Giving dire warnings that federal surveillance programs could cripple the U.S. digital economy and business opportunities around the globe, Silicon Valley technology leaders joined Senator Ron Wyden (D-Oregon) in Palo Alto Wednesday to urge government reforms.
"It is time to end the digital dragnet, which is harming America's liberty and economy without making America safer," said Wyden, chairman of the Senate Finance Committee and graduate of Palo Alto High School, who held the roundtable discussion in the Paly gymnasium. "The government ought to stop requiring American companies to participate in this suspicion-less collection of customers' data."
Wyden invited technology heavy hitters from Google, Facebook, Microsoft, Dropbox and venture-capital firm Greylock Partners to demonstrate industry support for government action, including passage of the USA Freedom Act, a bipartisan effort that is wending its way through Congress.
The technology executives sketched out the consequences that surveillance programs such as the National Security Agency's PRISM have already wrought -- and could wreak in the future.
"The fundamental issue ... is trust," said Brad Smith, executive VP and general counsel of Microsoft. "And it is personal. Just as people would not put their money in a bank they don't trust, they will be reluctant to store their personal information in a data center or on a phone that they don't trust.
"These issues have undermined people's trust in American technology, and it's a shame and it's a problem and we need to address it," he said.
He warned that new regulations, created in countries around the globe and intended to protect their citizens from U.S. spying, could hamper America's digital economy.
"If we don't address it, we'll lose ... the ability to keep growing this industry, keep creating these jobs, keep strengthening American competitiveness, keep building a world that is better connected," Smith said.
Alarmed about U.S. surveillance, 20 foreign governments in the past few months have proposed that technology companies must store their data in centers located in those countries, said Ramsey Homsany, general counsel of Dropbox. In effect, the proposals act as trade barriers.
The expense to companies of setting up data centers across the globe, known as data localization, would be prohibitive, he said.
"That would make it impossible for us to serve users in those countries and this from a company that's already made it," he said, referencing Dropbox's 300 million users, 70 percent of whom are outside of the United States.
Furthermore, Homsany warned, the requirement could severely curtail entrepreneurship.
"It would make starting these companies . .. impossible," he said.
Colin Stretch, general counsel of Facebook, said that service to users would become less efficient, slower and less personalized because of companies' inability to take advantage of cloud-based storage that a well-networked Internet enables.
Likened to a Balkanization or splintering of the Internet, data localization, Stretch said, makes the public at large less secure. Foreign countries may not respect the laws governing security, resulting in more access by state-sponsored surveillance or espionage. Also, companies are more vulnerable when their systems have more points of access, he said.
Wyden said that concerns over federal surveillance could cost U.S. cloud computing companies one-fifth of their foreign market shares, which translates to a loss of jobs at those American companies. Although many people may view U.S. government surveillance as necessary to securing freedom and fighting terrorism, other countries take a dimmer view.
"When I was in China this summer, Chinese officials likened cybertheft of U.S. trade secrets for the benefit of Chinese companies as no different than the surveillance carried out by the U.S. government," he said.
Given the distrust in the U.S. government that has already been cast, the tech executives urged the government to end requirements of companies to provide technological means for accessing consumers' data but instead to work within the court system.
"Forcing companies to provide (technological) backdoors is not the answer," Homsany said. "There are many other ways for the government to get data when they need it in legitimate investigations."
Eric Schmidt, executive chairman at Google, agreed. Law enforcement doesn't need technology access in order to obtain the information it wants, he said.
"Law enforcement has many, many ways of getting information that they need ... without having to do this without court orders and with the possible snooping (on) conversations," Schmidt said. "The problem with when they do it randomly as opposed to through a judicial process is it erodes user trust."
Smith said the country and industry need to move forward in two ways: One, establish international rules for when countries can get information from other countries' governments pursuant to international law, and two, ensure no new trade barriers are erected.
"We need these to more forward so that market access is kept open," he said.
Schmidt predicted that data localization laws would shut out American companies from some foreign countries.
"That means the future of Internet companies is half of what it could be if that spreads," he said. "It's a national emergency."
Schmidt also struck a moral tone, saying that a fragmented Internet and lack of access to American technologies could hurt education, economic progress and freedom around the world.
"One of the great hopes for the average person in the world is connectivity and education on their mobile phones. Imagine if they are unable to use American-built phones and operating systems. Imagine if they are unable to use data centers that Facebook and others have erected to provide services for them," Schmidt said. "Imagine the impact on their education, their culture, the safety of women -- all the things mobile devices change in a rural village in a developing country.
"There's a patriotic reason, an economic reason and a moral reason to worry about the trust breakdown," he said.
With Congress facing a deadline, requested by President Barack Obama, for passing stiffer surveillance regulations by December, Homsany urged immediate congressional action.
"It's really time now for government to do its part as well and pass some reform. A great start for that is USA Freedom Act," he said. "It's not only important to us as companies ... it's incredibly important to the world."