By Max Wilhelm

On a November night in 2014, Sarah Lacy was redoing her home security system.

The 38-year-old investigative journalist recently heard that Emil Michael, a senior vice president of business for Uber, had publicly boasted of a $1 million smear campaign to spy on journalists covering Uber.[1]

The popular San Francisco-based ride-sharing service had faced a barrage of criticism since its founding, mostly targeting the company’s “bro-ish” culture and insensitivity to its female customers. Lacy, (right) the editor-in-chief and founder of technology news website PandoDaily, knew that she was a likely target in Uber’s campaign against journalists.

Lacy had recently accused Uber of “sexism and misogyny” after the company appeared to be working with a French escort service. Michael’s plan to discredit journalists by “digging up dirt” on their personal lives seemed like a gross violation of her privacy, a violation that she could not easily forgive.

“Paula Deen made racially insensitive comments and lost a show, lost very real money. Donald Sterling was forced to sell an NBA team,” Lacy said. “And yet we believe that frighteningly misogynist comments like this, anti-First Amendments comments like this, are ‘boys being boys’ and that ‘they’re geniuses and this is what it takes to build a company.’’

In response, Uber publicly denounced Michael’s statements, saying that “We have not, do not and will not investigate journalists.” While some might attribute this seemingly Orwellian plan to Silicon Valley hubris, the truth is that corporate spying on journalists is not a new phenomenon.

General Motors vs. Ralph Nader

One of the most famous cases of companies spying on critics traces back to a young attorney named Ralph Nader in 1966. Nader had written a mildly successful book called Unsafe at Any Speed which criticized General Motors for design flaws leading to unnecessary accidents and deaths in the 1960-1964 Chevrolet Corvair models. Months later, Nader suspected that he was being followed, and later heard reports of strangers asking his friends and family about his personal affairs.[2]

Nader eventually learned that General Motors hired a private investigation firm to dig into his personal life in order to discredit his future testimony in a Congressional hearing against the company.

On March 9, 1966, General Motors admitted the company did track Nader “for routine matters” but never admitted to the widely believed intention of attempting to discredit witness testimony from Nader.

During these four decades separating Ralph Nader and Sarah Lacy, advances in technology, communications, and globalization dramatically altered the landscape of American business. However, one of the darker business practices has remained intact.

This practice is corporate espionage.

The major difference in modern-day corporate espionage is that companies are better at gathering the information they want, and a lot harder to catch in the act.

While corporate espionage traditionally refers to companies spying on their competitors to gain a strategic edge, it can also refer to companies spying on the journalists who cover them.

Any company with an investigative division would prefer a less grating term over corporate espionage such as competitive intelligence, or market research analysis. However, these business arms of America’s corporate machine are responsible for many of the chilling cases of corporate espionage in the history of American business, cases that include spying and intimidating journalists.

These divisions are made up of the most talented intelligence analysts and sleuths around, including former agents of the FBI, CIA, NSA, and Secret Service.[3] As agents of the firm, they have a relatively simple mission. They gather and use intelligence to protect the firm’s bottom line.

The structure of large, publicly owned companies requires constant growth in profit and share price. The motivation to continuously improve means companies are heavily suspicious of any coverage which can damage business. To prevent bad press, companies have gone to great lengths to keep their brand and share price intact, and investigative journalists are frequently the prime target.

The Case of Hewlett-Packard

Hewlett-Packard is another modern example of a company that initiated a large espionage case against journalists covering their firm. In 2006, it was revealed that Hewlett-Packard illegally obtained the phone records of several board members and journalists in an effort to find a board member leaking confidential, strategic information to the press.

One story in particular speaks to the unsettling power and boldness of corporations trying to protect their image. During this Hewlett-Packard spy campaign, Chairwoman Patricia Dunn authorized the creation of an elaborate scheme to track journalists involving a fictional Hewlett-Packard employee named Jacob.

Jacob was set up as a lure for CNET reporter Dawn Kawamoto, (right) who was believed to be in regular contact with the board mole. After releasing a few credible stories to gain her trust, Jacob sent an email to Kawamoto loaded with spyware that would record every keystroke she made in a sophisticated effort to track her source.[4]

These surveillance strategies, many which were against the law, resulted in Chairwoman Dunn and a half-dozen other top Hewlett-Packard executives losing their jobs. The company was also ordered to pay over $20 million in fines.

