When Security Becomes Surveillance: Data Protection Risks for Cybersecurity and Threat Intelligence Providers Under India’s DPDP Regime

Introduction: The Paradox at the Heart of Cybersecurity

Cybersecurity exists to protect data, systems and people. Yet modern security tools increasingly depend on deep, continuous visibility into user behaviour, communications, devices and networks. Technologies such as EDR, XDR, SIEM, SOAR, DLP, UEBA, MDR and threat‑intelligence platforms ingest enormous volumes of logs, packets, identifiers and behavioural signals, often invisibly and in real time.

This creates a fundamental paradox. Tools built to reduce organisational risk can themselves become high‑risk processors of personal data.

With the enactment of the Digital Personal Data Protection Act, 2023 and the Digital Personal Data Protection Rules, 2025, India has adopted a consent‑centric and accountability‑driven framework that directly reshapes how cybersecurity vendors and managed security service providers operate. The DPDP regime forces a re‑examination of long‑standing assumptions around monitoring, data ownership and lawful purpose in security operations.

For cybersecurity and threat‑intelligence providers, difficult questions now arise. At what point does security monitoring cross into unlawful surveillance? Who bears fiduciary responsibility is it the vendor or the enterprise client? Can consent ever be meaningful where monitoring is mandatory for employment or system access? And how should raw telemetry, packet data and intelligence feeds be retained, shared or anonymised?

Applicability of the DPDP Act to Cybersecurity Providers

The DPDP Act applies to any entity that processes digital personal data. Cybersecurity vendors fall squarely within this scope due to the nature of the data they routinely ingest and analyse. This includes MSSPs, SOC and MDR providers, endpoint and network security vendors, threat‑intelligence platforms, cloud security tools, insider‑threat solutions and security analytics providers.

The law applies equally to Indian and foreign vendors where personal data of individuals in India is processed. In practice, most global cybersecurity platforms serving Indian enterprises are subject to the DPDP regime.

Data Fiduciary or Data Processor: Moving Beyond Labels

Cybersecurity providers often position themselves contractually as data processors acting solely on enterprise instructions. In reality, this characterisation frequently breaks down when examined against actual operational control.

A cybersecurity vendor may be considered a data fiduciary where it determines the purpose of analysis, applies proprietary threat‑scoring models, enriches telemetry with external datasets, aggregates data across clients, or retains and reuses security data beyond immediate incident response. Sharing or commercialising threat intelligence derived from client data further strengthens this classification.

Where vendors independently decide how data is processed or reused, fiduciary obligations arise regardless of contractual wording. Platforms that process continuous telemetry at scale, deploy automated decision‑making or handle highly sensitive data may also be designated as Significant Data Fiduciaries, triggering enhanced compliance requirements.

Personal Data Embedded in Security Telemetry

Cybersecurity tools routinely process data that relates to identifiable individuals. This includes IP addresses, device identifiers, usernames, authentication logs, email headers, URLs, DNS queries, browsing behaviour, file metadata and behavioural risk scores.

Even when collected for defensive purposes, such data often qualifies as personal data under the DPDP Act. The security objective does not remove it from statutory protection.

Certain security techniques further heighten compliance risk. Deep packet inspection and payload analysis may expose communications content, credentials or sensitive documents, even if only momentarily. Processing content data significantly increases regulatory sensitivity and enforcement exposure.

Consent, Necessity and Workplace Monitoring

The DPDP Act requires consent to be free, informed, specific, unambiguous and capable of withdrawal. In enterprise security environments, these conditions are difficult to satisfy.

Monitoring is frequently mandatory for access to systems or continued employment. Refusal may carry adverse consequences, creating a power imbalance that undermines the validity of consent. In such contexts, reliance on consent alone is legally fragile.

Security monitoring is better justified on the basis of legitimate necessity tied to contractual or statutory obligations of employers. However, necessity under the DPDP framework is not open‑ended. Monitoring must remain strictly proportionate to defined security objectives.

