Surveillance reports: A tough spot for tech firms

While key details remained shrouded in secrecy, last week's disclosures about a clandestine government program for tracking Internet users has placed some of Silicon Valley's biggest tech companies in an uncomfortable spotlight.

Apple, Facebook, Google and Yahoo have all denied initial reports that they gave the government wholesale access to their servers. But U.S. officials confirmed the existence of a program focused on accessing the online activity of people outside the United States, as authorized by a secretive national security court, and critics said the program could easily pull in information about U.S. users as well.

Experts warn that the government program known as Prism will make it more difficult for the companies to maintain consumer trust and expand their business both here and overseas, in an industry that depends on consumers' willingness to share intimate details of their lives online — via e-mails, photos, Internet voice calls or even the websites they visit.

"These companies are trying to expand in markets around the world. Whatever assurances the government is giving to U.S. citizens, imagine if you were living in Brazil or India. I don't see how this isn't going to hurt," said Irina Raicu, who runs the Internet program at Santa Clara University's Markkula Center for Applied Ethics.

The disclosures are likely to make U.S. consumers more wary as well, experts said. Internet users generally expect that the companies to which they are entrusting their data will use or exploit it in some commercial way, said David Aaker, vice chairman of Prophet, a San Francisco marketing firm. But he added that giving that data to a third party, such as the government, is "frightening" to many people.

Industry leaders also worry the program could undercut the positions that Google and other companies have taken in resisting demands for information by autocratic regimes around the world, according to one executive who insisted on anonymity because he wasn't authorized to speak on the subject.

Other Internet executives expressed frustration, both with what they called distorted news coverage and with government secrecy requirements that they said made it difficult to discuss the issue.

"We provide user data to governments only in accordance with the law," Page added. "Press reports that suggest that Google is providing open-ended access to our users' data are false, period."

In a separate statement, Facebook CEO Mark Zuckerberg denounced what he called "the outrageous press reports about Prism." While Facebook also complies with legal demands for user information, he said, the company has never received a "blanket request" for that information, "and if we did, we would fight it aggressively."

In a statement, National Intelligence Director James Clapper said last week's articles contained unspecified inaccuracies, and that the program was authorized under a section of the Foreign Intelligence Surveillance Act.

That law allows U.S. agencies to obtain information on "non-U.S. persons" once the agencies have obtained general approval for the program from the little-known Foreign Intelligence Surveillance Court. With that approval, the government has broad authority to demand all kinds of information about foreign individuals, without specific warrants, provided they meet certain criteria, according to Marc Zwillinger, a Washington-based attorney who advises tech companies on government information demands.

Because that information might include Internet communications between foreigners and U.S. citizens, the government could also gain access to information from U.S. citizens' accounts, said Brett Kaufman, a national security expert with the American Civil Liberties Union.

While the companies say they are obliged to comply with legal demands, others say the government needs companies to cooperate and provide technical assistance to process the requests smoothly.

Companies that face other types of government scrutiny have felt pressured to go along with programs like Prism, said the industry official who spoke on condition of anonymity. Google, Microsoft and other companies named as providing information under the Prism program have all faced government regulatory investigations on antitrust and consumer privacy issues in recent years.