> It's not like there is a law of nature that makes software development outside of the US impossible.

Of course, see what I said above. I think what makes the US attractive for software development is the VC industry and culture there; a quick browse of founders in SF will reveal a ton of immigrants attracted to that culture.

They can of course try that but their clients have little reasons to trust them. Apart from that it might be very costly to develop, test, and distribute two versions of each product and to maintain compatibility, all of which puts US companies at a disadvantage.

There is already plenty of evidence for the idea that the privacy crisis helps the European industry. Many new businesses in several European countries are successfully selling privacy-reserving software and services and their future crucially depends on the trust of their customers, so they have to take privacy serious in ways that US companies don't have to, at least for now.

when the backdoor is covert and not overtly declared the choice of using the questionable product becomes more economic. the choice gets a lot easier when the government or company clearly states they have a backdoor. for many countries it's not just red flag for using the questioned IT it's a reason to fund industries that compete with a better modal.

And they do that, with the full knowledge of the NSA spying programs.

Unfortunately for your theory, most Europeans clearly do not care enough about their privacy. I don't see any vast European protests about the NSA these post-Snowden days, most people have gone back to sleep. European leaders have largely been 'reassured' enough to remain docile about it, after a brief pretend flash of anger and push-back.