Transparency obligations reinforce this limitation. The DPDP Rules require clear notice regarding the categories of data collected the purpose and scope of monitoring, retention periods, data sharing arrangements and grievance mechanisms. Generic IT or acceptable‑use policies that fail to explain continuous or intrusive monitoring may not meet statutory standards.

Purpose Limitation: Drawing the Line Between Security and Surveillance

Data collected for cybersecurity purposes cannot be treated as a blank cheque. Information gathered for threat detection or incident response cannot be casually repurposed for productivity scoring, employee discipline, behavioural profiling or commercial analytics without a fresh legal basis and clear disclosure.

This concern is particularly acute for insider‑threat and employee‑monitoring tools. Such platforms track keystrokes, screen activity, file access and communication patterns, placing them among the highest‑risk processors under the DPDP regime. Regulators are likely to expect strict necessity assessments, narrow configurations, short retention periods and strong governance controls for these tools.

Threat Intelligence, Aggregation and Secondary Use

Threat‑intelligence platforms often aggregate data from multiple sources, including client telemetry, honeypots, dark‑web monitoring and open‑source intelligence. Where client‑origin data is reused across customers, vendors must carefully assess whether the data remains personal, whether aggregation truly anonymises it, and whether the original purpose permits such reuse.

Assumptions that threat‑intelligence data is inherently anonymised are frequently unsafe. The risk increases where telemetry is used to train proprietary models, develop commercial intelligence products or generate enriched datasets. Secondary use without clear disclosure and lawful basis undermines purpose limitation and significantly heightens fiduciary exposure.

Cross‑Border Data Transfers and Global SOC Operations

Cybersecurity operations are inherently global. Many providers operate follow‑the‑sun SOC models, offshore analysis teams and overseas cloud infrastructure. Security data is often streamed continuously across regions and integrated into global platforms.

Under the DPDP Act, cross‑border transfers of personal data are permitted only to jurisdictions notified by the Indian government. This creates operational challenges for security providers accustomed to unrestricted global data flows.

Compliance requires precise mapping of data transfers, segmentation of Indian personal data where necessary, contractual and architectural adjustments, and ongoing monitoring of government notifications. Treating transfer restrictions as incompatible with security urgency is a risky assumption.

Breach Detection, Disclosure and the Irony of Security Failures

Cybersecurity vendors are themselves attractive targets for attackers. Breaches at security companies may expose client telemetry, credentials, secrets or proprietary threat models.

Such incidents trigger notification obligations to the Data Protection Board of India and, where applicable, affected individuals. Breaches involving security providers attract heightened regulatory scrutiny and reputational damage, as they undermine trust in the sector’s core promise of protection.

Penalties, Enforcement and Contractual Fallout

The DPDP Act allows for monetary penalties of up to INR 250 crore per contravention. In determining penalties, authorities consider the nature and sensitivity of data, the scale and duration of processing, and the adequacy of mitigation measures. Continuous monitoring and content inspection substantially increase exposure.

Beyond regulatory action, non‑compliance carries significant commercial consequences. Cybersecurity providers may face contract termination, indemnity claims, loss of enterprise trust and removal from approved vendor panels. DPDP compliance is rapidly becoming a threshold requirement in enterprise procurement.

Compliance Roadmap for Cybersecurity Providers

Effective compliance begins with comprehensive data mapping to identify all telemetry processed and to assess fiduciary versus processor roles honestly. Tools should be configured to default to the least intrusive settings necessary for security outcomes, with proportionality documented.

Providers should support enterprise clients with clear monitoring disclosures aligned with DPDP requirements, implement strict controls to prevent secondary use of client data, and segregate data used for product development or intelligence sharing. Cross‑border governance must be embedded into SOC workflows, contracts and system architecture.

Conclusion: Security With Accountability

• India’s DPDP Act does not weaken cybersecurity. It demands discipline. Security that is opaque, excessive or opportunistic will struggle under regulatory scrutiny, while security that is necessary, proportionate and transparent will endure.
• Cybersecurity and threat‑intelligence providers that embed privacy‑by‑design into products and services will be best positioned to retain enterprise trust, withstand audits and compete in an increasingly privacy‑aware global market.