When citizens find out — or are reminded — that their government is spying on them, the reaction is typically one of outrage. With the recent revelation that Verizon Communications Inc. (NYSE:VZ) was ordered by the National Security Agency to turn over call data on millions of its customers, investors might worry that outrage can spill over to the company — and possibly its stock price.
But investors should be cautious to paint companies in a negative light when this happens, and remember that the government often requires tech companies to turn over data against their will.
Just a sneak peek
According to The Guardian, which broke the story, the NSA order granted by the Foreign Intelligence Surveillance Court “requires Verizon Communications Inc. (NYSE:VZ) on an ‘ongoing, daily basis’ to give the NSA information on all telephone calls in its systems, both within the US and between the US and other countries.”
The data grab started on April 25 and continues until July 19. NSA gets to know who called who, where the calls took place, how long they were, when they were placed, and unique call identifiers .
All right, so these things aren’t fun to hear. But it’s not the first — or the last – time the government has required a company to turn over data. It’s important to remember that companies (usually) don’t like to turn over data any more than we like them handing it over.
Selling services, not stealing rights
Verizon likely knew this could negatively impact them if this information leaked out, and that their reputation would be hurt because of it. Customers hate having their data stored and shared against their will and Verizon Communications Inc. (NYSE:VZ) knows that it’s simply bad business to do so. Tech companies are in the business of selling devices and services, not colluding with the government to attack privacy rights.
Just a few days ago, before all of this NSA business broke, a U.S. federal judge ordered Google Inc (NASDAQ:GOOG) to turn over customer data to the FBI, despite not having the appropriate warrants. Under the USA Patriot Act, the FBI can send secret letters to companies requesting data information without any approval from a judge. According to an NBC News article, Google argued that the FBI’s request was unnecessary and unconstitutional and the company is currently trying to fight the court orders – with little success.
In a Transparency Report released by Google in March, the company said that it has received anywhere from 0 to 999 National Security Letters each year since 2009. While some requests can be legitimately considered an important part of national security, Google said it scrutinizes requests “to ensure they satisfy the law and our policies.” The Transparency Report is one way Google is attempting to cooperate with the government, while protecting and informing its customers at the same time.
But sometimes companies are criticized for working with law officials.