IBM Sued By Shareholders For Cooperating With The NSA... Decimating Sales In China

from the economic-impact-of-nsa-spying dept

Ever since the Snowden leaks began, we've been talking about how the harm for the US economy -- and especially the tech industry -- was going to be massive (much more damaging than anything the NSA might possibly prevent with its spying). We've already seen Cisco attribute poor earnings to the Snowden revelations, and now a large IBM shareholder is suing IBM, claiming that its relationship with the NSA resulted in the company's disappointing third quarter results:
The plaintiff in the complaint, Louisiana Sheriffs' Pension & Relief Fund, said this threatened IBM hardware sales in China, particularly given a program known as Prism that let the NSA spy on that country through technology companies such as IBM.

The Baton Rouge pension fund said the revelation of Prism and related disclosures by former NSA contractor Edward Snowden caused Chinese businesses and China's government to abruptly cut ties with the world's largest technology services provider.

It said this led IBM on October 16 to post disappointing third-quarter results, including drops in China of 22 percent in sales and 40 percent in hardware sales.
As for the legal basis for the lawsuit, the pension fund is arguing that IBM should have revealed the potential of this kind of information coming public as a "risk factor." Chances are this lawsuit will go nowhere, but it does highlight, yet again, just how damaging the NSA's activities can be on the US. When compared to how little the NSA has actually accomplished, according to various folks in Congress who have been briefed, it certainly seems like the NSA is doing a lot more harm than good. Hopefully this leads other companies to be much stronger in pushing back on the NSA's demands, knowing that it can significantly harm their business prospects outside of the US.
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Filed Under: china, lawsuits, nsa, shareholders
Companies: ibm

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  1. identicon
    Anonymous Coward, 16 Dec 2013 @ 3:09pm

    Many of the contracts for services from US companies are long term. So the effect hitting those companies and corporations will be a long term drip effect. It is the sum total that will tell the tale. Already Finland is planning a new fiber optic cable that will bypass Sweden and go straight to Germany to avoid the NSA's spying habits in Sweden. That it was made a public announcement is a clue of what is coming. Increasingly the US will find it's backbone routers bypassed too, making it's spying that much harder.

    People worldwide, not just in the US are unhappy with all these revaluations and it will result in changes not beneficial to the US.

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