Guess who’s not coming to dinner: Obama cyber push rankles tech giants

Amidst the pomp and pageantry of what’s been dubbed a “White House summit,” President Barack Obama journeyed to Palo Alto, Calif., today to meet a collection of tech industry leaders a jitney ride from their own back yard.

In a speech to the general audience assembled at Stanford University, Obama promoted government efforts to thwart cyberattacks, focusing on his data-sharing initiative, previously announced in his State of the Union address, touting the benefits to consumers in the wake of a bevvy of recent mass data breaches in the financial and retail sectors. But consumer protection is the easy-to-swallow spoon full of sugar in the administration’s plans; government concerns about private industry’s push for tougher data encryption — and White House demands that U.S. intelligence be allowed some sort of “back door” — are making the president’s proposed cyber-medicine unpalatable to some tech giants.

While the president will met today with the heads of AIG, Bank of America and Visa, to name a few, the CEO’s of Facebook, Google and Yahoo were noticeably absent.

The New York Times quotes a new technologies expert on the “enormous degree of hostility between Silicon Valley and the government.” But beyond the personal enmity, there are real differences that weigh heavily on future prospects, both for personal privacy and tech-sector bottom lines.

The bulk collection of data — started under President George W. Bush, continued under Obama and publicly confirmed in the leaks from Edward Snowden — changed the relationship tech and communications businesses have with the federal government, and specifically with the intelligence community. While most of the largest U.S. telecoms allowed the National Security Agency access to their lines and switches — in exchange for fees or under threat of losing government contracts — the “openness” of U.S. communications networks to U.S. intelligence has large international players looking for more secure options.

“The business leaders here want their privacy and their children protected just like the consumer and privacy advocates want America to keep leading the world in technology and be safe from attacks,” said Obama in today’s Stanford speech. But the reality is, in this instance, the interests of the consumer and the big tech providers are aligned, at least part of the way, and it is the government that stands across the divide.

Because under the rubric of protecting consumer data from the malicious hacks of criminal and government actors, and, to be honest, the negligent data policies of some businesses, the administration’s cybersecurity order is more about creating a means for the government to circumvent next-generation encryption when it finds it necessary, presumably for national security purposes.

The precedent, in government’s eyes, is the way U.S. intelligence was able to collect almost limitless amounts of data from the likes of AT&T and Verizon. But that electronic surveillance has made many in the private sector nervous. The likes of Google and Apple want to be able to promise their users — U.S. citizens, but more to the point, multinational companies — that private information, personal communications and proprietary business secrets are safe from both hackers and the government’s prying eyes.

And that is at odds with the desires of the intelligence community.

The passcode encryption offered to users of Apple and Google smartphones has annoyed the government to the point where FBI Director James Comey suggested it should be illegal. The proposals by the government to calm the furor over bulk data collection by handing that responsibility/requirement to the telecoms have been met with open hostility from the private sector.

And, especially galling to the tech sector, the government’s hording of so-called “zero-day flaws,” bugs that, once found, could be exploited by hackers and governments, alike. “Government often has the latest information on these threats,” said Obama today. Yeah, said tech firms in so many words, then why not tell us about them?

So, whether the Silicon Valley absentees are bargaining for ironclad promises of privacy, hefty compensation for leaving the back door open or a kind of sharing on zero-day flaws that leaves nearly zero bugs, the public snub of the president has private sector repercussions. Tech businesses see encryption as a growth industry and as essential to the growth of their industry. The need for real consumer data and privacy protections aside, it is on this key issue where Silicon Valley executives have decided to make their stand ... by not sitting down with Obama.