On the heels of the recent buzz surrounding the National Security Agency (NSA) and its data collection methods, questions have surfaced regarding the involvement of some of the world’s largest corporations. While participation from telecommunications companies, such as Verizon (VZ - Free Verizon Stock Report) and AT&T Inc. (T - Free AT&T Stock Report), has been noted, the spotlight has largely been on the tech moguls that are known to collect massive amounts of data on their users.

Internet companies, like Google, Inc. (GOOG) and Facebook Inc. (FB), amass information about those who utilize their Web sites on a regular basis, including browsing histories, posts, and even messages sent and received through their services. Even before the revelations about the NSA, there had been concerns about what this practice meant for users’ privacy, particularly with the increasing emphasis being put on social networking. The growing focus on connectivity encourages users to share personal information through various networks with their respective circles, but in order to do this users have to go through the companies themselves. This puts quite a bit of power in the hands of these corporations, which are then able to maintain large catalogs of data on their users.

Naturally, the unique position of the tech companies has made them of interest to government agencies like the NSA. And, while those involved in the NSA probe have stated that they only provide information required by law under court order, given the scope of information these moguls possess, Internet users have become more wary about how well their privacy is being upheld. The question is not just about what sensitive information these companies could be turning over, but whether or not it is prudent to provide them with it in the first place.

The leaders in the tech space, including the aforementioned companies, as well as other well-known names, such as Yahoo! Inc. (YHOO) depend heavily on the free flow of information and the trust of Internet users. As a result, there is considerable emphasis put on privacy settings, but the idea that government agencies can circumvent these restrictions with court orders, leaving these firms unable to protect their users is troublesome. This could have dire implications for the industry as a whole, given its reliance on the willingness of people to share information, as many may become more reluctant.

There is no doubt that more will come to light upon further investigation in the NSA’s tactics, but the recent reports have sparked a conversation about the overall magnitude of the Internet, as well as the intricate way people are connected through the information they share. This, in turn, has the potential to change the way users view the Internet, particularly with regard to social networking, in terms of their own privacy. As the world becomes ever more connected, it has become more necessary to consider exactly with who and how one makes connections. 

All told, this is clearly a situation in its infancy, and we suggest that interested subscribers continue to carefully peruse our full reports on the many Internet corporations under our coverage in The Value Line Investment Survey.

At the time of this article’s writing, the author did not have any positions in any of the companies mentioned.