Chilling effects and the stock market response to the Snowden revelations

Abstract

This study analyzes the changes in individuals’ Internet search behavior and economic variables following Edward Snowden’s revelation of National Security Agency (NSA) surveillance activities of global Internet communications. We refer to the abrupt changes in individual search behavior beginning in June 2013 following Snowden’s revelations as the “Snowden effect.” The “Snowden effect” is a form of chilling effect. Using data from a unique search engine, DuckDuckGo, we show that chilling effects indeed exist. However, further analysis including the stock prices of the largest cybersecurity companies demonstrate a muted market response to the revelations, while cybersecurity spending data suggest resulting economic harm in the form of increased opportunity costs of buyers of cybersecurity services.