Abstract:Third-party vendors, such as analytics platforms, cloud services, identity providers, and software suppliers, are increasingly embedded in digital service delivery. While these arrangements enable scale and specialization, they also move customer data and security-relevant practices into environments that customers rarely see, select, or evaluate. This paper examines this problem through a document analysis of the November 2025 OpenAI-Mixpanel security incident. The incident serves as an illustrative case for showing how a security event in a vendor environment can become a governance and accountability problem for the focal organization that maintains the customer relationship. Drawing on organizational trust research and agency theory, the paper argues that third-party cybersecurity risk is both a trust relationship and a delegation problem. Customers trust the visible service provider, while the provider relies on vendors whose security practices are only partially visible and controllable. The paper develops the concept of transitive trust, where customer trust in a digital service depends on the security practices of vendors authorized by that service provider. It then presents the Fortress and Gatekeeper framework, which explains cybersecurity governance boundaries through trust and data flows rather than formal organizational ownership alone. The analysis develops four propositions concerning vendor integration, metadata exposure, vendor assurance, and data proliferation. The paper contributes to cybersecurity governance scholarship by explaining how delegated data processing creates customer-facing accountability and by identifying implications for vendor tiering, data classification, contractual design, continuous assurance, and data minimization.
From: Yijun Chen [view email]
[v1]
Thu, 25 Jun 2026 10:52:48 UTC (493 KB)
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