Corporate espionage: the basics

By Published On: May 28th, 2024

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Corporate espionage can cause both financial loss and reputational damage to businesses. 

High-tech industries like software, biotechnology, and aerospace are common targets for espionage. But it doesn’t mean the attack will be high-tech as well. Sometimes it simply involves insiders sharing secrets with other companies.

Internal breaches are particularly challenging to detect. Many incidents go unreported due to fear of repercussions or tarnished reputations.

High-profile cases

Corporate espionage involves infringing intellectual property and stealing trade secrets. The theft of trade secrets alone is estimated to cost billions annually.

Intellectual property includes things like customer data, marketing strategies, or prospective bids. Trade secrets are specific secrets relevant to the core business of the company, such as formulas, designs, or prototypes. 

An ongoing legal battle between Fanatics and DraftKings over the hiring of a former executive gives a glimpse of such risks. DraftKings accuses its former senior vice president of business development, Michael Hermalyn, of corporate espionage and stealing trade secrets.

Similarly, Uber’s alleged actions against GoCatch underscore the aggressive tactics used to stifle competition. Uber denies allegations but evidence suggests that it sought to crush GoCatch’s growth by exploiting drivers’ data and launching competing services. 

However, one of the most prominent cases is probably the one involving tech giant Huawei, which is commonly associated with the Chinese military. 

TDC Group, Denmark’s largest telecom firm, had solicited bids for its 5G network, with Huawei and Ericsson as the final contenders in 2019. The tender sparked an investigation after TDC discovered leaked information about Ericsson’s lower bid. 

Dov Goldstein, head of special projects, confessed to divulging sensitive data to Huawei. Concerns and anxiety escalated along the way as the security team faced hacking attempts, stalking and drone surveillance even after relocating their probe to a law firm. 

Just when they thought the matter was settled with Ericsson securing the contract and no charges filed, TDC CEO Allison Kirkby and her security team found a drone outside Restaurant Silo where they held a celebratory dinner.

Countermeasures

Corporate espionage can employ various techniques, including bribery, trespassing and impersonation. Companies need to have comprehensive strategies to mitigate the risks.

Reviewing internal processes, enhancing security measures, and seeking external assistance can be a good start. A thorough employee investigation and background checks after suspecting a breach can help minimise the risk of corporate espionage and internal threats. 

These countermeasures need to be done while upholding the highest standards of discretion. This approach ensures that businesses’ reputations remain unharmed.

Learn more about corporate espionage in our series here.

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