Amid Prism Denials, Online Ad Companies Face Trust Gap

Government, Online Companies at Odds Over Scope of Spy Program

By Published on .

Leave it to the Federal Government to make the online privacy debate seem, well, quaint.

President Barack Obama
President Barack Obama Credit: Andrew Harer/Bloomberg

On Friday the biggest internet players in the world -- and some of the world's biggest purveyors of data for online advertising -- responded to reports that they are providing the National Security Agency unfettered access to their servers for intelligence and counterterrorism purposes under a program called Prism.

The companies implicated so far -- including AOL, Apple, Facebook, Google, Microsoft and Yahoo -- issued a variety of responses, ranging from categorial denials of the reports by The Guardian and The Washington Post to denying that the government has direct access to their servers.

"We have never heard of Prism," Apple spokesman Steve Dowling told The Washington Post in its story on the NSA program. "We do not have any knowledge of the Prism program," AOL said in a statement Friday.

Others said they do comply with targeted requests from the government for data, but provide no systematic access to their servers.

"We provide customer data only when we receive a legally binding order or subpoena to do so, and never on a voluntary basis," Microsoft said in a statement.

"We disclose user data to government in accordance with the law, and we review all such requests carefully," a Google spokesperson said. "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."

Similarly, Facebook said it only complies with narrow requests for information, which is directly at odds with the Post's description of the way the program works.

"We do not provide any government organization with direct access to Facebook servers," the company said in a statement. "When Facebook is asked for data or information about specific individuals, we carefully scrutinize any such request for compliance with all applicable laws, and provide information only to the extent required by law."

On the heels of those responses, President Obama Friday answered questions for the first time on Prism as well as a secret court order revealed earlier in the week requiring Verizon to turn over phone records of millions of customers. Mr. Obama argued that the government's efforts -- overseen, he said, by the executive branch and federal judges – are much narrower than reports suggest. "In the abstract you can complain about Big Brother and how this is a potential program run amok -- but when you look at the details I think we've struck the right balance," he said.

His message to the American people was, essentially, "Trust us."

But the idea that these companies not only allowed government access to customer information but helped the government search their respective servers is a public relations nightmare. Until now, consumer mistrust of these companies generally centered on personal information being passed to advertisers. If the new revelations stoke more general public mistrust in the online networks to which consumers constantly entrust information, it could lend momentum to the forces behind online privacy legislation.

"It certainly tees it up and presents a clash of two very important concepts, one being the governmental interest in exploring leads that could impact national security, yet on the other hand this very important notion we have in privacy of the right to be left alone," said Anthony E. DiResta, partner at the law firm Winston & Strawn.

Beyond canned statements, the companies involved have kept their heads down, their once-vibrant Twitter feeds gone silent. That's a good strategy, according to Harlan Loeb, global chair of the crisis and risk practice at Edelman. This scandal is much bigger than the companies involved, he said, and consumers' interests in the balance between privacy and safety are more nuanced.

"At the end of the day consumers want both privacy and PDAs and cell phones that are secure but they want their families and neighborhoods secure too," Mr. Loeb said. "It's ultimately why these brands will survive unless make statements that are inaccurate."

Analysts believe the new revelations will have little impact on tangible consumer behavior or, in turn, on their bottom lines. These companies -- not to mention the telecommunications firms such as Verizon also being identified in the reporting on government intelligence and surveillance programs -- are so embedded in consumers' daily lives that there will be practically no change on how consumers use them.

"I think the end result in terms of impact in terms of consumers purchasing iPhones and using mobile services will be essentially nil," Charles Golvin, principal analyst at Forrester, said. "Ultimately, if this is such a concern to a consumers, they'll stop communicating by anything other than carrier pigeon. Or they'll shrug their shoulders and accept that this is the reality of communicating in America following the Patriot Act and go about their business."

A barrage of negative tweets and Facebook statuses does not necessarily equate to lost customers. "I very much doubt [people will switch from Verizon]," Carolina Milanesi, VP-research at Gartner, said. "Consumers will do what they usually do; be upset with the practice and move on with their business."

Contributing: Michael Learmonth, John McDermott, Kate Kaye, Tim Peterson, Alex Bruell and Cotton Delo

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