similar devices on their soil. The reason is that the corporation that produces Blackberries was either unable or unwilling to guarantee that Saudi and UAE intelligence agencies would be able to intercept all communications.So while we watch this train wreck and feel the pain of thousands of people losing their jobs, keep in mind that the main reason for BlackBerry’s downfall was not its inability to innovate, it was our governments’ inability to spy on their own citizens forcing them to require BlackBerry to change their business model which caused the company to collapse.
“And the governments in Saudi Arabia and the United Arab Emirates were horrified by the prospect that people might be able to communicate on their soil without them being able to intercept and surveill their communication. And in response, they banned Blackberries.
“This created huge amounts of condemnation in the western world. Every American newspaper editorialized about how this showed how much these governments were the enemies of freedom, the Obama administration issued a stinging denunciation of both governments, saying that they were engaged in the kinds of oppression that we couldn’t tolerate. And yet, six weeks later, the New York Times reported that, ‘The Obama administration was preparing legislation to mandate that all services that enable communications’ -- and I’m quoting from the New York Times – ‘to mandate that all services that enable communication, including in encrypted e-mail transmitters like Blackberry, social networking websites like Facebook, and software that allows direct pure messaging like Skype, be designed to ensure government surveillance,’ which is exactly the same principle that everyone can damn United Arab Emirates and Saudi Arabia for.”
Have we learned any lessons from this fiasco? Not even close considering the hard-on that the U.S. government has had for Edward Snowden. As Mark Zuckerberg points out in the following insincere interview, "I think the government blew it".
Mark Zuckerberg Comments on the NSA | Disrupt SF 2013
We can expect many more companies, especially Western technology companies, to go the way of BlackBerry once certain governments begin to realize that there is now a huge opportunity available to them for new industries centered on protecting company and individual privacy. After all, if given the opportunity, wouldn’t you sign up to a network that offered secure and private communication?
“U.S. government knew that revelations about NSA’s PRISM program would hurt American Technology companies, but they didn’t ‘really really care’, Bart Gellman”
When details of NSA’s PRISM surveillance program were revealed, American technology companies shuddered in fear, not because they were concerned about criminal prosecution – both the Bush administration and the Obama administration had authorized the program – they shuddered in fear because they knew the revelations would negatively impact their business.
In the following interview on Democracy Now!, when Juan Gonzalez asks Alan Rusbridger, the editor of The Guardian, the British newspaper that first reported on the Snowden affair (2), what his thoughts are on the impact of the revelations of the surveillance program on the world stage, Rusbridger replies (segments of interest occur at approximately 38:00 and 47:00 – emphasis added):
ALAN RUSBRIDGER [38:00]: Well, I think, the bit that is sometimes missing from the American debate, the President places great emphasis on the fact that America doesn’t spy on Americans in American territory, as if that was the only thing that mattered. And I thought it was very interesting that Mark Zuckerberg of Facebook said, the other day, well that is no use to us if we are trying to build an international business. So, I think Americans haven’t quite understood the anger of other states, of people living in Germany, you say, that Americans feel free to spy on anybody else in the world, and you just have to, sort of, reverse that and think how would Americans feel if Germans were spying on them, or the Chinese.…
JUAN GONZÁLEZ [46:00]: …your sense of how these kinds of revelations are, not only effecting world perceptions of the United States, but as you alluded to earlier, the ability of American companies, internet giants and computer giants to do business overseas – and more and more people are saying, why should I deal with Yahoo or why should I deal with Google if the American government is going to be able to spy on me.
ALAN RUSBRIDGER: …I think it gets to be a big big story for American innovation and business if the rest of the world comes to associate these companies with forms of surveillance, that is going to damage American companies, and I think the Silicon Valley companies know this, and they are worried.
So was the world’s reaction to these revelations surprising? Didn’t the U.S. government and the companies that enabled the spy agency to initiate and optimize this program realize that there would be a backlash?
In the following gem of an interview with Bart Gellman, the Pulitzer Prize-winning American journalist that first broke the story about NSA’s surveillance program with a piece entitled, “U.S., British intelligence mining data from nine U.S. Internet companies in broad secret program”, we find out that the U.S. government knew that the willingness of American companies to provide support for NSA's dragnet data collection programs (2) would severely damage the American technology industry, and rightfully so considering how careless they have been with the data (1, 2, 3, 4). The interview is a must watch in its entirety for anyone following the NSA scandal since it delves much deeper than what has been discussed above. The segment of interest which I refer to takes place between approximately 22:00 to 28:00. I have provided the transcript to the best of my abilities below (emphasis added):
“So what you have, basically, is a system which begins with competition, in which the government will try to keep secretes, and it will always try to keep too many…. So the government will try to keep too many secretes and people like me will try to find them out, and I’m not going to get them all, nobody is, but I’ll get some of them. And then what happens is, there is a process of cooperation that takes place next. And so, we have not published anything in the Washington Post without going to the responsible authorities, and saying, here is a list of facts that we know and are planning to publish, can you please help us understand them, set them in context, and let us know if you have any security concerns about any of these facts getting into the public domain….
