Goldman Sachs was completely dependent on computer systems for program trading, and overly dependent on such systems for trading in general. (We're among the few people that trade the old fashioned way, over the telephone, and with pencil and paper, as the original Graham and Dodd certainly did)
Therefore, the firm was rocked by allegations that their systems had been penetrated by a foreign-born "spy," who stole their code, and shipped one copy to a new U.S. employer, where he began trading against Goldman, using Goldman's own systems. The other copy was sent abroad, and is probably available to the highest, foreign bidder.
The revelations threaten to compromise not only Goldman's secrets, but many of the secrets of US traders in general. Thus, Goldman stands to lose ALL of its competitive advantage in ONE area, as well as SOME of its competitive advantages in ALL areas.
We have maintained in previous posts that modern technology is far too powerful and dangerous to be left in the hands of ignoramuses. And Goldman's recent experience may illustrate a point. As was the case in medieval times with swords, "He who lives by the computer may die by the computer." The extent to which Goldman "survives" this catastrophe may be mark of what its truly worth.
Disclosure: Not long GS but long BRK/A and BRK/B.