As revelations of mass surveillance continue to come out, the NSA’s spying is starting to hit US companies in the pocketbooks. AT&T’s interest in buying a European operator, even the massive Vodafone, looks unlikely to succeed because of European displeasure with US spying. AT&T’s history of abetting the NSA does not help its cause, especially in Germany, with its strict privacy legislation.
Investors are beginning to take note that government spying “threatens the foundation” of many technology companies’ business models. Spying online erodes the trust of users, a crucial issue for advertising-driven companies. Together, investors and investing professionals are exploring ways to alter business models and push back against overbearing governments.
This week, Rebecca Mackinnon, a leading voice on privacy and free expression online and cofounder of the Global Network Initiative (GNI), gave the keynote at the SRI Conference, an annual gathering of mostly US investors and investment professionals that I attended representing Access. SRI refers to “sustainable, responsible, impact” investing, whose adherents use their money and voice to promote environmental, social and governance goals beyond simply profit maximization.
Asked whether the NSA could be spying on brokerage or banking accounts, MacKinnon had a short answer, “Yes.” Indeed, European officials are already taking action to protect their financial data. European Parliament voted last week to cut the US off from the the Terrorist Financing Tracking Programme (TFTP), more commonly known as the ‘SWIFT’ agreement, which provides member states access to an international financial transaction database in Europe.
In response to the spying, Mackinnon called for a “digital sustainability” campaign to join other movements in the responsible investing community, which came alive in the 1980s with the successful campaign to divest from South Africa over apartheid. Mackinnon previewed Ranking Digital Rights, her new project to rank the world’s telcos and ISPs on their respect for privacy and free expression.
MacKinnon said mass surveillance damages societies in subtle, yet real and long-lasting ways. Rather than putting “bodies in the streets,” she said, surveillance has a “long term corrosive effect,” discouraging anyone from speaking out for their rights or against the government. She cited a recent New America Foundation report on internet use among low-income, elderly, and immigrant communities, that found “marginal internet users face real, tangible online privacy and surveillance problems.”
A baseline privacy law for the US: good for users, and the environment
At a special panel on surveillance during the SRI Conference, Chris Calabrese, Legislative Counsel at the ACLU, dispelled a popular myth that surveillance only harms those with something to hide. Even if you don’t mind the government watching you, he said, everyone depends daily on people, from journalists to activists to immigrants, who require privacy to continue their work. He echoed MacKinnon’s call to recognize the chilling effect on everyday speech and expression that surveillance can impose.
The insecurity that surveillance causes also breeds mistrust among users, hurting corporate growth. One solution to this uncertainty discussed at SRI was a comprehensive data protection law for the United States. A coherent national framework would benefit companies, replacing the patchwork of state and federal laws now on the books, Calabrese said.
Calabrese noted the European Union’s Data Protection Regulation, which Access has worked to strengthen, as a good example of what the US might need. The Regulation would be binding law that would require all 28 EU member states to protect personal data and give users a host of options to query companies about what data they collect and store about them. Lacking a baseline data protection bill, the US is an outlier on the international stage, Calabrese said.
There’s even an environmental reason to support uniform data laws, Jonas Kron, Shareholder Advocacy Director at Trillium Asset Management, argued at SRI. If it were easier for companies to set up data centers, regardless of jurisdiction, they could move the centers nearer to sources of renewable energy. Kron listed resources for investors interested in privacy, mentioning Access alongside the EFF’s ‘Who Has Your Back?‘ rating guide and other sources.
Telco transparency and more
Two of the lowest rated companies in EFF’s guide are the telcos Verizon and AT&T — the latter won Access’ Network Interference Award earlier this year. The telcos have kept conspicuously silent despite claims they have worked with the NSA on mass surveillance. This collusion goes beyond simply building the honeypots of data and waiting for the NSA to knock with (or without) a warrant. Drug enforcement units, for example, pay for streamlined access to AT&T databases in the Hemisphere program.
Investors know what’s wrong, and have several tools at their disposal. One of the best options is a shareholder resolution, or a proposal submitted for voting on by shareholders (or their “proxies”) at the company’s annual meeting. Resolutions must be short, at 500 words maximum, true, and relevant to the business. Many annual meetings are in the spring, but the deadlines to submit resolutions are fast approaching. As one of the only groups with leverage on the telcos, it’s important investors act now to end mass surveillance.