Murky World of Corporate Spying– Its a High Growth Global Industry: Who is Spying on Your Business?

Corporate spying is commonplace and it represents the greatest transfer of wealth in human history… Economists estimate– that U.S. intellectual property is worth about $5 trillion, which is nearly half the country’s economy. They also estimate that the theft of trade secrets may cost companies $300 billion per year…

According to SANS Institute; the increasing high stakes game of corporate spying (or espionage) is being played by many individuals, corporations, countries… worldwide. These players use any ethical and/or unethical means to acquire data that will give them a competitive or financial advantage over their competition… According to Eamon Javers; there is so much money at stake that everyone is spying on everybody else. We live in an information age where data is money, and if you get more data than the next guy, you have the edge…

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What is the difference between industry espionage and corporate spying? According to Sarah Brumley; the difference between industrial espionage and corporate spying is 20 years and $10 million; that’s maximum penalty under the U.S. Industrial Espionage Act for stealing trade secrets for money, or for the benefit of a foreign country. Whereas, corporate spying refers to information gathering- where some is legal and some is not-taken from employees and companies without their knowledge or consent…

Corporate spying is not a crime, if the methods used to conduct it are legal, for examples; hiring secret shoppers to evaluate retail stores or simply hiring an investigator to eavesdrop at a trade show. The term is also used to describe using the Internet to collect information… Also, when a company tracks web searches and keystrokes of employees who are using its computers, it’s not breaking the law. However, often organizations do step over the line by obtaining information illegally…

Corporate Spying; according to the Merriam Webster Dictionary– spying is defined as: the practice of using spies to obtain information about plans and activities of a foreign government or a competing company… Although the term sounds very cloak and dagger and makes us think of cold war era spying; it has recently been used more to describe what companies around the world and in most industries, are doing to each other. Corporate spying is seen as a way to gain a competitive edge, a market advantage or perhaps to embarrass or put a competitor out of business…

There are various types of spying or reconnaissance that are intended for commercial purposes, rather than solely for national security objectives, and they have become more widespread in recent years with globalization and fair trade initiatives… Most often for commercial purposes these are misappropriation of trade secrets, which include; stealing, copying, transmitting, buying, or even destroying trade secrets… these are considered criminal acts under the Economic Espionage Act of 1996 (EEA)… The law makes it illegal to steal trade secrets, as well as; copy, duplicate, sketch, download, or communicate them to others…

According to an estimate by the Federal Bureau of Investigation (FBI); billions of dollars are lost every year to foreign and domestic competitors who intentionally target business intelligence from U.S. industries and technologies as well as commercial technologies by exploiting information and trade secrets. The FBI notes that foreign competitors criminally seek intelligence by recruiting insiders or establishing ‘cover’ business relationships or by acts of– bribery, theft, wiretapping, covert surveillance, cyber invasion… Corporate spying is international in scope, and transpires between businesses, companies, corporations…

One of the most significant misconceptions is that high-tech criminals, sophisticated spies, and computer hackers conduct it, but more often than not, corporate spying is carried out by very simple and preventable measures, for example;  with so much focus today on computer security, corporate spies can more easily slip into an unlocked office or neglected conference room to tap into information sources like the trash. desk tops, vulnerable telephones… Or secrete a small listening device that can be remotely triggered, in a company’s executive conference room or an executive’s office. As a general rule of thumb, a good spy will always look first to the path of least resistance.

However, from a corporate prospective there are two things that exacerbate the problem; 1. lack of awareness of general security practices by employees, 2. lack of proper valuation of intellectual property and company information… One simple example is the handling of draft documents, which are often discarded with less caution than the finalized version– and yet they contain much of the same information…

According to an American Society of Industrial Services (ASIS) Report; several major trends in the industry, include:

  • Information assets in all formats (e.g.; paper, electronic, oral, prototypes, models…) are being targeted for possible compromise…
  • Deliberate actions of current, former employees are a primary threat to proprietary information…
  • Exploitation of trusted relationships, including; those involving vendors, customers, joint ventures, outsourced providers… is a threat to proprietary information…

