Industrial Espionage and the Fourth Industrial Revolution: Technological Developments, Security Risks and Precautions

Introduction

The rise of geographical discoveries and the expansion of international trade have increased global competition and encouraged the systematic application of industrial espionage. This process has led to industrial espionage becoming a key strategy throughout history. Today, the Fourth Industrial Revolution is radically altering the context and methods of industrial espionage. The rapid development of technology presents more complex threats and opportunities for industrial espionage. In this context, understanding the impact of the Fourth Industrial Revolution on industrial espionage and addressing the challenges of this new era are critical.

History of Industrial Espionage

The foundations of industrial espionage were laid 1500 years ago when a Chinese princess secretly gave silkworms to an Indian, taking the secret of silk out of China[1]. Geographical discoveries encouraged espionage between different societies, and some states even passed laws to finance espionage activities.[2] For example, in 1474, Venice supported espionage by granting concessions to the technologies brought in, thereby gaining supremacy in the Mediterranean.[3] Similar laws were implemented in France, Germany, and the UK.[4] Particularly in Germany, industrial espionage was more effective than research and development (R&D), with studies conducted in East Germany indicating that state-sponsored espionage narrowed the technological gap and relegated R&D efforts to a secondary position.[5]

Fourth Industrial Revolution

As is widely known, the First Industrial Revolution, which began in the 1760s, used water and steam for mechanization, the Second used electricity for mass production, and the Third utilized electronics and information technologies for automation.[6] Now, with the advancement of technology, we are on the verge of a new technological revolution that will transform life. This new revolution is called the “Fourth Industrial Revolution.” The Fourth Industrial Revolution builds on the digital advances of the Third Industrial Revolution by merging physical, digital, and biological technologies.

The Fourth Industrial Revolution is a significant transformation that integrates the physical and digital domains with advanced technologies such as artificial intelligence, the Internet of Things, big data, and blockchain.[7] This revolution is particularly crucial for industrial espionage, as technological advances bring with them the areas and methods most vulnerable to espionage. Therefore, it is essential not to overlook the presence of the Fourth Industrial Revolution and to recognize that the world is entering a new era.

How Does Espionage Work?

Industrial espionage has become a serious threat to companies in the modern world of intense information-based competition, particularly as the Fourth Industrial Revolution gains momentum. While this revolution promotes the rapid integration of technology and digitalization, it also presents new challenges to information and data security. Protecting companies against these threats requires raising awareness and implementing appropriate measures.

Industrial espionage can be conducted through a variety of methods. These methods include cyber-attacks, physical theft, social engineering, insider information leaks, and gathering information through the supply chain. In particular, the digitalization brought about by the Fourth Industrial Revolution enables spies to remotely access a company’s critical information through cyber-attacks. These attacks, which aim to infiltrate information systems by targeting vulnerabilities, can cause significant damage.

Some methods of industrial espionage are listed below[8]:

• Obtaining confidential information from company employees via electronic means such as e-mail and telephone.
• Hacking into systems where company data is stored.
• Contacting dismissed employees and obtaining company information by exploiting their feelings of revenge.
• Purchasing knowledge from existing employees, particularly those specialized in specific fields, often in exchange for money.
• Using the vulnerabilities of individuals in strategic positions within the company as leverage to obtain information.
• Intercepting phone calls and monitoring e-mail correspondence within the company's communications network; identifying discussions on critical issues such as trade agreements, pricing strategies, last-minute changes, and alterations in negotiation policies.
• Collecting office waste from the company and conducting research.

Measures

Industrial espionage has become an increasingly significant threat with the rise of global competition. Therefore, it is crucial for both the public and private sectors to implement effective measures.

Measures to be Taken by the Public Sector:

• Legal Framework: Comprehensive and up-to-date legal regulations against industrial espionage should be established, and existing legislative deficiencies should be addressed.
• Awareness Raising: Public employees and other segments of society should be informed about the dangers of industrial espionage and the necessary precautions to be taken.
• Public Sector Cooperation: Effective cooperation and information sharing among public institutions should be encouraged.
• International Cooperation: Cooperation protocols should be signed with other countries to combat industrial espionage, and collaborative efforts should be undertaken.
• Support Mechanisms: Support mechanisms should be established to strengthen private sector actors, such as SMEs, against industrial espionage.

Measures to be Taken by the Private Sector:

• Security Culture: A security culture should be established within companies, ensuring that all employees are aware of its importance.
• Physical Security: The physical security of facilities must be ensured, preventing unauthorized access.
• Information Security: The security of information systems should be established, and measures against cyber-attacks must be implemented.
• Personnel Security: The reliability of employees should be carefully assessed, and recruitment processes must be conducted meticulously.
• Confidentiality Agreements: Confidentiality agreements should be signed with employees to protect trade secrets.
• Leak Detection: Systems must be set up to detect information leakage incidents, and regular audits should be conducted.
• Crisis Management: A crisis management plan should be prepared to address incidents of industrial espionage.
• Insurance: Insurance should be obtained to cover potential financial losses.
• Technology Utilization: Technologies such as artificial intelligence and big data analytics should be employed to detect potential threats early.

Conclusion

Industrial espionage has been an integral part of economic competition throughout history, a role it continues to fulfil today. The era of geographical discoveries and the expansion of international trade transformed industrial espionage into a systematic strategy. The Fourth Industrial Revolution marks the most complex phase of this evolution. Technological innovations such as artificial intelligence, the Internet of Things, big data, and cybersecurity have fundamentally altered the methods and scope of industrial espionage. Today, both physical industrial secrets and strategic information stored in digital environments are targets. While these technological advancements offer new tools for preventing industrial espionage, they also render such activities more sophisticated and harder to detect.

In today's world, where technological innovations have fundamentally transformed the methods of industrial espionage, a thorough understanding of these dynamics is essential for effectively developing modern industrial strategies. The measures and strategies implemented to combat industrial espionage are crucial for compliance with information security standards, data protection regulations, and intellectual property rights. Moreover, ensuring adherence to these standards is vital for addressing the new challenges presented by the Fourth Industrial Revolution.

With thanks to Can Ergül for his contribution

References

Ayanoğlu, A. (2017, August). Sanayi Casusluğu Kavramı ve Alınması Gereken Tedbirler (Only in Turkish). Retrieved from: Republic of Türkiye Ministry of Industry and Technology e-Journal Year 29, Issue 344: https://edergi.sanayi.gov.tr/File/Journal/2017/8/8_2017.pdf

Lee, M., Yun, J., Pyka, A., Won , D., Kodama, F., Schiuma, G., . . . Zhao , X. (2018, September 21). How to Respond to the Fourth Industrial Revolution, or the Second Information Technology Revolution? Dynamic New Combinations between Technology, Market, and Society through Open Innovation. Retrieved from ScienceDirect: https://www.sciencedirect.com/science/article/pii/S2199853122002761#f0010

Nickisch, C. (2016, November). Sanayi Casusluğu Ar-Ge'den Daha mı Etkili? (Only in Turkish) Retrieved from Harvard Business Review Türkiye: https://hbrturkiye.com/dergi/sanayi-casuslugu-ar-ge-den-daha-mi-etkili

Schwab, K. (2016, January 14). The Fourth Industrial Revolution: what it means, how to respond. Retrieved from World Economic Forum: https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/