Tech giants take new hits from fallout over spying

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Germany’s top security official on Wednesday warned Internet users in his country not to visit popular American websites like Google and Facebook if they are concerned about their private data being collected by the U.S. government, in the latest blow to Silicon Valley’s high-tech giants trying to contain the damage from recent revelations that they participated in the National Security Agency’s spying program.

European governments have been quick to criticize Washington for spying on their citizens — but now they may be turning their ire toward the American businesses that teamed with the NSA to uncover this information.

German Interior Minister Hans-Peter Friedrich on Wednesday issued a blunt warning to avoid American websites while speaking with reporters in Berlin.

“Whoever fears their communication is being intercepted in any way should use services that don’t go through American servers,” he said.

Mr. Friedrich’s message came on the same day that France’s government suggested the European Union should delay the opening of major trade talks with the U.S. to register its displeasure over the NSA revelations. The trade talks are slated to begin Monday in Washington, though the French, who have been the most vocal skeptics of a transatlantic trade agreement, stopped short of calling for Europe to back out of the talks altogether.

French government spokeswoman Najat Vallaut-Belkacem suggested “it would be wise” to “temporarily suspend” trade talks for about two weeks as a retaliatory measure against the U.S. in light of reports that American intelligence agencies spied on European diplomatic offices, which comes in addition to the recent news that they were using sites like Facebook and Google to grab data on regular European citizens.

“It’s not a question of stopping the negotiations,” Ms. Vallaut-Belkacem told reporters in Paris.

But German Chancellor Angela Merkel has dismissed this idea.

At least nine U.S. companies participated in the NSA surveillance program, known as Prism. This raised concerns about the possible market fallout for firms like Google, Facebook, Apple, Microsoft, and YouTube, which gave the NSA access to servers to collect Internet and phone records as well as video chats, photos and emails.

Last week, Germany, France and three other European countries joined forces to investigate U.S. Internet breaches to their security. France took the lead, giving Google three months to explain exactly what types of data it collects from customers, or face a fine.

Americans tech firms that operate on a global scale are facing scrutiny abroad, and some experts suggest it could cost the industry billions of dollars as it tries to repair the damage done to its reputation.

“The Googles and the Facebooks, I don’t know how they cope with this issue,” said Gary Hufbauer, senior fellow for trade and economics at the Peterson Institute for International Economics. “There will always be that suspicion.”

In many ways, U.S. tech companies could face the same pressures that Chinese firms with close links to the government in Beijing have to deal with in America.

“What American tech firms will go through from competitors is akin to the whisper campaign Chinese firms like Huawei now face,” said Peter Singer, director of the Center for 21st Century Security and Intelligence at the Brookings Institution. “Local firms will say privately, ‘Don’t buy them; this shows how you can’t trust them like you can trust us.’”

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