James Fallows: Why NSA Surveillance Will Be More Damaging Than You Think:
Because of what the U.S. government assumed it could do with information it had the technological ability to intercept, American companies and American interests are sure to suffer in their efforts to shape and benefit from the Internet's continued growth. American companies, because no foreigners will believe these firms can guarantee security from U.S. government surveillance; American interests, because the United States has gravely compromised its plausibility as world-wide administrator of the Internet's standards and advocate for its open, above-politics goals.
Why were U.S. authorities in a position to get at so much of the world's digital data in the first place? Because so many of the world's customers have trusted U.S.-based firms…. The problem for the companies, it's worth emphasizing, is not that they were so unduly eager to cooperate with U.S. government surveillance. Many seem to have done what they could to resist. The problem is what the U.S. government--first under Bush and Cheney, now under Obama and Biden--asked them to do. As long as they operate in U.S. territory and under U.S. laws, companies like Google or Facebook had no choice but to comply. But people around the world who have a choice about where to store their data, may understandably choose to avoid leaving it with companies subject to the way America now defines its security interests….
The real threat from terrorism has never been the damage it does directly, even though attacks as horrific as those on 9/11. The more serious threat comes from the over-reaction…. This damage was not done by Edward Snowden…. The damage comes from the policies themselves, just as the lasting damage from Abu Ghraib came not from the leaked photos but from the abuse they portrayed.
What governments do eventually becomes known…. In launching such an effort, a government must assume as a given that what it is doing will become known, and then calculate whether it will still seem "worthwhile" when it does. Based on what we've seen so far, Prism would have failed that test.