How the NSA Is Killing American Small Businesses

Government snooping and the cloud-based software industry


Sunir Shah of Small Business Web
Sunir Shah

The Small Business Web is a trade association for companies that sell cloud software to other small- and medium-size businesses. What began in 2009 right here at South by Southwest (SXSW) has grown into an organization with over 1,000 members, including companies like Constant Contact and Hootsuite.

While attending the conference this weekend I had a chance to chat with Sunir Shah, founder and president of the group (and the chief marketer at Olark, itself a cloud software company that provides a live chat tool that businesses can use to talk to customers online). He shared some thoughts about the ways the federal government, especially via National Security Agency (NSA) domestic spying, is hurting small businesses like the ones his trade association represents.

(The below transcript has been edited for clarity and length.)

Q: Tell me about the ways the federal government is affecting what Small Business Web's members are trying to accomplish.

A: A great example is the current U.S.-E.U. Safe Harbor data privacy treaty that just got blown up in October 2015 by the European Court of Justice directly in response to the Edward Snowden leaks from the NSA. And so now every U.S. company that is doing business with European customers will be asked to sign these things called "standard contractual clauses." The idea is to implement the same data privacy rights as the treaty, but it has to be signed one-on-one between each E.U. customer and each U.S. company. That's a lot of time and effort to negotiate with our customers' lawyers. And it's a very unstable environment with plenty of doubt that this patchwork system will be upheld.

These issues are so big and so annoying that it eats up a lot of time. We're in tech, so you might think of big companies like Google and Microsoft, but most tech companies are small businesses. We have no general counsel. We barely want to call a lawyer, because as soon as you spend money on a lawyer you're going to lose money on the sale. When selling to small businesses, we need to do things quickly and efficiently.

The biggest fear is that the European Union could make it illegal to do business with American companies as long as the data is stored in America. That's possibly too expensive for most of the companies in the trade association, making them unable to transact in Europe.

Q: The concern is that the NSA might gain access to the data that's being stored here?

A: That's right. At Olark where I work we take a position that we want to have the best, safest privacy policy. We have internal training all the time. We have a security team to make sure that we are treating our customer data with utmost respect and good faith and fidelity. That's just us acting as an independent company. And so you can negotiate with us, and you can sign a contract with us. The problem is that the government is an external party to every contract.

So if the government can snoop on the data of foreign customers, they become a party to those contracts, and we can't control that. We're just businesses and private individuals. We have no power over what the government does, especially on national security. But it certainly has an impact on our growth. Because you've seen it—after the leaks from Edward Snowden, the sales of American cloud companies have been reduced in Europe.

There are real economic burdens, not only on loss of sales because people are afraid and they don't trust their data is safe; not only in the operational costs of having to move the data centers to Europe; but also in the transactional costs of having to keep up with all the regulatory negotiations around things that are just way beyond the expertise of most of the companies in the trade association.

Q: If this is cutting into the bottom line of your members, why aren't they organizing to stop it?

A: We do talk about it, but government lobbying is so beyond most of our experience and expertise that we're outmatched. We don't know what to do.

It's still a very young industry, and it's not even that large. It's probably less than $10 billion globally [gross domestic product] right now in 2016 for [business-to-business] cloud software. There are certainly some giants like Google and Salesforce and Microsoft and Apple, and so most of us rely on them and hope that their counsel can fight the good fight for us. 

But ultimately, there's no one standing up for our voice. The big companies can agree to an onerous legal process, because they have a legal team. We don't. And we just can't afford lose money every time we talk to a lawyer.

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  1. Look Stephanie Slade, if that's even your real name, I saw what you just did there with the time stamp. NSA indeed.

    1. I'm in another time zone. I got confused.

      1. Blah blah masturbation euphemism blah blah...

  2. I knew it! Edward Snowden is the root of all evil.

    Fuck me. Do I have to vote for Hilltrump now?

