David Davis writes for the Financial Times: A false sense of security that will cost Britain’s tech sector dear

As published in the Financial Times:
A false sense of security that will cost Britain’s tech sector dear

Britain’s intelligence agencies are damaging the country’s economic prospects . Their activities have resulted in a dramatic loss of trust in the UK as a place to do business. The government shows no sign of absorbing this sobering conclusion. Yet it alone has the power to undo the damage.

America and Britain both have thriving, innovative technology sectors. Both have suffered severe reputational setbacks from whistleblower Edward Snowden ‘s revelations concerning the activities of their intelligence agencies, respectively the National Security Agency and Government Communications Headquarters. These surveillance programmes have prompted a furious and public backlash from technology companies on both sides of the Atlantic.

Facebook chief executive Mark Zuckerberg has expressed his frustration over what he says is long-lasting damage caused by the US government’s surveillance programmes. His company – which has a young clientele, 80 per cent of which resides outside the US – made clear that it could not tolerate unwarranted breaches of privacy. Google executive chairman Eric Schmidt called the NSA’s snooping programme “outrageous”. In an industry whose customer base is notoriously fickle, and in which today’s leviathan is tomorrow’s fossil, the established market leaders are feeling real fear and anger.

Part of this is the result of potential damage to companies’ profits. Forrester Research, a technology research company, has estimated that the losses could be as high as $180bn. The problem for an industry that holds copious amounts of sensitive personal data is that it is utterly dependent on trust.

This is of grave concern given the importance of the technology sector to the UK’s recovering economy. Large, established businesses will be able to weather the storm. But unlike the US, which is home to technology behemoths such as Microsoft and Google, digital enterprise in the UK relies on small businesses and start-ups. If the British government does not clean up its act, many of these companies will be smothered before they have chance to fulfil their potential.

The US government has listened to the criticism and taken action. President Barack Obama set up a panel with powers to investigate the allegations, which concluded that much of the surveillance is ineffective and intrusive. The government has recognised the importance of its technology companies to its economy and has acted to support them.

Alas, the British government has not been so farsighted. Instead it buried its head in the sand. Britons are patronisingly told that all data interception is carried out legally and is necessary for our security. After a perfunctory investigation, parliament’s intelligence and security committee concluded that the government had broken no laws. There is no suggestion that the UK will stop intrusive data collection programmes.

This leaves the country’s technology industry seriously exposed. Prime Minister David Cameron has correctly identified technology as an area in which Britain can excel. The government wants to make east London “one of the world’s great technology clusters”. But these are highly mobile businesses. They can easily relocate to countries such as Germany, where the privacy of their citizens and companies is guaranteed by the constitution.

The UK cannot afford to drive away the entrepreneurial activity that we have worked so hard to nurture. We need to rebalance our intelligence collection priorities and our economic interest. America has done much to repair its reputation by being transparent and clear on the need for change. Our government must admit that we have a problem, and reconsider its intelligence collection methods.

If we fail to act we risk driving one of our most promising sectors into the arms of our competitors. We will receive little in return. The government does not need an all-seeing, all-hearing intelligence apparatus to shield Britons from harm. Surveillance should be focused on those who wish to do us harm.
Britain is in danger of squandering its advantage in the digital economy of the future. And all we will receive in exchange is a false sense of security.