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The True Costs of Selling Out Our Privacy

When it comes to the full encryption vs. mandatory backdoors debate, there isn’t much left unsaid. By now, most people have heard arguments that run the gamut from "backdoors are necessary to keep terrorists from going dark," to "weakening of encryption standards will be the undoing of personal privacy and society."

One interesting facet that remains unexamined is the economic impact of widespread backdoor implementation. The economic ramifications of the systematic weakening of encryption standards in the US can jeopardize the economy, taking jobs and investments away from the country to other markets that support full security.
 

While people like CIA Chief John Brennan claim that giving the government backdoor access won't harm the American economy, the data seems to prove otherwise.

The impact of the technology industry on the American economy is substantial. The Software Alliance released a report in mid-2016, finding that the software and information industry contributed $475.3 billion to the U.S. economy. Another $594.7 billion was generated through the creation of 7.3 million jobs and investments.

With the current value of the US economy at $18.56 trillion, technology companies make up about seven percent of that activity. In the current economic climate, technology companies add nearly 200,000 new jobs every year, and in the last five years, the IT sector has introduced over half a million new jobs.

While the technology industry as a whole has a significant stake in the US economy, specific vendors drive the economic impact of the technology sector. Apple’s stock is at an all-time high, up 25% from 2016, and is currently the best performing player in the Dow Jones Industrial Average for 2017.

The company directly employs 80,000 people in the U.S. and provides freelance opportunities for hundreds of thousands of software developers. With over one billion steady users, Apple has easily proved its importance to the U.S. economy year after year.

In addition, Google generates over $165 billion in economic activity, and Facebook generates $100 billion for the U.S. economy out of its $227 billion global economic impact, providing an additional one million jobs for Americans.

When faced with the decision to allow the government access to their users’ private data, it’s logical that these companies would consider taking their prospects elsewhere. When Edward Snowden outed the NSA’s PRISM program in 2013, Forrester estimated that US cloud service providers may now face up to $47 billion in lost revenue from non-US corporations not wanting their data subject to NSA access.

Creating backdoors could have a similar chilling effect and steer businesses to service providers based outside of the US, and even its intelligence allies

In light of the many companies already considering relocating outside of the US (generally related to tax evasion) and the tense relationship between tech companies and President Trump, this interference might prove to be the final nail in the coffin. Over the past five years, more than 20 major American companies have left the US, taking jobs and investments with them. Giving these economic powerhouses yet another reason to take their operations entirely out of the US isn't something that would be in the long term best interests of the country.

It is also important to bear in mind that iOS and Android are built by American software companies. While their products run on hardware produced in China, the software is still subject to American standards and regulations. As such, any widespread implementation of backdoors would greatly affect the integrity of these systems. It is likely to assume that global consumers may reevaluate buying devices that run on American operating systems.

While it’s undeniable that iOS and Android dominate the mobile OS market today, there are at least three non-US based operating systems: Sailfish from Finland, BlackBerry from Canada and ZTE from China, that can easily become competitive in the mobile OS market.

The weakening of encryption standards may be the opportunity that these players have been waiting for and become their chance to finally gain a significant foothold in the market. Just because these companies are not as established in this monopolized market, does not mean that they lack technology that competes with American tech.

When viewed from a solely security-based point of view, the backdoor debate becomes an argument of whose blood is redder: national security or personal privacy? Breaking down the monetary effects turns the issue on its head. These are factors that can be calculated and measured, unlike the claim of “security” which is nebulous and subjective.

When executives and otherwise concerned individuals fail to join the conversation, they leave the general safety of the public and economy in the government’s hands. Weakened encryption standards will hurt the US where it can least afford it – in its wallet. 

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