How the NSA Affects Your Investment
Tyler is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Mozilla, the creator of Firefox, believes the NSA should mind their own business and stop monitoring our conversations altogether. In fact, they are the head figure that is protesting government surveillance. While Mozilla wasn't involved in the scandal, several companies, which already get a huge amount of press coverage, were. After all, it has been said that this scandal is larger than Watergate.
Mozilla has started a petition asking congress to end all Internet surveillance, including the one exposed by whistleblower Edward Snowden called PRISM. In just the first two days, this petition acquired over 27,000 signatures. So far, approximately 100 organizations have signed the petition, including the social news website, Reddit. This petition is in the form of a letter to Congress, asking a few very specific things. The following is part of this letter, and it details the main points Mozilla is trying to make.
We call on Congress to immediately and publicly:
1. Enact reform this Congress to Section 215 of the USA PATRIOT Act, the state secrets privilege, and the FISA Amendments Act to make clear that blanket surveillance of the Internet activity and phone records of any person residing in the U.S. is prohibited by law and that violations can be reviewed in adversarial proceedings before a public court;
2. Create a special committee to investigate, report, and reveal to the public the extent of this domestic spying. This committee should create specific recommendations for legal and regulatory reform to end unconstitutional surveillance;
3. Hold accountable those public officials who are found to be responsible for this unconstitutional surveillance.
Mozilla Firefox, the company's browser, has approximately 450 million users worldwide, so if even a portion of those people signed the petition, it would certainly demand attention from Congress.
Who was involved?
Mozilla was not involved, but several household names were. Facebook has previously come under a lot of scrutiny about privacy issues and this will, without a doubt raise concerns for some users. Eight other companies were involved, but three we will discuss are Google (NASDAQ: GOOG), AOL (NYSE: AOL), Microsoft (NASDAQ: MSFT) and Apple (NASDAQ: AAPL). Google Chrome has an approximate 750 million users.
Now, some extremists are already discussing not using any company involved with the scandal, but that would be nearly impossible. Yahoo! was another company involved, but will users actually stop using Google, Yahoo!, Facebook, Microsoft, and Apple products because of the scandal?
Probably not entirely. There could be some users that drop one or two of these companies services/products, but how could you stop all usage from all of these companies?
This scandal took many people by surprise, disrupted people's comfort zones, and caused millions of Americans to lose trust in their government, but will it disrupt the trends of these companies? That is yet to be seen, but if it does, it could be good for AOL, who has seen revenues decrease annually since 2007. In fact, their revenues have fallen 236%, despite being on track to increase revenues in 2013. Apple and Google have seen revenues increase every year for a decade, to the tune of 2,724% and 3,649% respectively. Microsoft saw its only drop of the decade in 2009. Overall, it is up 236%.
How profitable have these companies been? Well, much like revenues, earnings per share have increased annually for both Google and Apple over the past five years. In 2010, AOL saw a drastic drop but has increased annually for the other four years. Microsoft has done the worst in this category, as it has only increased three times since 2008.
Many Americans have become very concerned about their 4th amendment rights, and others don't care as long as it provides protection for the country. While I don't see any of these companies going under due to this scandal, what is at stake is their reputation. How these companies continue to respond is what may dictate how successful they are in the future. Below, you can see their immediate responses to the situation.
Apple: "We have never heard of PRISM. We do not provide any government agency with direct access to our servers, and any government agency requesting customer data must get a court order."
Microsoft: "We provide customer data only when we receive a legally binding order or subpoena to do so, and never on a voluntary basis. In addition we only ever comply with orders for requests about specific accounts or identifiers. If the government has a broader voluntary national security program to gather customer data we don't participate in it."
Google: "Google cares deeply about the security of our users' data. We disclose user data to government in accordance with the law, and we review all such requests carefully. From time to time, people allege that we have created a government 'back door' into our systems, but Google does not have a 'back door' for the government to access private user data."
AOL: "We do not have any knowledge of the Prism program. We do not disclose user information to government agencies without a court order, subpoena or formal legal process, nor do we provide any government agency with access to our servers."
The Foolish bottom line
Reputation is the bottom line here. While all of these companies appear reluctant to admit involvement, they have all been a part of this scandal. The good news, is none of them seem to have done anything illegal. If there is a 'back door' to any of these companies, they have let the government in reluctantly.
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Tyler Wofford has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!