European firms would probably quit services offered by the US internet providers following the National Security Agency (NSA) surveillance scandal, the European Commission (EC) warned.
EC also projects that cloud services providers would also suffer major loss of business following fears from clients of their security being under threat.
The warning comes after plans that the US and Europe were to start probing alleged violations of data privacy in the EU as well as US intelligence and espionage practices.
European Commission Vice President Neelie Kroes said that if businesses or governments think they might be spied on, they will have less reason to trust cloud, and it will be cloud providers who ultimately miss out.
"Why would you pay someone else to hold your commercial or other secrets if you suspect or know they are being shared against your wishes?" Kroes said.
Kores also revealed that the EU-US talks on electronic surveillance would begin on 08 July 2013 (Monday).
European MPs also sought ‘immediate clarification’ from the US on reports of its spying on the EU and also warned of ‘potential impact’ on relations between both the nations.
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"It is often American providers that will miss out, because they are often the leaders in cloud services," Kroes said.
"If European cloud customers cannot trust the United States government, then maybe they won’t trust U.S. cloud providers either.
"If I am right, there are multibillion-euro consequences for American companies," Kroes added.
NSA has been alleged of tapping servers of major firms including Microsoft, Yahoo, Google, Facebook, Apple, PalTalk, AOL, Skype and YouTube, through a programme known as PRISM.
