Privacy – Same boat.

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Microsoft has taken the most heat from the latest revelations but it looks like everyone is in the same boat.  

  • The latest revelations reveal that Microsoft has actively participated with the NSA to allow the authorities to circumvent its encryption.
  • Outlook.com, SkyDrive and Skype have all been compromised but it is unlikely that the circumvention has been limited to these.
  • Microsoft has been the subject of court orders (from the secret court) that has forced it to make its systems available to the security services.
  • Microsoft has not included any software in its systems that allow the NSA to eavesdrop but simply helped it to hack into the data flow.
  • I very much doubt that Microsoft has been alone in its receipt of court orders and I suspect that all the providers of Digital Life services are in the same boat.
  • Android is one step further along as it seems that Google has actually included NSA code in the Android operating system.
  • Apple appears to be less tarnished by these revelations and this is because its own services (to which the NSA is almost certainly demanding access) are much less used than those of Microsoft, FaceBook and Google.
  • Skype has around 660m users, Facebook has 1.1bn users with Google being in the same ballpark.
  • Apple has far less. Lots of people use Apple devices to get access to third party services but because Apple is not hosting these services itself, it does not have the data.
  • For its own services like Mobile Me, iChat and iCloud, I am certain that it has received the same requests and co-operated in the same way.
  • However, because the user numbers are much smaller, it has not been the main focus as these revelations have come to light.
  • Frankly, I do not believe that any provider of a Digital Life service based in the US has not been forced into co-operation and I suspect the same is true overseas.
  • For example, the Indian government recently announced that it is now ready to intercept all communications carried by the BlackBerry system.
  • Therefore, I do not believe that any one company is in a better position or is more to blame for handing out customer data than any other.
  • This incident is likely to further increase demand for services like VPN encryption and increase user willingness to try alternative services.
  • The problem is that any service will always be vulnerable to state intervention wherever it is located as it is very clear that the US is far from alone in this activity.

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.