By Joseph Menn

PALO ALTO, California, Nov 5 (Reuters) - Revelations about the scale of U.S. spying on the Internet have badly damaged the country's negotiating power in international talks on cyberspace regulation and law enforcement, analysts and industry leaders said at a conference on Tuesday.

Disclosures by former National Security Agency contractor Edward Snowden about the vast scale of the intelligence agency's data collection also are undermining U.S. efforts to maintain the Internet as an entity loosely governed by a mix of national, private and nonprofit forces.

"We're losing leverage internationally" to China, Russia and other countries that want to give more authority to the United Nations and governments, Hoover Institution professor Abe Sofaer said at the fourth annual meeting on international cybersecurity cooperation held by the EastWest Institute. "It's terrible."

China's Minister of the State Council Information Office, Cai Mingzhao, in a speech advocated a greater role for the UN Group of Governmental Experts and said the discussion of rules of conduct, which the United States has sought to keep general and nonbinding, should move to the United Nations as well.

"We should, step by step, create a fair and transparent mechanism for the governance of cyberspace," Cai said.

U.S. State Department Coordinator for Cyber Issues Chris Painter responded with the U.S. position that private companies and other non-government organizations who have been key to the Internet's growth would be undercut if the U.N. were given exclusive power.

The conference at Stanford University drew senior officials, academics and corporate officers from more than 40 countries who are working through the EastWest Institute on systems for improving collaboration on Internet security issues.

But on some of the biggest issues, including the appropriate role for international bodies and privacy rights, U.S. officials were on the defensive even from their European counterparts and American company representatives, who said the loss of trust by Internet users and possible Balkanization of the Internet's technological rules could erode economic growth.

Microsoft Corp Vice President Scott Charney, for one, said the software powerhouse was committed to protecting its users from privacy attacks by all countries and that when one nation attacks another through security holes in its products, he doesn't want either side to win. "I'm not on your side," Charney said. "I'm neutral."

Snowden's documents have cast a harsh light on practices at Microsoft, Google Inc, Facebook Inc and other internet companies. Spy agencies use secret court orders to force the corporations to turn over records on thousands of users overseas. In addition, former federal agents say they can find ways to break into Microsoft's Windows operating system.