Analysts predict US tech companies may lose $180 billion by 2016 using international concerns about intelligence agencies’ spying.

Creating an enormous digital dragnet designed to aid U.S. intelligence agencies spot terrorists before they’ll strike might seem great inside the abstract. But what are the true-world implications?

For US technology firms that sell hardware, software, and services, that could be a collective lack of $22 billion to $35 billion through 2016 because of foreign businesses and governments worrying if the National Security Agency (NSA) can spy on those service or product. That figure comes via the data Technology & Innovation Foundation (ITIF), a Washington-based policy research group backed by many leading technology firms, including Cisco, Google, IBM, and Intel.

“The prospective fallout is pretty huge given how much our economy relies on the data economy for its growth,” Rebecca MacKinnon, a senior fellow at Washington-based policy group New America Foundation, told Bloomberg. “It’s increasingly where the U.S. advantage lies.”

[ Government data mining is here to stick, and it puts your confidential business data in danger. See NSA Surveillance: First Prism, Now Muscled Out Of Cloud .]

But by other analysts’ reckoning, however, the ITIF’s estimate is simply too low. Forrester, as an example, recently estimated that losses for cloud businesses — that market is lead by HP, Cisco Systems, and Microsoft — and managed service providers (MSPs) would total $180 billion through 2016. For comparison’s sake, that might be reminiscent of about 25% of the once a year US defense budget, including spending at the Iraq and Afghanistan wars. Furthermore, Forrester estimated that cloud providers and MSPs might see their revenues decline by 20% over a higher three years.

“If a foreign enemy was doing this much damage to the economy, people will be within the streets with pitchforks,” Sen. Ron Wyden (D-Ore.) said last month at a Cato Institute conference, The Washington Times reported. Likewise, Rep. James Sensenbrenner (R-Wis.), who authored the Patriot Act, which the White House said authorizes the NSA’s digital dragnet, has accused the intelligence agency of overreaching. Some critics, however, have asked why Congressional oversight mechanisms did not rein inside the NSA’s surveillance programs.

Still, don’t blame just Congress, the White House, or the NSA for the predicted business fallout, Forrester analyst James Staten said earlier this year in a blog post. “It’s naive and threatening to think that the NSA’s actions are unique. Nearly every developed nation on this planet has an identical intelligence arm which is not as forthcoming about its procedures for requesting and getting access to supplier — and ultimately corporate — data,” he said. For instance, Germany’s G10 act empowers that country’s intelligence agencies to “monitor telecommunications traffic with no court order,” he said.

Many technology firms say they’ve already seen the NSA surveillance scandal begin to hit their final analysis. As an example, Cisco, that’s the world’s largest networking equipment manufacturer, recently blamed the NSA revelations for causing buying hesitation in some emerging markets. While Cisco said it had seen only “nominal” concern over the NSA in lots of countries, it did see a 12% decline in sales in emerging markets, with Chinese buyers, especially, becoming more wary. “It isn’t having a fabric impact, but it’s certainly causing people to forestall after which rethink decisions, and that’s reflected in our results,” said Robert Lloyd, Cisco’s president of development and sales, during a Nov. 13 conference call that reported good earnings, but a foul outlook.

That same day, Richard Salgado, Google’s director of law enforcement and data security, warned the Senate Judiciary Subcommittee on Privacy, Technology, and the Law that the NSA’s spying activities had caused governments in some countries — including Brazil and Norway — to rethink how they’ll procure cloud services or work with US firms. Brazil, for instance, has introduced a bill that will require service providers equivalent to Google to store all Brazilian data within the country or risk massive fines.

Salgado, in his testimony, said those forms of efforts could undermine today’s Internet. “If data localization and other efforts are successful, then what we’ll face is the effective Balkanization of the web and the creation of a ‘splinternet’ broken up into smaller national and regional pieces with barriers around all the splintered Internets to exchange the worldwide Internet we all know today,” he said.

The use of cloud technology is booming, often offering the simplest approach to meet customers’, employees’ and partners’ rapidly rising requirements. But it surely pros are rightly nervous a few loss of visibility into the safety of knowledge inside the cloud. During this Dark Reading report, Integrating Vulnerability Management Into The applying Development Process, we put the danger in context and offer recommendations for products and practices that could increase insight — and enterprise security. (Free registration required.)

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