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Verizon Responds to German Spying Concerns

Mitch Wagner
6/26/2014
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Verizon, which reportedly lost a contract for German services over allegations of US government spying, responded to those concerns Thursday. "Verizon Germany is a German company and we comply with German law," Detlef Eppig, managing director of Verizon Germany, said in a terse response.

Germany said this week that it is canceling its contract with Verizon Communications Inc. (NYSE: VZ), following Edward Snowden's NSA spying allegations. Germany severed the Verizon contract as part of an overhaul of the government's communications infrastructure. Germany says it's giving the work to Deutsche Telekom AG (NYSE: DT). (See Verizon's German Deal Could Be Just the First to Fall.)

Eppig said in his response emailed to reporters:

That blog post, "Thoughts on Foreign Data Storage and the Patriot Act," is dated Jan. 27 and says Verizon received no demands for data stored in other countries last year. It goes on to say: "Our view on the matter is simple: the U.S. government cannot compel us to produce our customers' data stored in data centers outside the U.S., and if it attempts to do so, we would challenge that attempt in court."

Even though Section 215 of the USA Patriot Act "allows a court to issue an order requiring a company operating in the U.S. to produce certain business records, it does not give the U.S. government the power to act outside the U.S.," the blog states. "More importantly, Section 215 does not grant the U.S. government access to customer data stored in the cloud; it only applies to business records of the cloud provider itself. So the U.S. government cannot use Section 215 to compel a company to produce customer data stored in data centers outside the U.S." (emphasis in original).

Search warrants and subpoenas can't be enforced outside the US, and Section 702 of the USA Patriot Act doesn't let the US government compel a US company to produce customer data stored in a data center outside the US, because the US company doesn't have "possession, custody or control of that data," the blog said. "For all these reasons, we do not believe the U.S. government may lawfully demand that Verizon turn over customer data stored in data centers outside the U.S., and if it were to do so, we would oppose the request in court."

The US government can use the Mutual Legal Assistance Treaty process to request help from local, in-country law enforcement agencies, Verizon says.

The company seems to be trying to say it's not cooperating with US attempts to spy on Germany -- without actually saying so. It does not explicitly say it hasn't given the US access to German data. And the company did not respond to our other questions:

  • Has Verizon lost this contract? What is its value?
  • How long has Verizon been serving the German government?
  • What does Verizon's involvement entail? What services does it provide?
  • Have any other governments or organizations expressed concern? Are any other contracts at risk?

If you have any inside information on what's going on here, leave a comment below or email me directly at wagner@lightreading.com.

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to wagner@lightreading.com.

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nasimson
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nasimson,
User Rank: Light Sabre
7/7/2014 | 10:43:43 AM
Re: Verification
Thanks Joe for a detailed insight. I can now see why Estonia is so important in European cloudspace. Lets see how it turns out!
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
7/6/2014 | 7:17:17 AM
Re: Verification
@nasimson:

My rationale for mentioning Estonia is that twofold:

1) This is not just a "random" European country.  From what I understand, the Tallinn University of Technology is offering great programs (taught in English, at that) that are growing.

2) The President of Estonia, Toomas Hendrik Ilves, chairs the European Commission's Cloud Partnership -- an organization of European countries focused on standardizing and jointly purchasing cloud solutions.  Ilves has also seized the opportunity of the NSA PRISM scandal to rally his European compatriots to stick together and team up for Eurocentric solutions that cut the US cloud out.

I think it may be an exciting time to pursue a cloud technology leadership role in Europe -- particularly in Estonia.
nasimson
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nasimson,
User Rank: Light Sabre
7/6/2014 | 2:10:51 AM
Re: Verification
>   I think we will see a growing cloud market not just in Germany,
> but in European countries that formerly have not been particualrly
> significant players in the cloud sector.  Estonia, in particular, is one
> I would keep an eye on.

@ Joe: I can see that cloud services would grow in Europe in this context. However, why do you mention Estonia in particular? All that I know is that is a tiny little country in East Europe.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
6/30/2014 | 11:41:19 PM
Re: Verification
> "Yeah, but we expect the spies to not get caught."

SNAP!


Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
6/30/2014 | 11:36:21 PM
Re: Verification
@Michelle: It's all Marketing 101 (well, maybe not 101, but still, pretty simple).  Yes, people may "secretly" know the dark truth about you, but if you keep the focus on your rivals, say it first, say it loudly, say it often, then you control the messaging, and thus the perception.

Yeah, those secret things people think they know about you MIGHT be true, but the bad stuff about your rivals is DEFINITELY TRUE and REALLY BAD.
pcharles09
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pcharles09,
User Rank: Light Beer
6/30/2014 | 5:58:44 PM
Re: Verification
I don't think they're unclear on pulic servitude. I think they just have an air of elitism that makes them think they can have their cake & eat it too. Why not, especially since most people are not involved in their local & state government.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
6/30/2014 | 2:09:22 PM
Re: Verification
Yeah, but we expect the spies to not get caught. 

We've seen with Dianne Feinstein how government officials expect to have privacy rights not shared by the common citizenry. They're unclear on the concept of "public servants."
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
6/30/2014 | 2:07:20 PM
Re: Verification
nasimon - The business is going to Deutsche Telekom, a local company. Local to Germany, that is. 
Michelle
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Michelle,
User Rank: Light Sabre
6/30/2014 | 10:17:52 AM
Re: Verification
@Joe I have seen European cloud computing customers move data away from US based data centers in an attempt to avoid US spying activities. This is an interesting trend considering the level of snooping done round the worls. Do other countries' governments really believe citizens are totally unaware of thier activies? 
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
6/29/2014 | 10:37:08 PM
Re: Verification
> What do you think will happen next?

 


I think what will happen next is exactly what the German government says will happen next.  They'll move their business to local companies while trying to keep Germans from paying too much attention to the recent revelations in Spiegel about their own intelligence practices.

Ever since these leaks happened, the EU countries have been united in trying to use the news to their advantage to build and mobilize their own cloud industries (never mind, in some cases, their own parts in these surveillance activities).  I think we will see a growing cloud market not just in Germany, but in European countries that formerly have not been particualrly significant players in the cloud sector.  Estonia, in particular, is one I would keep an eye on.
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