SOC 2 reports evaluate how well an organization safeguards customer data based on five Trust Services Criteria (TSC): Security, Availability, Processing Integrity, Confidentiality, and Privacy. SOC 2 specifically focuses on the operational effectiveness of controls over a period of time, and provides a detailed report to customers and auditors about the service organization's controls.

SOC 2 compliance is built around the AICPA's five Trust Services Criteria, which serve as a framework for evaluating controls:

• Security (Common Criteria - CC): Required for all SOC 2 reports, addressing the protection of information and systems against unauthorized access, use, disclosure, modification, or destruction to meet the entity's objectives. 
• Availability (A): Focuses on whether the system is available for operation and use as committed or agreed. This includes network performance, disaster recovery, and operational uptime.
• Processing Integrity (PI): Addresses whether system processing is complete, valid, accurate, timely, and authorized. This is crucial for organizations that process customer data, such as transaction processing or data analytics.
• Confidentiality (C): Pertains to the protection of information designated as confidential from unauthorized access or disclosure, like intellectual property, business plans, and financial data.
• Privacy (P): Relates to the collection, use, retention, disclosure, and disposal of personal information in conformity with the organization's privacy notice and generally accepted privacy principles. 

Organizations can choose which of the four optional TSCs (Availability, Processing Integrity, Confidentiality, Privacy) are relevant to their services and customer commitments. The auditor then assesses the design and, for a Type 2 report, the operating effectiveness of controls against these chosen criteri

• Customer Assurance (Especially U.S. Clients): SOC 2 reports provide a detailed and objective assessment of a service organization's controls, which is often a prerequisite for doing business with larger enterprise clients, particularly in the U.S.
• Competitive Differentiator: In the market, having a SOC 2 report can differentiate a company from its competitors.
• Reduced Vendor Due Diligence: A SOC 2 report can significantly streamline the vendor security review process for potential clients, saving both parties time and resources.
• Proactive Risk Mitigation: The process of preparing for a SOC 2 audit helps identify and address security weaknesses, leading to a more robust security posture and fewer incidents.
• Foundation for Other Compliance: Many SOC 2 controls overlap with other regulatory requirements (e.g., HIPAA, GDPR), making it easier to achieve additional compliance certifications down the line.

SOC 2 is particularly relevant for service organizations that store, process, or transmit customer data:

• Software-as-a-Service (SaaS) companies: The vast majority of SaaS providers, as they handle customer data in the cloud.
• Cloud infrastructure providers (IaaS, PaaS): Companies providing the underlying cloud infrastructure where customer data resides.
• Managed Security Service Providers (MSSPs): Companies offering security services to other businesses.
• Healthcare technology providers: Companies handling Protected Health Information (PHI) often seek SOC 2 in conjunction with HIPAA compliance.
• Fintech companies: Those handling sensitive financial data.

Any tech company offering services where the security and privacy of customer data are critical will benefit significantly from SOC 2 compliance.