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National Security Speeds Cloud Consolidation

Stocks in this article: GOOG IBM AMZN HPQ

NEW YORK ( TheStreet) -- The nature of cloud computing is that you can parcel out a huge job among many machines, address them as one virtual machine, then perform computing tasks that were impossible before.

A cloud can take a huge haystack of data and find individual needles in it, or analyze that same haystack for patterns that create immense value. Once a job is in the cloud it can scale on-demand, and be ready to run at a moment's notice.

Google (GOOG) uses this capability to get you the data you want, and uses the traffic patterns or "meta-data" generated by this to target ads to you that might actually be relevant. For years there were activists who found this feature scary.

But when it was revealed the National Security Agency can "google" too, using phone records and Internet cache to help it focus investigations on incipient plots that might take hundreds of lives, all this became a scandal with a life of its own.

The scandal has put all cloud players on the defensive, as I noted yesterday in writing about Hewlett-Packard (HPQ). What the NSA did was not a bug. It was a feature of the Patriot Act ( described here by Wikipedia), passed in 2001, as the cloud era was dawning.

It was the hope of Congress when it passed that act that computers would, in time, become capable of just the kind of "pre-surveillance" whistle-blower Edward Snowden revealed. That's why the CIA has signed a $600 million contract, reported by Wired, for Amazon.com (AMZN) to build copies of its Amazon Web Services cloud inside CIA offices.

And that's the real story here, a business story.

The NSA isn't listening into your phone calls. They're not reading your email. It's taking a first cut of this meta-data and then, if it finds something, going through a legal process to start listening to your phone calls and reading your email. Your kids now do the same thing when they research a term paper. They run a job to find what they need to read.

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