Tech chiefs in plea over privacy damage

September 14, 2014 9:01 pm

Tech chiefs in plea over privacy damage
By Richard Waters in San Francisco

The US tech industry has failed to appreciate the mounting global concern over its record on online privacy and security and must act fast to prevent deeper damage to its image, Silicon Valley’s top executives and investors have conceded.

The self-criticism, much of it aimed at consumer internet companies such as Google and Facebook, comes as some of the tech sector’s best-known names have been battered by a backlash over revelations of widespread US internet surveillance and concerns about their growing business and cultural dominance.

Peter Thiel, a prominent start-up investor and Facebook director, said: “Silicon Valley is quite oblivious to the degree to which this crescendo of concern is building up in Europe. It’s an extremely important thing and Silicon Valley is underestimating it badly.”

Google has been most in the line of fire, with the European Commission turning up the heat in a competition case last week and a recent “right to be forgotten” legal ruling forcing it to remove some links from its European search services.

The US government and [tech] companies will have to step up significantly if they want to regain the world’s trust
- Jim Breyer, former board member of Facebook

“I was surprised it turned this quickly,” Eric Schmidt, chairman of Google, said of the change in the political mood over US tech. However, he denied that Silicon Valley had failed to anticipate the concerns. “It’s easy to blame the tech companies for being insufficiently sensitive – we are way sensitive, trust me.”

Mr Thiel conceded that Facebook had work to do regarding its approach to Europe: “We certainly don’t think there’s a one-size-fits-all. Facebook would like to be more sensitive to more local concerns.”

Marc Benioff, chief executive of Salesforce.com, one of the biggest sellers of internet-based services to businesses, said consumer internet companies had “paid a terrible price” for imposing a US-centric view of their technology.

Jim Breyer, an early investor and former board member of Facebook, said: “The US government and [tech] companies will have to step up significantly if they want to regain the world’s trust.”

The backlash over privacy and security has started to ripple more widely through Silicon Valley, where young companies have typically raced to launch new technologies without making these issues an overriding priority.

“A lot of people have been caught off-guard,” said Aaron Levie, chief executive of Box, part of the latest generation of fast-growing start-ups aimed at the cloud. “I don’t think it was what many people thought about as they built these companies and technologies.”

The tensions have exposed rifts inside the tech industry, bringing mounting criticisms of the internet companies that collect large amounts of consumer data. While companies such as Facebook and Google claim to have seen little or no damage to their businesses, those that sell cloud services have been caught up in the backlash and stand to lose significant amounts of business.

US commercial cloud companies will lose $22bn-$45bn over the next three years as a result of the Snowden backlash, according to the Information Technology and Innovation Foundation.

“Some in our industry have underestimated the degree to which people care about privacy,” said Brad Smith, general counsel of Microsoft, which is trying to refocus its business on commercial cloud services. “I’m not sure across Silicon Valley people have completely woken up to this.”

Copyright The Financial Times Limited 2014.


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