Last month I wrote about the recent NSA spy scandal and the impact it has had on the activities of some general counsel, as well as some actions tech companies in particular have taken in response. It was clear that there was good reason to have the general counsel playing a large part in that discussion and being thrust in the public spotlight to spearhead the corporate response, but some new data offers even more evidence of just how impactful this event will prove to be. This recent article from Corporate Counsel references a report from a Washington think tank which estimates that the potential losses as a result of the NSA scandal could top $30 billion for U.S. tech companies. That’s billion-with a B-which is no trivial matter.
Many tech companies are now offering products which store users’ data in the cloud, and for good reason given the projected $207B size of the worldwide market. Losing as much as 15% of that market to overseas companies is a huge red flag and will not sit well with those here in the U.S., especially in a case such as this where corporate wrongdoing is not the culprit. At issue here is the reach of the U.S. government via the National Security Agency, and businesses in the technology sector will absolutely have to rely on their internal legal teams to determine the best course of strategy to protect those revenue streams from slipping away. As this story develops and the general counsel’s office shapes the companies’ responses and preferred policies, it will be key to have measures in place that allow staff counsel to track the frequency and breadth of requests from the government, as well as handle any disputes that may arise from government data inquiries. We know consumers are paying attention, as are shareholders, and we very well may see an uptick in activity involving the legal group as a result of this scandal.