Ethics in the high-tech industry, and elsewhere
Microsoft’s antitrust trial has provided several interesting insights into how high-tech companies operate. At one level, intricate details about the nature of innovation and rivalry in this industry were provided. In addition, during testimony, several rivals stood up to accuse Microsoft of unfair business practices. The court held that all these practices — which Microsoft maintains were not improper — were illegal, as was the way Microsoft used its market power to defeat its rivals. Newspapers also reported Microsoft aggressively courting and funding politicians and lobbyists, hoping to get off easily in the trial.
The latest is that its rivals are doing the same thing. News reports state that archrival Oracle suspected that Microsoft was using front groups to publicly support its case. So Oracle, in the spirit of “public service,” did some snooping of its own. Silicon Valley billionaires do not empty others’ trashcans at night: They hire investigative firms to do it. So Oracle hired a private investigator to gather evidence that Microsoft had secretly funded its allies, the National Taxpayers Union and the Independent Institute, and thereby influenced their reports. Oracle then leaked this information to the press. Oracle’s role was exposed when investigators tried to bribe janitors of a third group to hand over their trash. The janitors smelled a rat and ratted on them!
As chance would have it, there is nothing actually illegal in scrounging through someone else’s trash unless you trespass on private property to do so. Since, for many with a loose set of ethics, bribing and corruption only take place in the developing world, even bribing janitors and politicians can be conveniently considered as tipping or campaign contributions.
One might think that a prison term could be had under the Economic Espionage Act of 1996 if the material taken could be considered a trade secret, but that would involve gaining access to confidential data that a rival was actively trying to protect, which precludes, by definition, anything thrown into the trashcan.
While it is illegal for individuals or companies to steal trade secrets, nations don’t face these constraints. For quite some time, press reports have said that the U.S. Central Intelligence Agency, in line with what other nations are doing now that the Cold War is over, has been shifting its skills to commercial arenas. Matters came to a head when a European parliament voted to investigate allegations that the U.S.–owned Echelon spy system, so handy during the Cold War, was being used for economic espionage. The Echelon system can intercept telephone, fax, and e-mail messages. Several E.U. members, including France, Germany, and Denmark, believe that the United States and the United Kingdom are using it to collect commercial information.
This flexible public policy approach to ethics is based on the sure knowledge on the part of governments that they are under attack by the forces of evil. And law enforcement knows from experience that its entire clientele is criminal, and thus, by extension, the entire population is potentially criminal. (That’s why there are no low-risk traffic stops — only high-risk and unknown-risk stops.) This explains why this editor heard an impassioned plea for greater wiretap privileges for the FBI which in substance said “If your child were kidnapped, would you like her to die because we at the FBI have had restrictions [due to gross misuse] placed on our ability to do wiretaps?”
In effect, when surrounded by very real dangers there is a tendency to believe that because of the critical nature of the end, a wide variety of means are justified. Thus, for example, it becomes harder to get a confession from a guilty party if you can’t take him into a back room and beat him until the truth comes out. This means that some guilty people may get off. Indeed, when the Miranda warning was forced on the American law enforcement community, many felt that no criminal would ever be convicted again.
Thus, if you have nothing criminal to hide you should, by this logic, have no reasonable objection to appropriate people being able to listen to your conversations. And certainly nobody but a criminal would have a need to use any device or technology which would preclude communications being examined for the common weal. This not only justifies banning any encryption technology which cannot be defeated by the government, it also justifies systems like Echelon and Carnivore (which captures Internet traffic for the government and is likely to be renamed soon to something less obviously indicative of its function). And by extension, if you were not contemplating crime you wouldn’t be against general DNA samples being taken, or gun registration combined with a database of fired bullets, or any number of other measures designed to deal effectively with a violent and hostile populace.
The truth is, however, that there is always a tradeoff between freedom and security (Thomas Jefferson said “Any person that would trade freedom for security deserves neither security nor freedom.”), and that there is always a measure of risk in any human activity, and the tradeoffs are not always straightforward, particularly when lives are at stake. Indeed, in many cases it becomes a matter of who is going to die, rather than if someone is going to die. Thus, for example, when “the pill” came out, it was suggested that it should be banned not merely because it deprived God of souls, but because 2 of every 100,000 women who used it died of use-related embolisms. The flip side of this is that 100,000 women using diaphragms would have 5,000 pregnancies, the complications of which would cause 5 women to die.
