2 E-Mail Services Shut Down to Protect Customer Data

The shutdown of two small e-mail providers on Thursday illustrates why it is so hard for Internet companies to challenge secret government surveillance: to protect their customers’ data from federal authorities, the two companies essentially committed suicide.

Lavabit, a Texas-based service that was reportedly used by Edward J. Snowden, the leaker who had worked as a National Security Agency contractor, announced the suspension of its service Thursday afternoon. In a blog post, the company’s owner, Ladar Levison, suggested — though did not say explicitly — that he had received a secret search order, and was choosing to shut the service to avoid being “complicit in crimes against the American people.”

Within hours, a fast-growing Maryland-based start-up called Silent Circle also closed its e-mail service and destroyed its e-mail servers. The company said it saw the writing on the wall — while also making it plain that it had not yet received any court orders soliciting user data.

Mike Janke, the chief executive, said the company’s customers included heads of state, members of royalty and government agencies. The company will continue its encrypted phone and text messaging service.

In effect, both businesses destroyed their assets — in part or in full — to avoid turning over their customers’ data. Such public displays are far more difficult for large companies to make, and help explain why the most public efforts to challenge secret government orders have come from small companies and nonprofits.

“Providers are in a bind,” observed Orin Kerr, a law professor who specializes in surveillance law at George Washington University. “They need to respect the privacy rights of customers in order to keep customers, but they also have an obligation to comply with the law. A small company can say, ‘Rather than comply with the law, we will go under.’ But Verizon is not going to do that.”

He added: “The government usually has an easier time with large companies because they have more of a long-term need to have good relations with the government.”

Large Internet companies have moved more quietly and cautiously, addressing consumers’ concerns about government requests only after information about secret orders was leaked by Mr. Snowden. This week, technology industry executives and lobbyists attended meetings at the White House.

In an effort to address public concern about the government’s surveillance programs, President Obama on Friday announced the creation of a task force to advise the government about how to balance security and privacy. He also said he supported a proposal to change the procedures of the secret court that approves electronic spying under the Foreign Intelligence Surveillance Act.

The level of secrecy appeared to be a particular frustration for Mr. Levison. On the Lavabit site Thursday afternoon, Mr. Levison said he was legally prohibited from explaining why he had been compelled to suspend operations. “I wish that I could legally share with you the events that led to my decision. I cannot,” he wrote.

“This experience has taught me one very important lesson: without Congressional action or a strong judicial precedent, I would strongly recommend against anyone trusting their private data to a company with physical ties to the United States,” he added.

Silent Circle’s chief executive, Mr. Janke, said executives at his company — the founders include Philip R. Zimmermann, who created the original e-mail encryption protocol known as Pretty Good Privacy — had opted to follow Lavabit’s example, even before being served with a government order.

He said the incident was a reminder of a fundamental flaw with e-mail technology. An “aggressive” government, he said, can extract e-mail data from any company, no matter how good the company’s encryption tools. Keys to unlock its customers’ encrypted communications had been stored on the company’s servers. Silent Circle destroyed that data, the digital equivalent of a library setting fire to its membership records to keep the government from knowing who checked out what books.

Silent Circle’s text and phone service uses somewhat different technology. The encryption keys are generated between two users as they are communicating and then destroyed. It is aptly called ephemeral encryption.

Bruce Schneier, a cryptographer, applauded Lavabit’s decision, pointing out that its self-destruction was made possible because it had no shareholders to answer to.

“Could you imagine what would happen if Mark Zuckerberg or Larry Page decided to shut down Facebook or Google rather than answer National Security Letters? They couldn’t. They would be fired,” Mr. Schneier wrote on his blog. “When the small companies can no longer operate, it’s another step in the consolidation of the surveillance society.”

Before Lavabit, there was Calyx Internet Access, a small Internet service provider and Web hosting company, that challenged the constitutionality of a secret National Security Letter in 2004. Four Connecticut librarians likewise won their gag order challenge under a so-called National Security Letter in 2006. And a similar challenge was brought by a nonprofit digital library, called the Internet Archive; the government had sought information about one of its users, and it won its challenge to a gag order in 2008.

The most closely watched ruling on secret orders came this year. The San Francisco-based Electronic Frontier Foundation appealed to a United States District judge to lift a gag order issued by the Federal Bureau of Investigation through a national security letter. The court said the gag order was unconstitutional.

Large companies have pushed back more quietly. Yahoo is the only company known to have challenged a gag order from the Foreign Intelligence Surveillance Court. And a coalition of companies, including Google and Microsoft, which sit on a trove of personal communications, have appealed to the Obama administration to be able to disclose just how many Foreign Intelligence Surveillance Act Court orders they receive.

According to Justice Department figures, in 2012, government authorities made 1,856 data requests under the Foreign Intelligence Surveillance Act, the vast majority for electronic surveillance, and another 15,229 requests through National Security Letters.

Nicholas Merrill, the owner of Calyx, received one such letter in early 2004 under the Patriot Act. He closed his business within months. “I was terrified they were going to drag me away,” he said Friday.

It took him years to challenge the court order. He still cannot discuss its contents, he can only acknowledge its existence. His actions, he said, were possible only because his company was small and he was not beholden to shareholders. “In a way being a small company is quite liberating,” he said.

Mr. Merrill said he immediately empathized with Mr. Levison’s plight. “I would imagine he feels so strongly about this that he’s willing to sacrifice his own business and he’s willing to risk angering all his client base for this basic principle,” he said. “I can totally relate to where he’s coming from.”

Nicole Perlroth contributed reporting.