By Danny Yadron 

PALO ALTO, Calif.--To hear Google Inc. Executive Chairman Eric Schmidt tell it, the U.S. government has only itself to blame for new efforts by Google and Apple Inc. to keep police out of suspects' smartphones.

Speaking at a round table of technology executives organized by Sen. Ron Wyden (D., Ore.), Mr. Schmidt offered Silicon Valley's first public retort in a renewed debate about how far technology companies should go to protect user data.

Last month, Google and Apple said they would begin encrypting data on their phones in ways that would prevent them from unscrambling it for police--even with a warrant.

The director of the Federal Bureau of Investigation, James Comey, said last month that he was "concerned" the moves might help people "place themselves beyond the law."

Other U.S. officials said it marked a new low in relations between Silicon Valley and Washington since former National Security Agency contractor Edward Snowden began leaking state secrets last spring.

On Wednesday, Mr. Schmidt replied.

"The people who are criticizing this are the ones who should have expected this," he said.

At another point, he said new regulations by foreign governments to shield more data from U.S. spying would end up "breaking the Internet."

He also said that Google had been "attacked" by the British version of the NSA.

Documents leaked by Mr. Snowden indicated spies mined data from Google's overseas data centers without its knowledge.

Sen. Wyden organized Wednesday's event at a high school here to argue that revelations about U.S. electronic surveillance were hurting U.S. tech companies, as foreign governments pushed their citizens to use local technology that might better be shielded from U.S. spying.

Over the past year, Mr. Schmidt, 59 years old, has become one of the most outspoken executives about NSA surveillance leaks.

Google is based in nearby Mountain View, Calif., and the audience of students and local technology employees interrupted him with applause at several points.

The FBI and NSA didn't respond to requests for comment. Neither agency had a representative at the hearing.

Other companies represented included Microsoft Corp., Facebook Inc., Dropbox Inc. and Greylock Partners, an influential venture-capital firm.

"People won't put their information in a bank they won't trust," said Microsoft General Counsel Brad Smith.

Industry executives acknowledged that it is hard to know exactly why they don't win a customer, and that most of the data suggesting that foreign customers are turning away from U.S. suppliers was anecdotal.

It sometimes wasn't clear whether the executives were more troubled by U.S. spying or the negative reaction to it. Tech companies were embarrassed that Mr. Snowden's documents included their corporate logos and showed how the companies cooperated with government surveillance programs.

Mr. Schmidt at one point warned that widespread surveillance of electronic communication is difficult to maintain because of the chance it will become public. "It's so easy to do bulk-leaking, which we're certainly not endorsing," he said.

As for the phone encryption, Apple's and Google's new tools will only guard data stored only on a phone.

It won't affect call logs maintained by phone carriers and data backed up in the companies' servers.

"There are many, many ways law enforcement can get what it needs," Mr. Schmidt said.

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