From Google to News Corp: Privacy Scandals, and What They Mean for Us

From Google to News Corp: Privacy Scandals, and What They Mean for Us

Want to make sure your private life stays private and that your personal information is secure? Stop using your phone. Or computer. Or Wi-Fi.

Okay, fine, becoming Luddites isn’t the way to go. (We wouldn’t have access to LearnVest!)

But some of the top stories this week have revolved around corporations infringing on regular people’s cyber safety, which has ramifications for us as individuals, for broader government policy and for the markets.

No doubt you’ve heard about the News of the World phone hacking scandal that first surfaced last year, which rocked Rupert Murdoch’s News Corporation.


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This week, a report from a British parliamentary panel alleged that three senior News Corp execs gave misleading testimony in front of the British Parliament, and that the company tried to cover up widespread phone hacking. Perhaps the most telling tidbit was the report’s note that Rupert Murdoch “exhibited willful blindness to what was going on in his companies” and that he “is not a fit person to exercise the stewardship of a major international company.”

News Corp isn’t the only company raising eyebrows: Google is under fire for collecting personal data like emails, passwords and sensitive personal info from as many as millions of suspecting people, through its “Street View” project. For a long time, Google maintained that the engineer on the project was solely to blame for collecting data from civilians on the street by tapping into their Wi-Fi networks, but new details came out this week from a regulatory report by the Federal Communications Commission (FCC) indicating that this may have been a program supervisors actually knew about.

The FCC found that Google didn’t officially break any laws, but nonetheless levied a fine of $25,000 for obstructing the inquiry.

News Corp, however, has clearly broken laws, as its employees used reporting methods like illegal wiretapping.

What Does This Mean for Us?

The field of cyber privacy is always evolving, especially since it’s still such a new concept. Given a world in which everyone’s connected on Facebook, more comfortable with sharing personal details online and not always clear on which aspects of privacy are important and why, it’s only natural that companies will push boundaries and consumers will have to learn the value of privacy on their own—and maybe even learn to fight for it.

These companies impinged on personal privacy for business motives. News Corp was interested in finding out personal details about celebs and ordinary civilians making news in order to scoop the best stories; Google’s motives may have been influenced by an information-hungry engineer culture, in which, as one New York Times article put it, the mindset is about grabbing the data you can and worrying about filtering it out later.

But think about it: In the early 2000s, most of us didn’t know the concept of securing our wireless networks (i.e. creating a password when we set up that wireless router at home), but now most of us probably do. Admittedly, this makes it harder for us to pilfer Wi-Fi from our neighbors, but it does make us all more secure. And hey, the info Google collected in the case in question came from unsecured wireless networks.

As time goes on and security issues come more to the forefront of popular consciousness, regular people may learn better practices to keep their information. At the same time, we hope that legislators will become familiar with the new technology and enforce our rights—or perceived rights—to privacy, such as in these two cases.

What This Means for the Market

Despite the scathing government report out of the U.K., News Corp shares rose at the beginning of this week. This might be because the scandal forces the Murdochs to run the company in a more investor-friendly matter, according to an article by The Wall Street Journal.

In the past, some shareholders were critical of the company’s management, but the parliamentary report may actually bolster their case, helping to agitate for change. In addition, many investors think that one of the best routes for News Corp to expand is to put more firepower behind its television assets—and this scandal could be a catalyst for News Corp management to divest newspapers, which are seen by some investors as low-growth assets.

Meanwhile, Google’s fine of $25,000 may be the annual salary for an entry-level worker in some parts of the country, but it’s certainly not a big hurdle to the tech giant. Plus, Google may have other things on its collective mind: Earlier in April, Google announced a stock split, which would help preserve the control co-founders Larry Page and Sergey Brin have over the company. The Google board of directors approved a 2-for-1 stock split, meaning that investors will, according to Reuters, “get a dividend of one share of the new, non-voting ‘Class C’ stock for each existing Google share.”

But more troubles may be on the horizon: Google is now being sued by a Massachusetts pension fund over the creation of nonvoting shares.

Are these privacy concerns just the beginning of a decline for companies like News Corp and Google, or is this a time of transition and change, that could lead to a different strategic vision in the future?

Only time will tell.


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