Either the fines need to be high enough until there is a material impact to shareholders, or natural persons who make decisions within the corporation needs to be held accountable (not just the legal person), OR, we need to fundamentally rethink what a corporation's charter must necessarily include (in addition to shareholder returns).
What is the pushback exactly against fining based on average yearly revenues ?
The EU has been issuing fines to google as mentioned ($8 billion still owed) but I never understood why they can't simply charge a 20% of revenue within the EU.
The fines are not to redeem some income for the EU, they're to deter bad actors. This is just not happening.
This SHOULD be the way as they are the ones who stand to gain the most. They should be the ones who lose the most if the actions of their responsibilities are nefarious.
But in turn it would incentivize some better practices to avoid risks of fines.. It wouldn't be risky if companies didn't act maliciously and ignore regulations etc.
That actually sounds like a remarkably elegant way to do it. We'll never know what the second order consequences could be until we try it. But I doubt they'll be as bad as what we're experiencing now.
No. That would destroy the stock markets in an instant. The way it has always been is that with a classic stock, the only risk an investor has is the money they paid someone to acquire the stock.
There exist other classes with actual post-buy liabilities, e.g. stock options, as one particularly unlucky poor sod discovered at the start of the 2020 plaguefest [1], but normally these are (supposed to be) heavily gated for actually qualified investors for precisely that reason.
Personally, I'd keep it that way... and nationalize companies that can't pay their fees, without paying out the shareholders. That way, the shareholders get punished, the jobs created by the company aren't lost, and the government gains something of value.
To be clear -- the stocks are not the potential liability.
You're talking about situations where people are borrowing shares and selling them, with the hope of buying the share back later to pay back the borrowed share. Obviously that's a bad scene if you borrow / sell the share and then it goes from $20 to $20,000,000,000.... Your liability in these scenarios is infinite, but it is also part of the trading system to manage those exploding liabilities.
If you buy a property, and it turns out that property is a former toxic waste dump, you own that liability from that asset. What you thought would make a wonderful daycare is now going to cost you millions to remediate.
If you buy into a partnership, and one of the other partners does a silly thing and now the partnership owes someone millions, you're on the hook for that.
If you buy a stock, your liability is the money you've invested in the stock, which is why stocks are such a wonderful innovation (as seen from a 1400's perspective where debts are paid back by all owners).
Fining shareholders would effectively force unlimited liability to shareholders, which comes with a bunch of negatives (ex: bigger shareholders would just own inside of an LLC wrapper).
Wouldn't fining more accomplish the same goal? If it was big enough, it would cause major drawdowns in the stock price, which would cause financial losses for the shareholders.
Our entire western society depends on the ability to own and run businesses without personal responsibility for what the business does as an organisation. Sometimes in the case of fraud, or similar individual crimes within an organisation can be placed as blame on individuals or even management found to wilfully ignore internal warnings and so on, but on the whole, it’s rare that we go after private persons for what the organisations where they work does.
Shareholders are even further detached from this process, often having very little knowledge of what happens within organisations. Often having no influence on what happens within organisations. You likely own stock yourself through your pension funds, and if you made these laws your pension would be fined for what the index fonds it invest in does.
I guess from some political points of views all of this would be a good thing based on our current inequality in society, but the way to solve this isn’t through collective punishment. It’s through taxation. Right now, the entire economy is very much geared in favour of increasing the inequality by transferring more and more wealth to those who already have it. It hasn’t always been like this, 50 years ago, before the age of new public management, the taxation on things like wealth, stock and so on were high and the wealthy in our society paid most 80% of their total (not income tax) wealth generation. Today it’s often less than 10-20% through various tax law loop holes, and that’s if you keep your wealth generation absolutely legal.
Af far as organisation fines go, the situation is sort of similar to the general economy, in that major organisations and wealth owners have “rigged” the system in ways where it’s very hard to punish major corporations on a global scale. In Denmark we might find Facebook or Google guilty of something and fine them up to 10% of their income, but its income in Denmark, which is frankly so small on the global scale that they often don’t even bother fighting it in our courts like they do with the larger EU rulings. This could change, but it’s hard to do so, as the US isn’t interested in forcing US non-token companies fines to foreign countries. Similarly it would seem that even within the US there is competition between the various states to be the most company friendly.
Where do you think the money comes from? The organization has some money they can either use for stock buybacks or fines. Money that goes to fines necessarily does not go to buybacks or dividends
Hmm, could we apply a fine to share. Either as fixed amount or percentage at time it is transacted on next time. Basically make them partially non-fungible...
So fine is applied at end of some day. Now all shares are marked. And when they are sold next time this fine is paid.
So, I hold, I am super rich you know, 10% of Airbus. Now Airbus is fined billions by authorities for violating export control laws, engaged in bribery and other stuff. Some that was done by local sales entities. How exactly can I, even as one of the biggest shareholders, influence those operational daily decisions?
Also, you are aware of the idea of having limited liability companies?
Yes, your liability would be limited to whatever is the value of that 10%.
Own a company that does bad enough thing, lose the whole holding in the company.
You could participate in electing a board. That elects CEO and other C-level that spend all their waking hours ensuring that no one in company breaks rules. I think that is absolutely reasonable thing to ask, specially with pay they are getting.
Wow, that is a very interesting take on how limited liability and public companies work...
One corner stone of free societies is private ownership of enterprises. And that comes with the idea of shielding investors and owners from certain decisions of the comoany, which is a legal person apart from the legal person of the investor / owner...
