NSA Fallout in Europe Boosts Alternatives to Google

During its first four years, Berlin-based Posteo struggled to find customers for its secure e-mail service. That changed in June, when US National Security Agency contractor Edward Snowden revealed that his former employer monitored phones and e-mails worldwide.

In the past six months, Posteo has tripled the subscribers of its 1-euro-per-month ($1.37) encryption service, to more than 30,000. “The NSA reports were the final straw,” said Daniel Hundmaier, a 42-year-old communications officer in Berlin who switched to Posteo, stopped using Google’s search engine, and changed the operating system on his phone. As European consumers like Hundmaier focus more on Internet privacy, they’re avoiding the likes of Google, Amazon and Yahoo!. Phone operators such as Vodafone Group and Orange and providers of Internet computing services like Deutsche Telekom’s T-Systems have started stressing that stricter European laws on privacy make the region a safer place to store client data. The shift has created a windfall for privacy-focused startups and small companies that promise enhanced security. Shares of S&T, a computer services company from Linz, Austria, attributed growth of almost 50 percent in orders in 2013 to increased concerns over data security among customers. German systems integrator Cancom says its operating profit climbed 18 percent in the third quarter, largely due to fallout from the NSA scandal. Its shares have jumped 69 percent since June 1. “Made in Germany is high in demand,” said Klaus Weinmann, chief executive officer of Cancom, based in Jettingen-Scheppach, a market town 100 km (62 miles) west of Munich.