The legal and policy arguments around the PRISM program through which the NSA snoops into the data stream of major American high-tech companies are primarily going to focus on the treatment of American residents and citizens. There doesn't really appear to be much in the way of a debate as to whether it's legal or appropriate to be spying on foreigners without warrants or probable cause.
Which is perhaps fine as a matter of constitutional law, but I wonder about it as a matter of business practice. We've had some disputes in the United States about firms using Huwaei's networking equipment in the telecommunications space. The issue is that Huwaei is a Chinese firm with ties to the Chinese state, so people raise the worry that there's a national security risk in using them for network infrastructure. And, of course, whatever legitimate concerns there are about this are politically amplified by the fact that Huwaei's competitors would like to block them from doing business. So now imagine a foreign country deciding that it's maybe not such a great idea for all its citizens' Web search and webmail traffic to be surveilled by the American government via Google, Microsoft, Yahoo, and AOL along the same principles. Bad, right?
Maybe the most dramatic example here is Google's new Glass product. Right off the bat a number of people have raised concerns about the privacy issues implied by the use of heads-up displays.
But Google Glass + NSA PRISM essentially amounts to a vision in which a foreign country is suddenly going to be flooded with American spy cameras. It seems easy to imagine any number of foreign governments having a problem with that idea. More broadly, Google is already facing a variety of anti-trust issues in Europe, where basic economic nationalism is mixing with competition policy concerns. Basically, various European mapping and comparison and shopping firms don't want to be crushed by Google, and European officials are naturally sympathetic to the idea of not letting local firms be crushed by California-based ones. There is legitimate concern that U.S. tech companies are essentially a giant periscope for American intelligence agencies and seem like they'd be a very powerful new weapon in the hands of European companies that want to persuade EU authorities to shackle American firms. Imagine if it had come out in the 1980s that Japanese intelligence agencies were tracking the location of ever Toyota and Honda vehicle, and then the big response from the Japanese government was to reassure people that Japanese citizens weren't being spied upon this way. There would have been—legitimately—massive political pressure to get Japanese cars out of foreign markets.
The intelligence community obviously views America's dominance in the high-tech sector as a strategic asset that should be exploited in its own quest for universal knowledge. But American dominance in the high-tech sector is first and foremost a source of national economic advantage, one that could be undone by excessive security involvement.
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