Skip to main content


New Economic Study Highlights Dangers Of Data Breaches & Need For Strong Encryption

BECKERMAN: “Experts across disciplines, parties, and industries all agree: encryption makes America safer and grows the economy.”


Washington, DC – Internet Association today released new economic research detailing the integral role of encryption in protecting American interests. The report outlines the increasing risk of data breaches to America’s national security and economic growth, finding that encryption is the only viable solution to mitigating these risks.

“Experts across disciplines, parties, and industries all agree: encryption makes America safer and grows the economy,” said Internet Association President & CEO Michael Beckerman. “This research contributes even more evidence to the consensus that encryption is a necessary part of keeping our country safe. Mandatory security vulnerabilities or encryption back doors do not make us safer.”

IA estimates that nearly 6 billion records could be exposed in data security breaches and these breaches would cause almost $220 billion in damages by 2020 if no changes are made to better protect records.

“Strong encryption is the best – and frankly the only viable – way to protect America’s economic interest from criminals and state-based actors,” said Internet Association Chief Economist Dr. Christopher Hooton. “The economic and infrastructure risks of online security breaches are real and will continue to increase. The internet already represents about 6 percent of GDP and the quantity of both digitized records and internet-connected devices will continue to proliferate, making encryption all the more important.”

Internet Association examined online security breaches, the number of records exposed in breaches, the cost of security breaches, and several other factors in its research. Key findings include:

  • The potential for damaging security breaches is increasing at exponential rates. The average annual costs of privacy breaches from 2005-2016 is estimated to be more than $5.5 billion with large outlier incidents comprising approximately $3.4 billion of that total. These numbers are set to increase.
  • Encryption protects American interests. Experts all across the spectrum agree that encryption makes us, our data, and our nation safer. Engineering vulnerabilities into products and services makes us less safe.
  • Encryption protects the U.S. companies and the government from foreign state-sponsored actors. State-sponsored cybercrime is increasingly a threat, especially from China. Many Chinese industries have turned to hacking as a replacement for research and development, calculating that it’s cheaper to copy American IP from a hack than to develop their own products.
  • Unencrypted data is now a threat to every industry and internet user.  As more and more of our daily lives become integrated into the internet, the risk of a security breach increases both in terms of scope and scale.

To read a two-page summary of the report, click here.

To read the full report, click here.