Home' Technology Review : May June 2014 Contents 73
MIT TECHNOLOGY REVIEW
VOL.117 | NO.3
BUSINESS REPORT — SPIES AND TECHNOLOGY
The Year of
Government spying gives a giant push
to cryptography on the Web.
● Last summer, the world’s largest Inter-
net companies learned they’d been hacked
by the U.S. government.
Their answer for 2014: encrypt every-
Over the last eight months, Yahoo
encrypted its e-mail service and Google
extended encryption to every search term
that users enter. Microsoft said that by the
end of this year it plans to encrypt all the
data traveling to and from its networks.
“Encryption on the Web is expanding
enormously,” says Peter Eckersley, tech-
nology projects director at the Electronic
Frontier Foundation (EFF), which grades
companies on how well they do at protect-
ing users’ privacy.
The EFF believes that within a few
years, every file crossing the Internet
could be protected with encryption,
which uses mathematics to scramble and
Encryption does not guarantee com-
plete privacy—ciphers can be broken or
compromised. But its widespread use
could seriously hinder both cybercrimi-
nals and bulk collection of data by gov-
ernments. That’s because even someone
who is able to pilfer encrypted data can’t
easily read it.
Encryption was already a rising trend,
even before the spy scandal. Major secu-
rity breaches have shown that computer
networks are not safe from intruders. Last
year, hackers stole millions of credit card
numbers from Target and Neiman Marcus
after finding clever ways to gain access to
“ Today’s networks are like Swiss
cheese. It’s very easy to get in, move lat-
erally, and exfiltrate data,” says Dmitri
Alperovitch, cofounder of the security
firm CrowdStrike. “People are using tools
from the 1990s to do it.”
Encrypting data, like customers’ credit
card information, is an additional line
of defense. But encrypting stored data
(in contrast to data in transit) turns out
to pose a difficult puzzle. Encrypting the
data protects it but also makes it difficult
to search or process—rendering it less
Encryption also takes up computer
time, the main reason Web companies
like Yahoo didn’t always use it before.
But Internet firms realize they must now
take extraordinary steps in response to
extraordinary new threats.
— Robert Lemos
To get a sense of the opportunity, one
need only look at the projected losses
the U.S.-based cloud services industry
(including Google, Microsoft, and IBM)
is facing because of anxiety and indig-
nation over U.S. wiretapping. Estimates
of lost market share through 2016 range
from $35 billion to $180 billion (accord-
ing to Forrester Research).
Switzerland isn’t the only country hop-
ing to cash in. Finland’s F-Secure recently
released a Dropbox competitor called
Younited. And a consortium of German
telecoms, ISPs, and e-mail providers has
backed an “E-Mail Made in Germany” pro-
gram that aims to keep communication
data routed and stored in-country when
possible. In February, German chancellor
Angela Merkel attended talks in Paris on
building an all-European communications
network so that “one shouldn’t have to
send e-mails and other information across
European companies, according to
Grüter, now routinely question where
data is physically stored—and are declin-
ing U.S. offers. One result is that a cluster
of privacy companies is forming in Swit-
zerland. ID Quantique makes the Cen-
tauris CN8000, one of the world’s first
commercial encryption systems using
quantum mechanics. And Blackphone,
a secure handset launched by U.S. pri-
vacy pioneer Phil Zimmerman, will store
subscribers’ telephone numbers on Swiss
Altogether, Switzerland has around
1,440,000 square feet of data-center
space. While that is far less than is avail-
able in countries like the U.S. and Ger-
many, it’s a large amount when compared
to Switzerland’s population of 8 million.
Richard Straub, head of market devel-
opment at ID Quantique, says Swiss inno-
vations are backed by strong research at
universities like EPFL in Lausanne, ETH-
Zürich, and the University of Geneva.
They also benefit from local demand.
When ID Quantique took its products to
market, it found early, and eager, custom-
ers in the banking industry and in gov-
ernment. Officials in Geneva have used
its technology to help transmit federal
election results since 2007, and in online
voting for citizen initiatives since 2009.
So whom can you trust with your data?
Grouitch thinks Switzerland’s appeal
should be obvious. “ This country really is
a vault in the center of Europe,” he says.
— Russ Juskalian
Spread the Risk
Cloud computing spending is shifting
away from the U.S.
’12 ’13 ’14
European companies are now routinely questioning
where data is physically stored.
4/3/14 9:02 AM
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