GO
Loading...

Foreign cloud companies will win big from NSA spying revelations

Zmeel Photography | E+ | Getty Images

American cloud companies stand to lose billions of dollars in business because of Edward Snowden's NSA revelations, and non-U.S. companies are already preparing to pick up the slack.

"The leading cloud companies have been U.S.-based companies, but now there's a real reason to invest in these types of companies that are not in the U.S.," said James Staten, an analyst at Forrester.

The fear that the U.S. government can pry into companies' systems at will and access sensitive data is causing a growing number of businesses to either avoid big U.S. cloud providers--which include IBM, Hewlett-Packard and Oracle--or abandon the cloud altogether.

Read MoreWhite House eyes end to bulk NSA data collection

"A lot of countries are going to fight to be the new leader in this area," said Daniel Castro, a senior analyst at the Information Technology and Innovation Foundation. "I think that's where the U.S. could lose long term."

Read MoreCramer sees big cloud on the horizon

So far, growth in cloud computing has largely been domestic, but part of the problem for the U.S. is that the next big growth opportunity is the international market.

"We are sidelined at the most important part of the game. Even if we resolve this issue in the next 12 months, we've had two years where we've been sidelined. That's permanent damage and not something you get back," Castro said.

Read MoreFormer President Carter suspects his email is monitored by NSA

Castro predicts that U.S. cloud computing companies will have lost $35 billion by 2016. Forrester Research says the damage could reach as much as $180 billion by then if companies' spying concerns continue to outweigh their desire to go cloud. IBM, Oracle and HP did not respond to email requests for comment.

So, who's likely to grab that business?

International providers including NTT Communications, a Japanese telecom company; Fujitsu, a Japanese information technology service provider and Telstra, Australia's largest telecom company, are positioning themselves to be global leaders in the industry, Staten said.

There's also been a significant boost in the number of cloud-specific companies coming out of Israel and New Zealand since the Snowden leaks, Staten said. And although it can't be concluded that these companies were formed because of the Snowden revelations, it's certain that the spying revelations are helping put these firms on the global map, Staten said.

"Data is being courted by overseas cloud providers, so this is clearly hurting U.S. cloud providers," said Elad Yoran, chairman and CEO of Valutive, a cloud security solutions company. "Many places around the world are seeing this as an opportunity."

Another factor likely to accelerate the trend: Countries like Brazil and Germany are strengthening their data residency laws, which force companies to keep their data stored locally. In other words, if a company wants to store data in the cloud, it needs to do so on servers in the country in question.

A recent survey of 1,000 information and communications technology decision-makers from France, Germany, Hong Kong, the UK and the U.S. revealed that many businesses are in fact aggressively changing the way they store their data.

According to the survey, which was carried out by NTT Communications, 90 percent of respondents had changed the way they use the cloud and 16 percent had delayed or canceled contracts with cloud service providers.

"This is a big deal. It's a terrible problem being foisted on companies. And it's the Achilles' heel of cloud computing. It forces them to replicate their infrastructure around the world in the countries that are implementing these laws," Yoran said.

"The U.S. had such a strong position which is being in effect weakened by the proliferation of these laws and creates an opening for global competitors to get into the cloud market at the expense of business that would have otherwise gone to the U.S."

By CNBC's Cadie Thompson. Follow her on Twitter @CadieThompson.

Symbol
Price
 
Change
%Change
9432.T
---
TLS
---
IBM
---
HPQ
---
ORCL
---

Featured

Contact Cybersecurity

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Squawk Alley