High Stakes Over Data Privacy

Patrick Doherty

Patrick Doherty
Director, Corporate Governance Office of the New York State Comptroller

Disclosures of data monitoring programs run by the National Security Agency highlight the increasingly complex relationship between legitimate law enforcement and national security concerns and the need to protect individual privacy in the digital age. As global communications platforms become increasing ubiquitous, government agencies at all levels, are increasingly seeking confidential customer data.

Customer trust is critical for any business, but especially for internet and telecommunications companies that routinely gather massive amounts of personal data concerning and affecting the lives of hundreds of millions of people in the U.S. and around the world.

The Congressional newspaper The Hill commented: “The stakes are high for companies like Google and Microsoft that depend on users trusting them with their most sensitive personal information. If users worry that the information they share isn’t safe from snooping government agents, they are less likely to use the online services, meaning less revenue for the companies”. This is also true for telecommunications companies like AT&T and Verizon, who can lose domestic customers, as well as access to foreign markets.

Responding to these concerns, major U.S. internet companies like Google, Microsoft, Yahoo!, Twitter, Facebook, and LinkedIn have begun to issue periodic “transparency reports” that disclose, in broad terms, what law enforcement has requested of them. While there are statutory limits on the amount of detail the companies can reveal concerning those requests, the companies have been actively pressing the federal government for permission to disclose more. Major telephone companies, however, refused to disclose any information, even when there were no legal or regulatory impediments to their doing so.

The New York State Common Retirement Fund, concerned that a failure to persuade customers of a genuine and longterm commitment to privacy rights could present companies with serious financial, legal, and reputational risks, filed a resolution at AT&T (along with other investors) asking AT&T to follow the lead of the internet companies by publishing semi-annual reports, providing statistics and analysis regarding requests for customer data by U.S. and global law enforcement agencies. Trillium Asset Management filed a companion resolution at Verizon.

Both AT&T and Verizon acceded to our requests and published reports on government requests, including National Security Letters, to the extent that they could legally do so. The companies also pledged to expand on that release as changing government policy permits. New York State Comptroller Tom DiNapoli commented that “it is reassuring that AT&T has responded to shareholders’ justifiable concerns over the security of customer information… The privacy debate is ongoing (and) AT&T should show leadership on these issues by fully engaging in that debate.”

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