2 economic theories that relate to this letter is the cost-benefit analysis and market failure. The cost-benefit analysis is a theory that claims that enterprises should weigh the expenses of deploying security measures against the possible damages from data breaches. The letter states that the platform provider’s systems were compromised, implying that the provider may have previously evaluated the risks and determined a degree of security investment. The incident suggests that the evaluation may have underestimated the possible expenses, resulting in insufficient security measures. Market failure occurs when the market fails to distribute resources properly, resulting in negative consequences such as data leaks. The letter states that the intrusion occurred on the platform provider’s servers and affected many clients. This shows a market failure to ensure that third-party providers meet appropriate security requirements, which could be related to a lack of legislation or information asymmetry.

2 social science theories that relate to this letter is the neutralization theory and the routine activity theory. The neutralization theory suggests that offenders rationalize their illegal activities in order to alleviate guilt. Hackers may justify their intrusion into the platform provider’s systems by downplaying the damage done or framing their actions as a challenge rather than a crime. The routine activity theory proposes that crimes occur when a motivated perpetrator comes across a suitable target without enough protection. In this situation, the platform provider’s systems were an appropriate target, and the lack of adequate security measures created an opening for the attackers.