The NSA's appetite for raw data is incredible. They are vacuuming up communications from millions of people and now we discover that without the knowledge of tech giants Yahoo and Google, the NSA hacked into links to their data centers which allowed them to intercept emails and other private communications almost in real time.

The violations of privacy are bad enough. But what these revelations are doing to big IT companies is almost as bad. As it becomes known that companies like Google and Yahoo can be hacked, customers migrate to firms overseas thus siphoning off profits from America's cutting edge techology companies.

The Cable:

I think they're in an almost impossible situation," Rep. Adam Schiff, a senior member of the Intelligence Committee, told The Cable. Speaking of Silicon Valley firms who are obligated to cooperate with the NSA, Schiff said recent leak revelations threatened to negatively impact their bottom lines. "It's definitely going to hurt their business and I think we ought to do everything we can to mitigate that damage. I'm very sympathetic to what they have to confront."

The Washington Post reported today that the agency "has secretly broken into the main communications links that connect Yahoo and Google data centers around the world." According to documents provided by former NSA contractor Edward Snowden, the agency is intercepting emails, documents, and other electronic communications as they move between the companies' privately controlled facilities and the public Internet, giving the NSA access to data in nearly real-time. 

The latest revelations are likely to inflame an already tense relationship between the Obama administration and American technology companies, many of whose customers live outside the United States and are not protected by laws that prohibit the NSA from spying on Americans en masse.

"Why in the world would we burn a relationship with Google by breaking into a data center?" one former intelligence officer asked.

According to an August report by the Information Technology and Innovation Foundation, the NSA scandal could cost cloud companies with U.S.-based servers between $21.5 billion and $35 billion over the next three years as customers flock to European firms that may have more legal protection from U.S. spies. 

"The most enduring setback on national security from all of this could well be the impact on U.S. companies," observed a former U.S. official intimately involved with intelligence matters.

"We've created a Huawei problem for these companies," this official said, referring to the Chinese telecommunications firm that many U.S. lawmakers and intelligence officials believe is a proxy spy for the Chinese government.

There's more. The NSA is also working to undermine encryption standards so they can more easily hack into people's private communications:

The NSA has also reportedly worked to undermine encryption standards that are used around the world to protect private information and secure commercial transactions. Technology experts were outraged to learn that a government agency they thought they could trust was secretly working to make it easier to spy on people.

The former intelligence officer wondered aloud why the agency would engage in intelligence gathering that, if exposed, would make companies seem unable to protect their customers' data from prying government eyes. "My personal concern is that an American company like Cisco that's doing business with governments overseas could face real problems in that line of business."

The NSA's voracious hunger for every packet of data they can steal not only makes privacy a joke, but threatens to severely cripple a key sector of the economy.

I wonder who the president is going to blame for this?