The cases of Hewlett-Packard, General Motors, and Uber exhibit the lengths companies will go to protect their market share and brand image. While extreme, these case of corporate espionage are possibly just one of many other cases that have remained secret.

The truth is that no one knows exactly how large the market is for corporate espionage, or how much spying on journalists, executives, and employees actually occurs. However, we do know that companies are willing to pay a premium for access to hidden information.

Gartner, a leading technology research and advisory firm based in Connecticut, estimated the competitive intelligence industry at around $30 billion in 2013. This industry is only expected to grow as big data becomes more prevalent and valuable for corporate strategy.[5]

Many might wonder why corporations would engage in such questionable behavior, which seems reckless given these companies are often in the media spotlight. By looking at the risks and rewards of corporate espionage, one can better understand why this practice remains in use today.

As representatives of shareholders, it is the board of directors’ responsibility to maximize shareholder value. Therefore, spying on journalists who have the potential to hurt shareholder value, in addition to the boards’ jobs, can be seen as a viable strategy for the company’s health.

It does not help the case of journalists that companies who get caught in the act of corporate espionage have faced historically low penalties. After Hewlett-Packard was caught illegally monitoring board members and journalists, the company faced a fine of roughly $20 million, or just around 0.02 percent of revenue the year before.[6]

Considering this miniscule penalty in addition to the roughly 23 percent rise in Hewlett-Packard’s share price over the year following the scandal, one can imagine why a board of directors might frequently make decisions favoring money over ethics.[7]

The example of Uber also demonstrates how profit triumphs over ethics in the minds of investors. Not even one month after Uber’s supposed plan to spy on journalists like Sarah Lacy became public, a new round of funding valued the 5-year-old company at over $40 billion[8].

It is clear that companies have far greater resources and personnel to monitor journalists than journalists have to monitor companies. So how do journalists react with all the odds seemingly stacked up against them?

Not a serious problem?

For the most part, they do not believe there to be a serious problem.

Investigative journalists work with the belief that companies are not evil, and that it is natural for these institutions to learn about the people who write about them. They believe that there is a healthy yet competitive relationship that serves the best interests of media and the companies they cover.

Companies need the media to generate brand recognition and good press, and the media needs companies to build stories about the company, its competitors, and the industry that people will want to read.

Ben Smith, the editor-in-chief at Buzzfeed and one of the first to report on the Uber scandal, believes the relationship between the media and companies to be a healthy one.

“We don’t view our role as ‘combating’ the companies we cover. Adversarial relationships are both normal and healthy,” Smith said.[9]

One might expect to hear some bitterness after Smith’s exposure to the Uber executive talking about “digging up dirt” on journalists’ personal lives. However, he adopts an attitude of taking the high road, acknowledging that there can sometimes be bad eggs who do not represent the company culture.

In regards to the media and corporate relationship Smith also said, “Companies typically respect journalists who give them fair and tough coverage. Our reporter covering Uber, Johana Bhuiyan, has not had problems with access.”

It seems apparent that many journalists do not hold grudges, and that they are comfortable with a bit of a competitive relationship.

While the relationship is generally amicable, there are some investigative reporters that have been exposed to the darkest elements of the media and corporate relationship.

Diana Henriques, (right) an award-winning financial journalist and a New York Times best-selling author on financial events and scandals, is one such journalist.

During her 12-year career at The Times and other publications, she has had a front-row seat into how different companies work with journalists. Overall, Henriques finds no problem with companies performing normal due diligence into a journalist covering them.

“Any competent public relations professional is going to research a reporter’s public track record after getting an interview request, and I don’t find anything offensive about that,” Henriques said.[10]

Henriques states an example of a journalist covering a company who might also have been paid for speaking events by an advocacy group hostile to that company. In this scenario, she believes a company has every right to refuse an interview request by this journalist.

However, reasonable inquiry into a journalist’s professional career is not always where companies draw the line, as Henriques has personally discovered.

“I have had only a few encounters with that sort of bullying research [corporate spying], most memorably by the Ponzi scheming CEO of a debt-collection agency who traveled everywhere with armed guards and who left threatening messages on my voice mail making it clear that he knew where I lived,” Henriques said.

On a separate case, Henriques said she was trailed by a private investigator 24/7, a time which she described as “a little unsettling”. These are the only events of corporate spying that she has encountered in her 40-year career as an investigative journalist, but they are enough to leave a mark.

