The U.S. government data mining and spying program conducted by the National Security Agency dealt a crippling blow to trust and confidence in the integrity of business intelligence and products following its revelation by former contractor Edward Snowden. In the electronics industry, the process of cleaning up the mess and restoring confidence in the relationships they have with partners across international business lines and with foreign governments must now be intensified to ensure there are no permanent damages.
Electronics executives downplay the impact of the NSA spying activities on their operations and profitability but guaranteeing the security – from snooping and data miners – of their products is fast becoming one of the greatest challenges facing the high-tech industry. Governments, enterprises of all stripes concerned about the theft of intellectual properties and other business intelligence and even consumers in general have become acutely aware of and sensitive to the vulnerabilities of high-tech communication devices following the spate of disclosures by Snowden on the U.S. government’s alleged spying activities.
The Snowden disclosures rocked the telecommunications, networking and data communications industry but its effects are also reverberating throughout the entire economy and impacting how companies do business, which enterprises they partner with, in which geographical zones they store and process information as well as which territory’s laws they pick to govern their business operations.
Companies in the electronics manufacturing supply chain have tried to stay out of the public fray as companies like Facebook, Google, Microsoft, Yahoo, telecommunication services providers and others challenged the U.S. government on its data collection activities. While Facebook and Google confronted the government in court, OEMs involved in the production of electronic devices and their component suppliers kept quiet. The implication was that not only were these enterprises not implicated as collaborators or facilitators of the NSA program but they possibly would not be impacted by any fallouts from the controversies surrounding the events.
This argument has been faulty from the start because supply chain and product integrity is critical to buyers of high-tech goods and services. However, it crumbled completely recently when the latest Snowden revelation noted the U.S. government might have infiltrated servers owned by Chinese communications equipment giant Huawei. (See: NSA hacked into servers at Huawei headquarters, reports say).
Previously, the U.S. itself banned Huawei from bidding on government contracts based on the idea that the Chinese company could compromise the security of the networks by inserting components and systems programmed to harvest information for China’s military. Australia similarly excluded Huawei from a major telecommunications infrastructure rollout. In tit for tat action, China’s government has similarly targeted many American multinationals, including Cisco Systems and Qualcomm, both of which have seen sales slide in the country.
The latest Snowden revelations may be more problematic for the electronics industry, however, as it seems to imply governments could infiltrate the entire supply chain, implicating not just communication service providers but also component suppliers and the extended supply chain. The industry should not underestimate the potential disruptive impact of this problem. A recent report in the New York Times indicate many high-tech companies are being shunned by foreign governments. (Revelations of N.S.A. Spying Cost U.S. Tech Companies).
Today, the U.S. announced plans to end the NSA data collection program following outcries by businesses and governments worldwide. That may be a step in the right direction but for high-tech companies the challenge of cleaning up the mess aftermath has only just begun.
DISCLAIMER: Bolaji Ojo is editor-in-chief and publisher of Electronics Purchasing Strategies. The views expressed in this blog are those of the author alone who promises to base his sometimes biased, possibly ignorant, occasionally irrelevant but absolutely stimulating thoughts on the subjective interpretation of verifiable facts alone. Any comments should be sent to the author at firstname.lastname@example.org.