The same problem holds true of civilian ownership of handguns. Those against civilian ownership of handguns note that nearly 14,000 Americans die each year as a result of gun accidents or homicides, and that there can be no social benefit to compensate for these lost lives. Those in favor of civilian ownership of handguns throw in (as a side benefit not related to the intent of the Second Amendment) the fact that in the United States a handgun in civilian hands is used about once every 14 seconds to stop a crime, that states forbidding the carrying of concealed weapons have 715.9 violent crimes per 100,000 population while must-issue states allowing the carrying of concealed weapons have 378.8 violent crimes per 100,000 population, and that there would probably be an additional 5,000 homicides if civilian ownership of handguns were eliminated. They note that in post-gun ban England, incidents of violent crime jumped by 8 percent and robberies increased by 21 percent between October 1999 and September 2000, as the use of handguns in crime in England and Wales reached its highest level.
This followed a 19 percent rise in violent crime between 1998 and 1999. In Australia, which had seen gun violence decline for a quarter of a century, the first year of the national ban on handguns brought homicides up 3.2 percent, assaults up 8.6 percent, and armed robberies up 44 percent. In the state of Victoria, homicides with firearms tripled.
But while governments might function in a hostile environment against a physically hostile populace, companies do not, and gathering competitive information need not be a dirty-tricks department. The Society of Competitive Intelligence Professionals (SCIP), an above-board body (of which this editor is a member), is upset at the negative connotations attributed to its field. It has a code of professional ethics that, when followed, specifically prevents members, including former FBI or CIA operatives, from using that special brand of intelligence-gathering which we could call espionage. They feel that intelligence can be gathered without resorting to unethical behavior.
Former intelligence agents, now in the private sector, tend to agree. They have found that ethical behavior does not put them at a disadvantage, and that if they call someone asking for information, stating honestly that they are doing research for a client, they are pretty much as likely to get an accurate answer as if they called and lied about who they are.
As it turns out, ethical behavior is not shrouded in mystery. Indeed, the Economic Espionage Act of 1996 is a model of clarity, stating that if there is a trade secret and that reasonable steps are taken to protect that secret, it is illegal to take steps to acquire or use the protected secrets. This is pretty clear, and makes it easy to decide whether a given behavior is right or wrong. If somebody throws the secret into the trash, it is arguably not reasonably protected. If you pose as a janitor and take the secret out of a file you pick, you have behaved illegally. If you as a leader say that you would like to have certain information which you know is not publicly available (the corporate equivalent of “Will no one rid me of this meddlesome priest?”) and the material mysteriously reaches you, you have an ethical obligation to ignore it, and in certain circumstances, to report a crime.
The scenario of misuse of desired information anonymously received recently happened in a large law enforcement trade organization. The final explanation given (of several tendered) by the board member was that he had expressed to his students an interest in seeing the material and it mysteriously arrived — and was used. Interestingly, the organization’s Ethics Committee — since disbanded — said:
“It has been the committee’s practice that when an individual has acted on a reasonable and prudent belief, even when that belief turned out to be incorrect or unsupported, that individual is held harmless. This is the “reasonable person” doctrine commonly used in the criminal justice system.”
This reflects a commonplace view, by those with little understanding of the study of ethics, that ethical behavior is scarcely more than behavior that doesn’t actually break the law. As it turned out, the organization’s insurance company had a stronger grasp of both ethics and the law, and settled the claim in record time, probably because the organization had been exposed to such massive liability that it couldn’t risk going to court. While the organization’s insurance company paid the settlement costs for this incident, I would guess that this board member’s tenure probably cost the organization something in the six figures.
Why should an organization or an individual behave ethically? There are three reasons. First, it is the right thing to do, and will make the world a better place. Second, it might keep you out of trouble and save you money. Third, if you have a problem, a reputation for ethical behavior might be of positive value (think of Johnson & Johnson and the Tylenol incident).
Behaving in an ethical manner does not require an onsite ethicist. Rather, it takes a commitment not to do bad things, a few simple rules to follow, and some thought about how these rules apply to your situation. Thus, SCIP has periodic discussions about how to apply ethics to real life: What do you do if someone sends you papers you should not have? What do you do if you are on a plane sitting next to a competitor and he pulls out his laptop and starts looking at proprietary information. What if….
Because of the nature of our business, we in The LUBRINCO Group are frequently put in a position of temptation. How do we deal with this? We have four underlying rules, two of which deal with ethics. The first rule is that we don’t do bad things. The second is that we don’t work for bad people. So far there has been no doubt as to how we needed to behave. We hope there is none for you as well.