Dan Kane, investigative reporter for The (Raleigh) News & Observer, is an example of a journalist exposed to intimidation tactics, though from a different source.

Kane was the first to break the story of the widespread academic negligence at the University of North Carolina at Chapel Hill, starting a chain of events that culminated in a federal investigation and the withdrawing of former Chancellor Holden Thorp. Soon after releasing his research on the academic scandal, Kane said he was exposed to numerous threats from the UNC-CH fan base, including threats against him and his wife’s safety.[11]

Kane never became aware of a university-led investigation led into his personal affairs, but he did find that the school cut off all ties with him in a damage control campaign to prevent any more bad press.

“After that Julius Peppers mess it was very hard to get people to talk to me on the phone or in person,” Kane said. “It shouldn’t be that way.”

Companies and institutions who take a strong-armed or closed-door approach against media exposure can lose more than the public’s trust. Henriques believes that it erodes the entire corporate-media relationship that is essential for companies.

In regards to the intimidation tactics taken against her, Henriques said, ”Knowledge about that kind of research being conducted can introduce a strong adversarial tone to the relationship right out of the blocks, which is unfortunate for both sides…opposition research can sometimes push reporters into that posture despite their best effort to be fair and diplomatic.

“That can only backfire for the company, which loses any opportunity to open a constructive dialogue with the reporter and which risks coming across to the public as a bully with something to hide.”

While corporate spying is a serious problem, the truth is that extreme cases of corporate bullying rarely happen.

Arguably the rise of social media has facilitated greater public awareness of businesses, and makes spying on individuals riskier. When it does happen, it is generally rooted in the personalities of the company’s top executives who might believe themselves to be larger than ethical business practices, an opinion that Sarah Lacy seems to have of Uber.

“I’ve never heard of a very high-ranking executive at a $20 billion company talking about a million-dollar budget to destroy my life,” Lacy said. “I’ve never heard of a case where someone was bragging about it at a dinner, where it was considered socially acceptable.”

While companies can often be the source of the problem, the responsibility to prevent this type of destructive behavior does not solely rest on companies. Journalists must be held to the same professional standard as the companies they cover by striving to remain impartial.

“A reporter has the same obligation to be held accountable for her professional performance. And that means avoiding associations, activities and assignments that can be reasonably challenged as conflicts of interest,” Henriques said.

In and of itself, companies researching the professional background of reporters is not a vicious act. It is a necessary process to facilitate ties within the media and companies, although it can never entail “digging up dirt” on reporters’ personal lives to discredit their research.

The mystery lies in where the line is drawn.

[1]Nellie, B. (2014, November 18). Sarah Lacy on Exec’s Plan to Smear Her: “Every Woman Using Uber Should Be Scared.”. Retrieved April 29, 2015.

[2] Jack Doyle, “GM & Ralph Nader, 1965-1971,” PopHistoryDig.com, March 31, 2013.

[3] The Fifth Surveillance: Corporate Spying On Non-Profits | Techdirt (Techdirt.) https://www.techdirt.com/articles/20140711/08223227850/fifth-surveillance-corporate-spying-non-profits.shtml

[4] Martin, P. (2006, October 2). Hewlett-Packard spying scandal sheds new light on US corporate “ethics”. Retrieved April 15, 2015.

[5] Chidi, G. (2013, February 2). Confessions of a Corporate Spy. Retrieved April 22, 2015.

[6] Hewlett-Packard Company (2006). 10-K Annual Report 2006. Retrieved from SEC EDGAR website http://www.sec.gov/edgar.shtml

[7] HPQ Interactive Stock Chart | Yahoo! Inc. Stock – Yahoo! Finance (HPQ Interactive Stock Chart | Yahoo! Inc. Stock – Yahoo! Finance)

[8] MacMillan, D., Schechner, S., & Fleisher, L. (2014, December 5). Uber Snags $41 Billion Valuation. Retrieved April 21, 2015.

[9] Smith, B. (2015, March 29). Uber’s Opposition Research [E-mail interview].

[10] Henriques, D. (2015, April 28). Investigative Reporting and Opposition Journalism [E-mail interview].

[11] Kane, D. (2015, April 2). Investigative Reporting at The Raleigh News & Observer [Telephone interview].

Max Wilhelm is a junior in the UNC-Chapel Hill School of Journalism and Mass Communication.