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Eric Grosse, Google’s security chief, suggested in an interview that the N.S.A.'s own behavior invited the new arms race.“I am willing to help on the purely defensive side of things,” he said, referring to Washington’s efforts to enlist Silicon Valley in cybersecurity efforts. “But signals intercept is totally off the table,” he said, referring to national intelligence gathering.“No hard feelings, but my job is to make their job hard,” he added.

In Washington, officials acknowledge that covert programs are now far harder to execute because American technology companies, fearful of losing international business, are hardening their networks and saying no to requests for the kind of help they once quietly provided.Continue reading the main story Robert S. Litt, the general counsel of the Office of the Director of National Intelligence, which oversees all 17 American spy agencies, said on Wednesday that it was “an unquestionable loss for our nation that companies are losing the willingness to cooperate legally and voluntarily” with American spy agencies.

Many point to an episode in 2012, when Russian security researchers uncovered a state espionage tool, Flame, on Iranian computers. Flame, like the Stuxnet worm, is believed to have been produced at least in part by American intelligence agencies. It was created by exploiting a previously unknown flaw in Microsoft’s operating systems. Companies argue that others could have later taken advantage of this defect.Worried that such an episode undercuts confidence in its wares, Microsoft is now fully encrypting all its products, including Hotmail and Outlook.com, by the end of this year with 2,048-bit encryption, a stronger protection that would take a government far longer to crack. The software is protected by encryption both when it is in data centers and when data is being sent over the Internet, said Bradford L. Smith, the company’s general counsel.

Mr. Smith also said the company was setting up “transparency centers” abroad so that technical experts of foreign governments could come in and inspect Microsoft’s proprietary source code. That will allow foreign governments to check to make sure there are no “back doors” that would permit snooping by United States intelligence agencies. The first such center is being set up in Brussels.Microsoft has also pushed back harder in court. In a Seattle case, the government issued a “national security letter” to compel Microsoft to turn over data about a customer, along with a gag order to prevent Microsoft from telling the customer it had been compelled to provide its communications to government officials. Microsoft challenged the gag order as violating the First Amendment. The government backed down.

Hardware firms like Cisco, which makes routers and switches, have found their products a frequent subject of Mr. Snowden’s disclosures, and their business has declined steadily in places like Asia, Brazil and Europe over the last year. The company is still struggling to convince foreign customers that their networks are safe from hackers — and free of “back doors” installed by the N.S.A. The frustration, companies here say, is that it is nearly impossible to prove that their systems are N.S.A.-proof.

In one slide from the disclosures, N.S.A. analysts pointed to a sweet spot inside Google’s data centers, where they could catch traffic in unencrypted form. Next to a quickly drawn smiley face, an N.S.A. analyst, referring to an acronym for a common layer of protection, had noted, “SSL added and removed here!”

Facebook and Yahoo have also been encrypting traffic among their internal servers. And Facebook, Google and Microsoft have been moving to more strongly encrypt consumer traffic with so-called Perfect Forward Secrecy, specifically devised to make it more labor intensive for the N.S.A. or anyone to read stored encrypted communications.One of the biggest indirect consequences from the Snowden revelations, technology executives say, has been the surge in demands from foreign governments that saw what kind of access to user information the N.S.A. received — voluntarily or surreptitiously. Now they want the same.

The latest move in the war between intelligence agencies and technology companies arrived this week, in the form of a new Google encryption tool. The company released a user-friendly, email encryption method to replace the clunky and often mistake-prone encryption schemes the N.S.A. has readily exploited.But the best part of the tool was buried in Google’s code, which included a jab at the N.S.A.'s smiley-face slide. The code included the phrase: “ssl-added-and-removed-here-; - )”

1) Yes, we’re downloading and installing a wiretapping black-box to your computer. But we’re not actually activating it. We did take advantage of our position as trusted upstream to stealth-insert code into open-source software that installed this black box onto millions of computers, but we would never abuse the same trust in the same way to insert code that activates the eavesdropping-blackbox we already downloaded and installed onto your computer without your consent or knowledge. You can look at the code as it looks right now to see that the code doesn’t do this right now.2) Yes, Chromium is bypassing the entire source code auditing process by downloading a pre-built black box onto people’s computers. But that’s not something we care about, really. We’re concerned with building Google Chrome, the product from Google. As part of that, we provide the source code for others to package if they like. Anybody who uses our code for their own purpose takes responsibility for it. When this happens in a Debian installation, it is not Google Chrome’s behavior, this is Debian Chromium’s behavior. It’s Debian’s responsibility entirely.3) Yes, we deliberately hid this listening module from the users, but that’s because we consider this behavior to be part of the basic Google Chrome experience. We don’t want to show all modules that we install ourselves.

If you think this is an excusable and responsible statement, raise your hand now.Now, it should be noted that this was Chromium, the open-source version of Chrome. If somebody downloads the Google product Google Chrome, as in the prepackaged binary, you don’t even get a theoretical choice. You’re already downloading a black box from a vendor. In Google Chrome, this is all included from the start.This episode highlights the need for hard, not soft, switches to all devices – webcams, microphones – that can be used for surveillance. A software on/off switch for a webcam is no longer enough, a hard shield in front of the lens is required. A software on/off switch for a microphone is no longer enough, a physical switch that breaks its electrical connection is required. That’s how you defend against this in depth.

Of course, people were quick to downplay the alarm. “It only listens when you say ‘Ok, Google’.” (Ok, so how does it know to start listening just before I’m about to say ‘Ok, Google?’) “It’s no big deal.” (A company stealth installs an audio listener that listens to every room in the world it can, and transmits audio data to the mothership when it encounters an unknown, possibly individually tailored, list of keywords – and it’s no big deal!?) “You can opt out. It’s in the Terms of Service.” (No. Just no. This is not something that is the slightest amount of permissible just because it’s hidden in legalese.) “It’s opt-in. It won’t really listen unless you check that box.” (Perhaps. We don’t know, Google just downloaded a black box onto my computer. And it may not be the same black box as was downloaded onto yours. )Early last decade, privacy activists practically yelled and screamed that the NSA’s taps of various points of the Internet and telecom networks had the technical potential for enormous abuse against privacy. Everybody else dismissed those points as basically tinfoilhattery – until the Snowden files came out, and it was revealed that precisely everybody involved had abused their technical capability for invasion of privacy as far as was possible.Perhaps it would be wise to not repeat that exact mistake. Nobody, and I really mean nobody, is to be trusted with a technical capability to listen to every room in the world, with listening profiles customizable at the identified-individual level, on the mere basis of “trust us”.

Privacy remains your own responsibility.