PALO ALTO – You own your data. And the government needs to start respecting that.

This was the assertion made today by Microsoft General Counsel Brad Smith at a Silicon Valley panel discussion on NSA surveillance. Until the US recognizes and restores the fundamental right of ownership you have in your data, he continued, the U.S. cannot hope to rebuild trust lost through the NSA’s widespread surveillance programs.

This stance flies in the face of what we expect from internet companies these days, many of whom tend to act as if they own the content we create.

“If you're a consumer or a company, you own your email, your text messages, your photos and all the content that you create,” he said. “Even when you put your content in our data centers or on devices that we make, you still own it and you are entitled to the legal protection under our Constitution and our laws. We will not rebuild trust until our government recognizes that fundamental principle.”

The room erupted in applause.

The panel discussion was organized by Senator Ron Wyden (D – Oregon) to address the effects the NSA surveillance programs have had on the tech industry. It included Google Executive Chairman Eric Schmidt, and the top legal counsels for several tech companies—Colin Stretch of Facebook, Ramsey Homsany of Dropbox and Smith from Microsoft. Also participating was John Lilly, a partner with Greylock Partners an investment firm.

Wyden is chairman of the Senate Finance Committee and has served on the Select Committee on Intelligence for more than a decade. He was one of the few lawmakers privy to the NSA's programs before they were disclosed by whistleblower Edward Snowden. The panel was held before an audience of about 200 adults and students on Wyden's home court: the gymnasium of his alma mater, Palo Alto High School.

"We're Going to End up Breaking the Internet”

Wyden opened the panel by noting that until the Snowden revelations he never once heard a US official express concern about the potential impact of the government's mass surveillance programs on the digital economy.

"When the actions of a foreign government threaten red-white-and-blue jobs, Washington gets up at arms," he said. "But, even today, almost no one in Washington is talking about how overly broad surveillance is hurting the US economy.”

The panelists all agreed that the surveillance has had detrimental affects on the industry, not only in terms of the erosion of trust from consumers but also in terms of the potential economic, social and educational impacts that would occur if countries follow through on their threats to keep data local. Some twenty countries have already proposed or stated intentions to propose domestic laws requiring local data to remain local as a result of the spying revelations. If this occurs, Google's Schmidt warned, “the simplest outcome is we're going to end up breaking the internet.”

Governments, he said, will eventually just say, “we want our own internet...and we don't want other people in it.” The cost will be huge in terms of shared knowledge, discoveries, and science. It will also be expensive, since the cost of running data centers in every country where they have customers may be too much for some firms to handle.

"We're screwing around with those kinds of concepts without understanding that that is a national industry," Schmidt said.

Data localization also makes data potentially more accessible to foreign regimes that don’t respect the rule of law or even have a rule of law governing how or if they can access data. “More access points around the world make your network hard to secure [and] in a practical matter it makes us more vulnerable,” said Facebook's Colin Stretch.

Homsany noted that the burden of regaining trust shouldn’t lay just with companies; the government needs to lead and repair the trust that's been damaged “to show the world that we are a country that respects these values,” he said. “We have built this incredible economic engine in this region of the country . . . and trust is the one thing that starts to rot it from the inside out. I think it is really that serious. We need to see the government also starting to do its part."

Silicon Valley vs. the Government

In a year of profoundly disturbing disclosures, Schmidt said the one that struck companies the hardest were reports about the tapping of undersea cables used to transmit data between the overseas data centers of U.S. companies. To put it in simple terms, Schmidt said, this was essentially hacking—the same kind of state-sponsored hacking the US has condemned in other countries, and it rallied companies to take action. “I think that put the relationship between the industry and the government on profoundly different footing,” he said. “The disclosure brought to light that there was this effort outside of what we all thought of as the appropriate legal process to obtain user data."

The effect has led companies to play essentially a game of whack-a-mole with the government, working to find technological solutions that “force the government to come to us through the legal means [that are] the product of a democratic process,” he said. By “investing as heavily as we are through security, we're forcing that access through those laws to be the only way in.”

Senator Ron Wyden, July 14, 2014. Victor J. Blue/Bloomberg via Getty Images

Wyden addressed the battle that’s currently taking place between the government and technology companies over this, referencing specifically Apple's move to make encryption default on the iPhone 6 and government claims that this will erode the ability of law enforcement agencies to do their job. Wyden said lawmakers need to find laws that ensure that liberty and security are not mutually exclusive “so that companies aren’t forced to duke it out with the government in the technology lab.”

Schmidt had little sympathy for the government’s cries that the move to secure data thwarts law enforcement.

“The people criticizing this should have expected this,” he noted, adding that law enforcement still has “many, many ways to get that information they need without having to do this.”

The government should get used to it, because these kinds of technological solutions are here to stay. “I'd be shocked if anyone takes the foot off the pedal in terms of building security and encryption into their products," Facebook's Stretch said. "[But] I think that would be true even if the NSA didn't exist.” The Snowden disclosures, however, created an additional imperative to do it “and I think we’re all working harder and faster on the process than maybe we were doing before."

>Companies had no choice but to take the steps that Apple and others were taking to strengthen the security of customer data, and the government should get used to it.

Homsany noted that the burden of regaining trust shouldn’t lay just with companies; the government needs to lead and repair the trust that's been damaged “to show the world that we are a country that respects these values,” he said. “We have built this incredible economic engine in this region of the country . . . and trust is the one thing that starts to rot it from the inside out. I think it is really that serious. We need to see the government also starting to do its part."

This led to a discussion about the inadequacy of current legislation to protect consumers.

There are two ways to protect privacy, either through stronger technology or better laws, Smith said. “And in the absence of better laws, we're all being asked to invest in stronger technology. We need better laws.” Current laws are way too antiquated to address present-day technologies and circumstances. The Electronic Communications Privacy Act, he said, is almost 30 years old. "If this law were a technology product, it would be in a museum.”