Zoom Epitomizes the Concept of Negative Externalities

By on May 22, 2020

May 22, 2020

The software industry thrives by being early to market and putting off bug fixes until later releases, the so-called “move fast and break things” approach to business. This remains the dominant philosophy among technology companies, but the dangers inherent in that approach are becoming more and more apparent. Software vulnerabilities can be categorized as negative externalities, a term used to describe costs imposed on third parties by activities related to the production or consumption of a good or service. Environmental pollution is the classic example of a producer-consumer economic activity in which all the costs are borne by people external to the commercial relationship. Cybersecurity flaws become negative externalities when the general public, and not technology companies, bear the costs imposed by vulnerabilities in their software products. Zoom teleconferencing software is an example of that paradigm. Millions of people began using Zoom as a means of holding meetings, classroom discussions, and even funerals during the Covid19 lockdown. News of its many security flaws soon spread, but that came years after security consultants found serious vulnerabilities in Zoom that made cloud provider Dropbox reconsider its use within their company, and New York City schools ban it for remote learning. Legislation would be required to remove this “moral hazard” from the producer/consumer relationship.

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