US cloud service providers have been warned by the EU that they could suffer in the European market if they are too ready to share customers' information with the authorities.
Neelie Kroes, Vice President responsible for the Digital Agenda, sounded the warning following a meeting of the European Cloud Partnership in Tallin, Estonia.
Although she did not refer directly to the allegations against the US National Security Agency's PRISM project, it was clear that the comments were prompted by reports that the NSA can readily access data held by cloud services.
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Kroes said that businesses would be less likely to use the cloud if they thought they could be spied on, and that this will affect cloud service providers.
"If European cloud customers cannot trust the United States government or their assurances, then maybe they won't trust US cloud providers either," she said. "That is my guess. And if I am right then there are multi-billion euro consequences for American companies."
Kroes said there could be two big consequences: that European policy makers could place security guarantees against open markets; and that companies providing better privacy protection would be at an advantage.
There have been reports that several US technology companies have made it easier for the NSA to access information in the name of national security, and that the UK government has taken some information from the programme.