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Competitive Intelligence, Corporate Security and the War on Terrorism

Counterterrorism measures also play a role in intellectual property theft and other security steps taken by corporate America.

By John J. McGonagle and Carolyn M. Vella, The Helicon Group

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For decades, citizens and businesses had come to rely on the state and federal Freedom of Information Acts (FOIAs), also known as open-records laws, to gain access to government records about themselves and others. Of course, there have always been exceptions to access, such as those guaranteeing personal privacy, protecting ongoing criminal investigations, etc. But in general, the FOIAs have been a powerful tool for controlling the behavior of government. They similarly have been a powerful tool in the hands of intelligence professionals, who use them to dig out details about companies dealing with the government, companies in difficulty with the government or those seeking to influence the government.

Shortly following the attacks of Sept. 11, 2001, the U.S. government adopted a new, more rigid policy toward the release of information to the public. Following the specific directive of the attorney general, federal agencies immediately began to restrict access to information that might be of assistance to terrorists. For example, the U.S. Environmental Protection Agency (EPA) had previously posted online very detailed information compiled from the numerous reports businesses filed with it. It also had begun a program of enriching that information by adding details from publicly accessible business directories, and even adding access to driving-direction programs, and producing maps of the areas surrounding many industrial facilities. After 9/11, that material soon disappeared from the Internet. The EPA's feeling was that the data provided too much assistance to terrorists in detailing chemicals being used, physical locations and other details.

However, that data was also being used by companies in the chemicals industry to develop accurate and inexpensive profiles on their own competitors. In fact, the utility and power of this data had been such that official representatives of the chemicals industry had actually protested to the EPA before 9/11, seeking to remove that information from places where their competitors could access it. They even engaged a competitive intelligence research firm to show just how powerful and critical that data was to developing competitive profiles.

But the limitation of access to data does not and will not stop there. There are moves within the U.S. government to put together working groups to reassess the kinds of information that should be available through FOIA and the kinds of information that should be protected. A part of this battle has surfaced in the use of brand-new classifications for data not previously seen, marking efforts by U.S. government organizations to protect data that was not personal, confidential or subject to a security classification. The result is that the amount of data available through the federal FOIA and the speed with which it can be retrieved are both less than in 2000.

In addition, the states themselves, responding to increasing citizen concern about identity theft and similar invasions of privacy, have begun efforts to limit or prevent the release of what most people would consider personal data. This has had unintended but significant consequences on the production of data for businesses. For example, last year, one state amended its open-records laws to try and protect personal, sensitive data. It stated that records released by state government agencies could not include identification data such as taxpayer numbers, telephone numbers, home addresses and similar information. This all makes perfect sense. However, the way the language is written, it impacted not only the contents of business records but also the access to them.

For example, in the insurance industry, applications for approval of new policies, advertisements and the like are typically accompanied by a cover letter from the company filing the documents. That letter will include the name of the individuals responsible for the filing, their direct-dial phone number and other data. The applications themselves will typically contain some sort of identification number for the company, usually its federal taxpayer identification number, the same number used in corporate filings with the SEC. Because of the change in the law, the state insurance department found that it was not able to release documents dealing with the filing of new insurance policies, to which the public and competitors had a right of access, without manually redacting telephone numbers, personal names and taxpayer dedication numbers from these documents. Since the documents, upon receipt, were put into Adobe PDF format, and some were even provided in that format, that position meant withholding the documents completely from the public until they could be rescanned with the material data manually blacked out.

Since these forms were available online as well, that one change completely shut down access to all filings of all insurance companies for as far back as the records went. Eventually, that was straightened out by a combination of amendments and the application of common sense, but for a period of time, an effort to protect personal identity and personal phone numbers had the effect of shutting down access to literally thousands of pages of previously public information.

But not all rule changes in recent years have been intended to restrict access to information. For example, the SEC adopted regulation FD, for full disclosure, to force companies to release critical information, all at once to all parties. The companies had been required to disclose material information as was known, but very often that information was disclosed first to one or a select group of analysts before it was made available to the media and then to the public. The SEC sought to level the playing field by requiring that this information, when released, be released to everyone simultaneously.

Oddly enough, changes in SEC regulations requiring more public disclosure by publicly traded businesses have had a different impact. While we might initially think that this makes collecting competitive intelligence easier, it actually has the effect of making those who disclose information about publicly traded businesses more sensitive about what they say, to whom they speak and the contents of what they release. Anyone reading their analyst briefings and comparing them with some from even six years ago will be struck by the extreme caution exercised by every speaker and the extremely general nature of all exhibits and displays such as PowerPoint presentations.

As the war on terrorism continues, we can expect that access to more and more data currently held by the government will be impacted. Most likely, it will be subject to the typical back and forth of politics. That is, access will be increasingly restricted. That will result in a backlash, shifting the trend toward more "openness and transparency." When data that should not be released is found to have been released, there will be another backlash, and so forth.

 

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