In the article Corporate Spying– Spies are Among Us by Janelle Brown writes: It may seem a little farfetched but perhaps that seemingly benign salesman sitting in the next cubicle is one of them. Or, maybe its the executive you saw breezing through the airport, briefcase in hand… According to Adam Penenberg and Marc Barry; many corporations worth their salt are using spies these days. It’s just one of the costs of doing business… Every once in a while, corporate spying stories slip into the mainstream media…

Most of the time, corporate spying is cloaked in euphemisms, for example; the average corporate conglomerate may have a million-dollar budget for secret information gathering, but the internal responsibilities are hidden from public and shareholder scrutiny, many with seemingly innocuous titles, such as; the title of ‘competitive intelligence’ is common and it’s a growing industry…

The Society of Competitive Intelligence Professionals (i.e., basically, corporate spy central) has 7,000 members, and the U.S. Chamber of Commerce reports that $25 billion in shareholder money is lost every year in intellectual property theft. In the information age, intellectual property is money; so it’s not any wonder that most multinationals are trying to get ‘intelligence’ on what their competitors are up to… For most companies, the target is data; business plans, patents, pricing lists, product details, markets… which are easily obtained by a seasoned sleuth…

But despite some nifty gadgets, corporate spying relies mainly on good old-fashion stealthy research. The typical spy is not very sexy, most lack the intrigue or drama that you would normally associate with spying, e.g.; no miniature camera, no disguise, no midnight break-in, no ‘Bond’ gadgets… most corporate intelligence gathering is not very scintillating…

In the article Corporate Espionage: Fact, Fiction by Andrew Beattie writes: Corporate espionage is probably not what you think of when you hear the word spy; there is nothing blatantly illegal about this profession. The freedom of information act can, with some imagination, be stretched to protect the collection of any kind of information as long as you abide by two Rules: 1. You have not signed a non-disclosure agreement… 2. You do not use fraud or break any laws while gathering information…

When corporate spies are caught, they are usually charged for breaking Rule-2… There are several reasons that you don’t hear much about corporate espionage: If a corporation admits that it has been the victim of cloak and dagger activities, then it appears vulnerable. This could potentially attract more freelance spying on the basis that the company is a ‘easy target’… It also shakes shareholder confidence.

Corporate spying is a much more compelling headline than a company’s earnings report, so the news of a breach would almost certainly receive publicity that would cause the company’s stock price to drop…

Art of Corporate Spying: Corporate spies begin by gathering all the information they can on a targeted firm by requisitioning documents via the Freedom of Information Act, the Internet has a wealth of information, also if a company listed the bowling scores of the previous office outing on a webpage– voila, the spy has a list of management, personnel to research…

Then, little more digging reveals how much they make, any shifts in position that may have left a disgruntled employee ready to dish the dirt, and so on… Facebook and Twitter have eroded the idea of personal privacy to the point where people rarely give a thought to their professional confidentiality…

Then further, corporate spies may pose as journalists for some unknown local paper wanting to write a company profile or a story about the management team– and why not? It’s free advertising… However, a  company’s weakest link is not its corporate vanity or vastness of the Internet, but the ‘people’ themselves within the company…

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The world of corporate spying is very real and its far from being glamorous, but knowing a competitors next product line, bid price or other sensitive data can give a rival company a real competitive advantage– provided they don’t get caught. The temptation is strong, so corporate spying will continue– whether you hear about it or not… According to George Chidi; I’m a competitive-intelligence researcher (or, a spy of sorts)… I don’t break the law, but I always feel like I’m right on the edge of it, and the information I gather is given freely and obtained legally, and I don’t lie to get it, but in the back of my mind I’m always thinking: You (the target business) probably don’t want me to know this

According to Paul King; it’s difficult to know exactly how common corporate spying is because most victims never report the attack, being fearful of the consequences of going public… the best you can do is monitor your systems carefully and if you hear of an attack on another organization, ensure that it couldn’t affect you… The question isn’t whether you know you’re vulnerable to corporate spying, it’s knowing ‘how’ vulnerable you are…

Protecting trade secrets and competitive advantage must be an immediate top priority in any company… Companies walk a tightrope when it comes to investigating crimes of spying; publicity damages brand reputations, and has negative impact on shareholder confidence, value…