U.S. Spying Scandal: Europe’s Sputnik moment

Edward Snowden has already received the “whistleblower” award. Actually, though, the German Ministry of the Economy should be presenting a fellowship from the German IT industry to the NSA defector. In recent years, not one manager, scientist or politician has given such an impetus to German and European suppliers in the telecommunications and information industry as Snowden has with his revelations about the American and British secret services.

But the joy in Berlin political circles has restrained itself, for a variety of reasons. While the NSA scandal has unexpectedly boosted skyhigh the demand for German encryption software, German politics has suffered a shock: with his revelations, Edward Snowden has delivered decisive proof that Europe cannot effectively protect its citizens’ data, and that it does not have a competitive IT industry either. Hardware, software, lines and Internet deals come mainly from companies from the United States – or from China. The infrastructure of the Internet is also dominated by the United States, where the majority of the most significant servers are located. Germany and the EU are, at best, digital colonies.

The situation resembles the Sputnik scare in the United States in 1957, when the Russians succeeded in being the first nation to fire a satellite into orbit

What has been so far often overlooked: apart from the pulp-fiction espionage drama, whose main protagonist he is, Edward Snowden has rekindled transatlantic competition for market share in the IT industry. The NSA scandal offers Europe probably its last chance to close the gap with the Americans, who have opened up a terrific lead. In this respect the situation resembles the Sputnik scare in the United States in 1957, when the Russians succeeded in being the first nation to fire a satellite into orbit. The Americans were shocked, but then they put everything they had into becoming number one in the space race, and eventually they set the first man down on the moon.

Captives of American IT companies

Today’s situation is similar: Europe must do everything it can to avoid becoming permanently left behind in a race for strategic technologies. “We’re captives of the American IT companies, and it takes this kind of scandal to wake up to the fact”, says Octave Klaba, head of the French group OHV, which offers cloud servers where private individuals and businesses can store their data online.

There has been no lack of warnings till now. In 2011, the French government was sounding the alarm that a European opposition was needed because of the strategic importance of the IT sector. France is now promoting the construction of a French server industry with €200m in backing. Admittedly, that’s small change next to the multi-billion dollar investments by Internet giants like Microsoft, Amazon and Google. But, thanks to Snowden, the European Commissioner Neelie Kroes is also feeling a favourable wind for her plans to promote the European IT industry and to build up a European infrastructure with taxpayer funds. To pursue this ambition, the Commission is considering redirecting billions from the EU structural funds.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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