Security in a Reputation Economy

In the past, our relationship with our computers was technical. We cared what CPU they had and what software they ran. We understood our networks and how they worked. We were experts, or we depended on someone else for expertise. And security was part of that expertise.

This is changing. We access our email via the web, from any computer or from our phones. We use Facebook, Google Docs, even our corporate networks, regardless of hardware or network. We, especially the younger of us, no longer care about the technical details. Computing is infrastructure; it’s a commodity. It’s less about products and more about services; we simply expect it to work, like telephone service or electricity or a transportation network.

Infrastructures can be spread on a broad continuum, ranging from generic to highly specialized. Power and water are generic; who supplies them doesn’t really matter. Mobile phone services, credit cards, ISPs, and airlines are mostly generic. More specialized infrastructure services are restaurant meals, haircuts, and social networking sites. Highly specialized services include tax preparation for complex businesses; management consulting, legal services, and medical services.

Sales for these services are driven by two things: price and trust. The more generic the service is, the more price dominates. The more specialized it is, the more trust dominates. IT is something of a special case because so much of it is free. So, for both specialized IT services where price is less important and for generic IT services — think Facebook — where there is no price, trust will grow in importance. IT is becoming a reputation-based economy, and this has interesting ramifications for security.

Some years ago, the major credit card companies became concerned about the plethora of credit-card-number thefts from sellers’ databases. They worried that these might undermine the public’s trust in credit cards as a secure payment system for the internet. They knew the sellers would only protect these databases up to the level of the threat to the seller, and not to the greater level of threat to the industry as a whole. So they banded together and produced a security standard called PCI. It’s wholly industry-enforced ­ by an industry that realized its reputation was more valuable than the sellers’ databases.

A reputation-based economy means that infrastructure providers care more about security than their customers do. I realized this 10 years ago with my own company. We provided network-monitoring services to large corporations, and our internal network security was much more extensive than our customers’. Our customers secured their networks — that’s why they hired us, after all — but only up to the value of their networks. If we mishandled any of our customers’ data, we would have lost the trust of all of our customers.

I heard the same story at an ENISA conference in London last June, when an IT consultant explained that he had begun encrypting his laptop years before his customers did. While his customers might decide that the risk of losing their data wasn’t worth the hassle of dealing with encryption, he knew that if he lost data from one customer, he risked losing all of his customers.

As IT becomes more like infrastructure, more like a commodity, expect service providers to improve security to levels greater than their customers would have done themselves.

In IT, customers learn about company reputation from many sources: magazine articles, analyst reviews, recommendations from colleagues, awards, certifications, and so on. Of course, this only works if customers have accurate information. In a reputation economy, companies have a motivation to hide their security problems.

You’ve all experienced a reputation economy: restaurants. Some restaurants have a good reputation, and are filled with regulars. When restaurants get a bad reputation, people stop coming and they close. Tourist restaurants — whose main attraction is their location, and whose customers frequently don’t know anything about their reputation — can thrive even if they aren’t any good. And sometimes a restaurant can keep its reputation — an award in a magazine, a special occasion restaurant that “everyone knows” is the place to go — long after its food and service have declined.

The reputation economy is far from perfect.

This essay originally appeared in The Guardian.

Posted on November 12, 2009 at 6:30 AM • 31 Comments