The War on Business

Nations and businesses often compete and clash. But the war on business has escalated in  recent years as nation-states and non-state actors target specific businesses with sanctions and recriminations and new intensity and methods. The many legal, economic, and social implications are serious.

In a recent article, I examine the contemporary war on business, its growing importance to corporate and national affairs, and the pressing need for better, pragmatic approaches to understanding and addressing these rising threats.

Even before the global business community responded to the Russian invasion of Ukraine, the world witnessed this new mode of business warfare.  For example, the United States banned Huawei, one of China’s largest and most prominent technology companies, from doing business in the country due to national security concerns.  Foreign drones affiliated with Iran attacked oil installations of state-owned Saudi Aramco, one of the world’s most valuable companies. China’s military hacked into data corporate giant, Equifax, to gather private, sensitive information about American officials and intelligence officers for bribery and blackmail. North Korea initiated an unprecedented attack on Sony in response to a movie’s unflattering portrayal of the nation’s president. Hackers affiliated with Russia targeted large American corporations and large swaths of the federal government.  Regardless of form, motivation, or severity, these attacks and aggressions raise critical, interlocking questions about law, commerce, society, and warfare.

Addressing business warfare is challenging, in part, because many of the old rules governing global conflict are inapplicable or ill-fitting for the new threats. Business warfare highlights serious practical and legal tensions between longstanding laws of war and modern business realities.

Practically, one of the chief tensions is the unintended domestic and global economic impact of countries engaging in intertwined national security and economic strategies. Attacking another country’s businesses could not only hurt that country, but also the attacking countries, as states retaliate with aggressions and sanctions of their own. This ricocheting dynamic could discourage some countries from engaging in business warfare or retaliating despite having legitimate cause and political will to do so.

Legally, international and domestic law needs to offer clearer guidance to companies and nations on economic and financial attacks.  Traditional laws and norms were not designed for a world where nations target the businesses of their adversaries and where some businesses are as valuable and important as entire nations. Prior legal regimes did not fully comprehend a world where everything would become part of warfare and national security.  Moreover, the rise of cyberweapons and non-state actors in these attacks further complicates matters.

As such, business warfare will require new international laws and norms to better address these new tensions and questions. My article recommends three initiatives relating to business war games, cybersecurity incentives, and supply chain and market diversification.

First, nations and businesses should regularly engage in war games among themselves to better prepare for the threats of business warfare. These games should involve governments and businesses just as actual business warfare does. Federal agencies like defense, homeland security, and treasury should lead and coordinate these exercises, marshalling military, public, and private expertise and resources. Private business participation is particularly important because businesses are often on the frontlines of modern conflicts. Well-designed war games can create cross-learning opportunities for businesses and governments to anticipate and prepare for the threats of contemporary business warfare.  For instance, a good business wargame can simulate simultaneous attacks on key distribution centers of Walmart and Amazon to help retailers, local communities, and the government to better anticipate and respond to such strikes.

Second, governments, particularly the U.S. federal government, should regularly provide strong cybersecurity guidance and incentives through tax and procurement policies, for private firms across all industries. Government leadership and coordination is necessary to counteract some of the collective action problems and business inclinations to underinvest in cybersecurity. Because modern information networks and the global economic system are intertwined, public and private sectors must work together on cybersecurity, as one vulnerability can lead to risks across industries and countries.

Third, government and business leaders should diversify their supply chains and markets to better withstand attacks and engage in business warfare while mitigating economic blowback. For instance, a firm like Apple, which is largely reliant on contract manufacturers and rare earth suppliers in China, would be particularly vulnerable to punitive actions from the Chinese government. Because Apple is one of the most valuable companies in the world and its securities are among the most widely held in America, a sustained attack on it would have serious repercussions.

Business warfare will undoubtedly continue to affect many aspects of law, business, and society. While progress is being made on the longstanding geopolitical and international law issues, a thorough discussion of these issues is essential if business and government leaders are to gain meaningful, principled, and workable guideposts for dealing with  business warfare.

This post comes to us from Professor Tom C.W. Lin at Temple University’s Beasley School of Law. It is based on his recent article in the Boston College Law Review, “Business Warfare,” available here.