EU businesses are threatening to terminate relations with American internet providers in response to the National Security Agency surveillance scandal, the European Commission has warned.
Neelie Kroes, Vice President of the European Commission, said that US providers of "cloud services," a technology that permits clients to store data on remote servers, could suffer steep losses if users fear the security of their material is at risk of being compromised.
The EC vice president then pointed to the "multi-billion euro consequences" facing US internet companies in the wake of the scandal.
"It is often American providers that will miss out, because they are often the leaders in cloud services. If European cloud customers cannot trust the United States government, then maybe they won't trust US cloud providers either. If I am right, there are multibillion-euro consequences for American companies. If I were an American cloud provider, I would be quite frustrated with my government right now."
On Thursday, the European Parliament overwhelmingly passed a non-binding resolution that says the US should provide full disclosure about its email and communications data, otherwise two EU-US transatlantic information-sharing deals -- the Terrorist Finance Tracking Program (TFTP) and Passenger Name Records (PNR) -- could be revoked.
Relations between Washington and Brussels suffered a setback in June when former NSA analyst Edward Snowden leaked details of a top-secret US data-mining surveillance program, known as Prism, which operated both in the United States and the European Union.
Prism is said to give the NSA and FBI user information from some of the world's largest internet companies, including Google, Facebook, Microsoft, Apple, Yahoo and Skype.
Der Spiegel cited a secret 2010 document alleging that the US spied on internal computer networks in Washington, as well as at the 27-member bloc's UN office and EU offices in New York.
The NSA paper also allegedly refers to the EU as a "target."
In response to heated European criticism of the US surveillance activities, US President Barack Obama this week seemed to downplay the severity of the situation when he commented: "I guarantee you that in European capitals, there are people who are interested in, if not what I had for breakfast, at least what my talking points might be should I end up meeting with their leaders. That's how intelligence services operate."
During a Wednesday phone conversation with German Chancellor Angela Merkel, Obama sought to reassure her that the United States would provide the Europeans with details of their surveillance program.
Meanwhile, in an effort to contain the damage from the revelations, ambassadors to the European Union agreed on Thursday to proceed with EU-US negotiations on a new transatlantic free trade pact, scheduled to open in Washington on Monday.
During the EU-US trade negotiations it will certainly not go unnoticed that crucial European positions in the trade talks may already be compromised due to the wide-scale surveillance. EU officials do not want the issue of America's covert spy program to be the elephant in the room which nobody talks about.
Dalia Grybauskaite, the president of Lithuania, which takes over the rotating six-month EU presidency this week, said on Thursday that she awaits "information" -- not apologies -- from the Americans over the spying allegations.