Economic aspects of Internet security1 Henk Kox2 and Bas Straathof3 CPB Background Document 1 We would like to thank Giuseppe Abbamonte, Jaap Akkerhuis, Esther van Beurden, Fokko Bos, Maarten Botterman, Alessandra Falcinelli, Eric Hertogh, Peter Hondebrink, Olaf Kolkman, Edgar de Lange, Michel van Leeuwen, Ronald van der Luit, René Nieuwenhuizen, Alex Noort, Mink Spaans, Michiel Stal, Paul Timmers, Michel Verhagen, Jan Westerman, Henry van der Wiel, Erwin Zijleman and others for insights and discussions. All errors and omissions are ours. 2
[email protected] 3
[email protected] Executive summary The Internet has become a part of daily life for many people. And if the past decade is of any guidance, the role of the Internet in the economy is going to increase substantially. As a consequence of this rapid development, the security of communication over the Internet will become even more important than it already is today. The Internet is provided by a broad range of organizations with varying, and sometimes conflicting, objectives. The security of the Internet depends on the behaviour of all users (although in varying degrees) but these users often do not have sufficient incentives to invest in cyber security. Insights from economics help us to understand these incentives and may help to make the Internet a safer place. This background document surveys cyber security issues related to the Internet from an economic perspective, focusing on the role of markets and incentives. Cyber security covers four areas: Availability (can we use the Internet without interruptions?) Integrity (can we trust that data we transmit or store are not tampered with?) Privacy (can we trust that data is not used by parties whom we did not give permission?) Identity (do we know who we communicate with? how to protect against fishing and spam?).