Cyber Risk Events have seen a 37% increase in volume Q1 vs Q2 on our ESG Safeguard platform. Particularly, Canada’s Rogers Communications has suffered major outages that are not unique in the industry, and has led to growing antitrust sentiment among consumers and governments.
The Cyber Risk Event Type has seen a 37% increase in volume from Quarter 1 to Quarter 2 on our ESG Safeguard platform. The most recent volume swing on this issue has been ushered in by the internet service outage faced in Canada this past weekend by Rogers Communications.
This weekend Rogers Communications (RCI.B:CA) faced an outage that halted most daily functions for Canadians like online banking, access to government services, and transportation. This was the telecommunication giant's second major service outage in the last 15 months, it is still unclear what caused the outage. An investigation is underway to assess the impact and causes of the internet outage.
Another concern is reports of small businesses losing out on thousands of dollars in sales due to inability to process credit card payments. As small businesses are still recovering from the impact of the pandemic, any loss in potential sales is a painful blow for local economies. It is unclear if Rogers is willing to accept responsibility for this type of collateral damage. Rogers is essentially a monopoly in Canada and there has been outcry over politicians and consumers alike over high fees and poor service. The antitrust sentiment towards Rogers is not unique and has been felt by other companies in the communications industry.
When it comes to more familiar names in the space, Alphabet (GOOGL) has been implicated in sharing data with a sanctioned Russian company. The company has had numerous antitrust lawsuits and fines over the years and is well versed when it comes to negative scrutiny. However, this time the problems they are encountering affect consumers and personal data rather than barring competition from participating in the market. Due to the sensitive nature of personal information and the fact that individuals may not be able to defend themselves from a legal standpoint as well as corporations, there could be increased involvement from third parties. Namely, these third parties could be lawyers instigating class action lawsuits or more government intervention.
Similarly, Meta is facing increased scrutiny on consumer data. Last week, a former Meta (META) employee claimed that employees can see user data that has been deleted. The former employee is suing Meta, and the company's actions appear to violate European and American laws on data privacy. If the company's actions do indeed violate laws, Meta could have bigger problems than a disgruntled former employee on its hands.
The communications sector and technology space has always had its fair share of controversies, mainly centered around antitrust issues. However the issues in the past few weeks have taken a turn towards consumer data and individual impact. The Rogers service outage in Canada this weekend, and the way it impacted small businesses highlights the important role technology plays in our society today. It is a key component to the sinews of commerce and connects us in ways that were once unimaginable. However, the tradeoff for information and convenience is that privacy is compromised.
Currently, there is very little to keep corporations like Google and Meta from obtaining personal information and collecting data on users. In the future government bodies may take more action to limit the scope of information that companies can acquire and the ways they can monetize that information. Cyber risk and data privacy will continue to be a hot button issue, especially as more of the world digitizes and connects to the internet.
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This communication does not represent investment advice. Transcript text provided by FACTSET and S&P Global Market Intelligence.
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