  3. The great mystical "Cloud". Where everything is nothing and nothing is something.

    1. If half of the data is in flight we can store twice as much!

      1. Mercury delay tubes FTW!

  4. OT from TrucelentPetulance: Quid Pro D'oh!


    Dr. Ben Carson, who endorsed Donald Trump's presidential candidacy on Friday, appears less than enthusiastic about that decision. And the real reason the unsuccessful GOP presidential hopeful endorsed his former rival could be a violation of federal law.


    Carson then said that Trump had promised him a role in his administration, "certainly in an advisory capacity." Asked by NewsMax's Steve Malzberg whether this meant a cabinet position, Carson declined to "reveal any details about it right now, because all of this is still very liquid."

    1. Yeah this never happens! Dr. Carson just too na?ve to know what he should and shouldn't say about such offers.

      1. Indeed. I've always had the suspicion that these kinds of laws are specifically written to ensure the only way you'd get caught out is talking about it in an interview.

    1. Now that right there is a great masturbation euphemism.

    2. The best of both ideologies! What's not to like?

    3. Oh my God, these people are amazing.

      They're called Coffee Party USA and they actually call themselves...CPUSA.

      They're either ignorant of that connotation or are okay with the comparison. Also, from their issues page:

      "Campaign Finance Reform: Pass campaign finance laws that limit the impact of special interest groups such as corporations, *MAJOR POLITICAL PARTIES* and lobbyists."

      Yeah! Let's have elections with no involvement from political parties! Brilliant idea!

      1. Only MAJOR political parties. You fell into their clever trap.

    4. *turns to class*

      Ok, who can tell me what fallacy is present in that syllogism?

        1. That works. I was also thinking equivocation as "capitalism" and "democracy" aren't 100 percent equivalent.

          1. To put it mildly.
            "Democracy" is socialism with a forced smile.

    5. The Nolan chart exposes how looters want to divide and conquer freedom. It has made vague stuff like capitalism (low tariff mercantilism), right-wing (mixed-economy religious zealots), left-wing (lay socialists) more meaningless than before 1972. Now that libertarian parties are popping up all over the world, we really ought to get our terminology more fathomable.

  5. Damn, I was earlier today thinking about Obama's reference to the balancing act between security and privacy necessary to allow government the tools to go after terrorists. And, oh yeah, tax evaders. And I thought, who the hell keeps their tax information on their iPhone? What's he talking about? The answer is, of course, nobody keeps their tax records on their iPhone, but there are lots of people who use electronic communication in their business and banking affairs and that's really what the government wants. Full access to all your communications. It's got little to nothing to do with terrorism, it's the obsoleting of the Fourth Amendment through the third-party doctrine and it's going to screw any business dependent on confidential electronic communications. Time to kill off that paperless office crap and go total paper!

    1. And I'm wondering: Is a company like Amazon that does (as far as I know) all their business online comfortable with the idea that the government has the capability to monitor their entire operation in real time? When an executive calls for the latest sales and profit figures on small appliances for the first quarter, broken down by geographic region, is he aware the government can pull that information together just as fast as he can? They know how many small appliances Amazon bought and how much they paid for them, they know how much Amazon pays for shipping and warehousing and employees and rent and electric bills and they know how many small appliances Amazon sold and who they sold them to and how much they sold them for.

  6. I gotta go with the Old World on this one. The Bush dynasty pushed the same brand of prohibitionist income-tax asset-forfeiture as Herbert Hoover and Harry Anslinger. The results in 1929-39, 1987-92 and 2007-13 were similar. It is a fair question to ask whether US politicians and spies armed with wiretap recordings and snoop-intercepted data could not use that data to blackmail or disrupt foreign governments. Wikipedia publishes a list of criminal US politicians, and looters are much alike everywhere. Any foreign politician critical of a US policy initiative could easily be arrested in the night by his own tax collectors acting on an "anonymous" tip. Their only protection would be wholesale repeal of tax laws and other regulations.

  7. There are certainly some giants like Google and Salesforce and Microsoft and Apple, and so most of us rely on them and hope that their counsel can fight the good fight for us.

    Yeah, good luck with that. I'm sure they won't rig the game in their favor or anything like that. /sarc

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