NSA Prism scandal could hit US cloud providers, says EC vice-president

European commission (EC) vice-president Neelie Kroes says US cloud service providers could suffer loss of business in light of revelations about the US National Security Agency’s Prism surveillance system.

In June, Edward Snowden, a former technical assistant for the CIA, revealed the existence of Prism, which he said enables US intelligence agencies to extract audio and video chats, photographs, emails, documents and connection logs.

Kroes, who is the European Commissioner for digital affairs, has warned that cloud service providers could suffer significant loss of business because of security fears, according to the Guardian.

"If businesses or governments think they might be spied on, they will have less reason to trust cloud and it will be cloud providers who ultimately miss out.

“Why would you pay someone else to hold your commercial or other secrets if you suspect or know they are being shared against your wishes?" she said.

The warning comes as investigators on both sides of the Atlantic begin looking into alleged breaches of privacy in the EU and the espionage practices of US intelligence.

EU anger over alleged US spying activities had threatened to delay next week’s talks in Washington on a new trans-Atlantic free trade deal, but EU ambassadors have decided to go ahead with the negotiations.

However, reports say they have not yet agreed on how to respond to a US offer of parallel talks on the Prism internet monitoring programme and allegations of US spying on several EU member states.

Kroes said that if her prediction about the effect of the NSA scandal on cloud service providers is correct, there will be multibillion-euro consequences for US companies.

She also warned that concerns about cloud security can easily push European policy-makers into putting security guarantees ahead of open markets, with consequences for US companies.