“The first disclosure that I did was about this PRISM program by which NSA get information from Microsoft and Facebook and Google and so forth, and I began the conversation – and it was on the phone so I did not speak in detail – and told them here is the title of the document, you know, we’ll talk again in a couple of hours and if you need me to come in, I’ll come in, or get the document in front of you and we’ll talk about page numbers and line numbers….
“There were a number of places where they said, can you leave this out or leave that out and they had quite plausible reasons and we said sure, and in fact there have been very very few cases in which we have published anything that they asked us not to publish. Sometimes we come back and say let’s try a different form of words, we want to get across the idea here because there is an important policy question that we think should be aired and we think most members of congress and most members of the public would think this should be aired, but we want to avoid stepping on the thing that you’re most worried about and so how about this, and they say we can live with that.
“There was one thing in that first PRISM story that the government asked us to do that we declined to do, and that was to remove the names of the 9 companies. They said this could greatly damage our ability to work with these companies in the future, and I said, I am not speaking for the Washington Post but I’ll tell you what my recommendation will be. If the harm you’re worried about consists of the companies stopping doing something because their customers and the public at large don’t like what they’re doing and they’re going to lose business because of it, that’s why we have to publish it, that’s our job. Our job is to enable the public to make that kind of decision based on information. And as I expected the editor backed me up on that and we published it, and the government really cared about that, but there is another kind of measure of how much they cared. This thing got resolved entirely at the level of me and reasonably senior officials talking on the telephone. When they really really care and they’re not getting the answer they want, the conversation goes higher. I’m aware of two cases in which a president has called in an editor or publisher of the Washington Post, and it’s happened at other news organizations as well, this didn’t get anywhere near that. I’ll stop there. ”
“An example of how the surveillance state is hurting the U.S. economy: Ladar Levison confirms that he will be forced to move his business overseas”
In a sign of things to come for the U.S. tech industry, Ladar Levison, the owner of Lavabit, the secure private encrypted email provider that shut down after 10 years of operation (2, 3) because they decided not to abide by the demands made by the United States government to spy on their 400,000 plus users, explains that if he loses his case against the U.S. government he will most likely hand over his company to someone overseas and let them run it. It’s important to note that the U.S. government already new that this would be the end result, that revelations about NSA’s PRISM program would hurt American Technology companies, but they didn’t really care.
Levison clarifies his position in the following interview on Democracy Now!. The segment in which he makes these comments occurs at approximately the 11 minute mark, but the whole interview is well worth watching, especially the part just before these comments where he explains how the U.S. government is “remotely loading malware onto people’s computers without any kind of restriction, restraint or oversight.”
AMY GOODMAN: What are your plans now? Are you going to restart Lavabit? Do you feel you have to go overseas to do this?
LADAR LEVISON: I feel if I did go overseas, I could run the service. But I’m not ready to give up on America yet. I think I have effectively come to the decision that I’m going to wait and see how the court case plays out. If Jesse and myself end up winning, I’ll be able to reopen Lavabit here in the U.S. If I lose, I will probably end up turning over the service to somebody abroad and let them run it, so that I can stay here in America, and I’ll move onto something else.
"The NSA Revelations Are Destroying IBM Hardware Sales In China"
"The first shot was fired on Monday. Teradata, which sells analytics tools for Big Data, warned that quarterly revenues plunged 21% in Asia and 19% in the Middle East and Africa. Wednesday evening, it was IBM’s turn to confess that its hardware sales in China had simply collapsed.
"Every word was colored by Edward Snowden’s revelations about the NSA’s hand-in-glove collaboration with American tech companies, from startups to mastodons like IBM.
"But the fiasco was tucked away under the lesser debacle of IBM’s overall revenues, which fell 4.1% from prior year, the sixth straight quarter of declines in a row. Software revenue inched up 1%, service revenue skidded 3%.
"At the hardware unit, Systems and Technology, revenue plunged 17%. Within that, sales of UNIX and Linux Power System servers plummeted a dizzying 38%. Governmental and corporate IT departments had just about stopped buying these machines.
"IBM quickly pointed out that there were some pockets of growth in its lineup: business analytics sales rose 8%, Smarter Planet 20%, and Cloud, that new Nirvana for tech, jumped 70%. But in the overall scheme of things, they didn’t amount to enough to make a big difference...."
...continued at Business Insider