One of the only bright spots in the US economy is high tech, particularly internet-related businesses. But thanks to the close collaboration between tech giants like Google and the NSA spying apparatus, a significant opening is being created for foreign competitors to erode our competitive advantage. Elizabeth Dwoskin and Frances Robinson write in the Wall Street Journal:

Three of Germany's largest email providers, including partly state-owned Deutsche Telekom AG, DTE.XE -0.28% teamed up to offer a new service, Email Made in Germany. The companies promise that by encrypting email through German servers and hewing to the country's strict privacy laws, U.S. authorities won't easily be able to pry inside. More than a hundred thousand Germans have flocked to the service since it was rolled out in August.

Politicians outside the U.S. are pushing new data-privacy rules in the wake of Edward Snowden's revelations.

"We can say that we protect the email inbox according to German law," says Jorg Fries-Lammers, a spokesman for one of the German companies, 1&1 Internet AG. "It's definitely a unique selling point." (snip)

Fueled by the controversy, countries are seeking to use data-privacy laws as a competitive advantage-a way to boost domestic companies that long have sought an edge over Google, Microsoft Corp and other U.S. tech giants.

"Countries are competing to be the Cayman Islands of data privacy," says Daniel Castro, a senior analyst at the Information Technology and Innovation Foundation, a nonpartisan Washington, D.C., think tank that receives funding from the tech industry.

Wonderful. U.S. business history already features too many examples of industries where the United States squandered its early dominance, handing opportunities to overseas competitors because of arrogance and neglect. Do Google and all the others really think the Germans and other competitors are not going to leverage the data dragnet into a competitive advantage that can't be matched?

Nobody likes being spied upon, especially by foreigners. And when the spying amounts to a conspiracy between a foreign government and big companies, the resentment will be intensified.  As is well-known, Google provided both huge campaign donations and the loan of personnel to the Obama campaign. Itg can be regarded as in bed with the regime. The Journal continues:

It could be tough for U.S. companies to undo any damage, particularly when the extent of NSA activities is secret and other nations have been critical of the U.S. On Tuesday, Brazilian President Dilma Rousseff in a United Nations address assailed U.S. snooping on her country. Last week she canceled a planned visit to Washington.

There is ample reason to be alarmed. If America loses its IT dominance, what will be left to power the economy?