Sony Execs in Privacy Hot Seat

Donna Ward/Getty Images; Toru Yamanaka/Getty Images

Recently promoted Kaz Hirai faces test of leadership as costs from security breach could hit $2 billion.

Could the fallout from the worsening Sony hacking scandal derail the rise of the company's heir apparent, Kazuo "Kaz" Hirai? One of the largest-ever breaches of online security, the April 20 leak compromised personal data from as many as 100 million user accounts of Sony's PlayStation Network and Qriocity. The attack has yet to result in any confirmed cases of credit card fraud or identity theft, but Sony has faced criticism for delays in informing users and in getting its online platform running again. "It doesn't look very good for Hirai-san, but I don't think he'll have to perform seppuku over it, either," a Tokyo ad exec says.

Hirai, a former head of Sony's gaming division, was promoted in April to head of a division that consists of the company's crucial game, consumer electronics and networked services businesses. One of the so-called Four Musketeers that CEO Howard Stringer charged with revitalizing Sony, the appointment catapulted Hirai, 50, into the front-runner spot to succeed his boss.

The cost to Sony could be vast. In a note to investors, a Barclays Capital Tokyo analyst wrote that the company could be devastated by costs associated with the service shutdown as well as credit card reissuance fees, costs to improve security and mass refunds for canceled services. Barclays estimated the cost to Sony at $1.86 billion to $2.48 billion, though another analyst pegged the potential losses at $1.24 billion. A Sony spokesperson in Tokyo tells THR that the company has yet to put a figure on the scandal's cost or decide whether Stringer or Hirai would take responsibility.