Let's say company has stock price of 100. Then it kills million people. Court decides to set fine of 99%. Now the stock price stays the same, but next time holder of share sells it 99% of price goes as fine to society.
Their liability is limited to that 100. Just that next time they transact on the share they entirely justly lose most of it. As they did horrific job in controlling their property.
That's not even how criminal law works... If I borrow money to someone, that someone buys a gun with that money to rob a bank, I am, rightfully, not guilty of bank robbery or any other crime. Unless I borrowed the money knowing I funded a bank robbery, in which case I would be a co-conspirator. As a simple share owner, I am far from that. Heck, even as a majority shareholder I am far from that.
And by the way, if I am a memeber of the board and my management and I engange in anti-trust violations together, I am legally and criminally liable already under existing law. If I am a member of the board, and my management does something illegal without my knowledge, I am off the hook as well (again rightly so). If I engage in a cover up, well, then things change again (and again rightly so).
Some people have weird ideas about the rule of law is supposed to work in a democracy.
Shareholders of large public companies have limited ability to challenge the actions of directors, as proxy fights are in a majority of cases unsuccessful and shareholder lawsuits are also difficult as courts such as the Delaware Chancery are generally highly deferential applying the business judgement rule. For optimal effect, if non-corporate liability desired, suggest liability attach to directors and officers first instead.
Or, alternative explanation, the fines aren't meant to deter behavior but serve as a way of rent seeking, signaling by politicians and bureaucrats and capturing ever more regulatory authority by various groups
The fines aren't large enough to be materially impactful to governments. So if it's rent seeking, it's a poor job of it.
I'd expect they're at the levels they are because laws atrophied during the 80s - 00s, and this is indeed the maximum remedy that can currently be sought.
Providing for tighter penalty scaling with relation to company size would go a long way to fixing this, including for small firms.
It's really the opposite. The EU in particular is seeking to curb the power of monopolistic big tech. The fines are in responsive to anti-competitive behaviour. Smaller companies should be happy.
This article makes a good point comparing the relatively small magnitude of fines paid to revenue earned. It follows that perhaps fines are not deterring.
Perhaps a stronger deterrent would be injunction-based: companies found to be in violation of regulations and laws might be enjoined completely from operating in a commercial space. "One strike and you're out."
Fine for big corp are just cost of doing business. All the big corp have some money stashed away for that purpose. It is all about working out with the AG on what the fine will be.
Profit margin for Big Tech is absurdly big compared to most other industries though, it makes much less of a difference than for grocers or other industries with razor-thin margins.
Evidently not. But I'm not sure if such fines are supposed to be a deterrent or supposed to be to pay to fix the damage done. Somehow I think they are even further from covering the latter.
I didn't know companies can just ensure they have no profit on paper. Why don't they do that now and not pay corporate taxes? Why is it dependent on fines?
Shareholders care more about net profit than revenue. Using revenue makes the number more clickbaity. Also, you claim this isn't a deterrent, but you don't explain why. How do we know that tech companies weren't just well-behaved last year? Or, should one week's revenue never ever be able to pay off a company's past year's fines, and we should always assume tech companies are more evil than that?
I have a simple and very fair solution to that problem: make each consecutive fine for a repeated offense grow exponentially. If you make an honest mistake (or even are just testing the waters to see what you can get away with), the fine should be bearable. But being able to treat fines as just cost of doing business will indeed lead to a world where nothing is ever wrong or immoral, as long as you keep making money.
Profit is an easier number to manipulate than revenue through expenses and liability. E.g., by increasing expenses to executive salaries and by investing huge sums in growth projects or new strategies.
For large companies, particularly those where investors prioritize growth, cash flow is often more interesting than profit.
Oh I agree that if you're going to fee based on something, revenue is better than profit. My post wasn't trying to say otherwise. It's just that I don't believe it makes sense to gauge how fast companies pay off the fee in terms of revenue, such as was done in the article.
The concept of a corporation is fundamentally unjust. It doesn't make sense that there are entities which have more rights than people.
If I do a crime, I go to jail. If a corporation does a crime, they only need to pay a small fine.
Not to mention that they have many thousands of people working for them doing crimes on their behalf for which are never caught and never punished. Just the scale of a corporation, makes it impossible to prevent crime. They are crime factories by design.
If a nation state kills someone, it's not called murder. If a corporation commits fraud, it's not called fraud... So long as they don't run out of money.
Corporations can influence laws in ways that I can't. I can't even talk to a politician.
Corporations have far better access to government contracts and the tender process than regular citizens. There is subtle, but harmful corruption constantly taking place behind the scenes.
Not only that, but the people who work for corporations are, to some extent, shielded from the crimes that they commit on behalf of corporations as it limits their liability by design, not to mention all the opportunities for cover ups and deflection of liability that they provide. It absorbs and neutralizes liability. Nobody ends up taking responsibility. The crimes keep getting more frequent; corporations keep finding people who are more and more desperate and willing to commit crimes on their behalf. People create shell companies just to launder borrowed money to corporations, in the hope that they will get a well paid corporate job from them after their shell company runs out of money... The list of schemes/crimes is endless and beyond my imagination.
The first corporations ended up bankrupt. E.g. Both Dutch and British East India Company, South Sea Company, Mississippi Company... They ALL turned into bubbles and collapsed spectacularly, every single time. That was before the fiat monetary system came along and started propping them all up... Now the scam never ends. The entire economy is fully monopolized by these proven scam constructs. They suck up all opportunities and produce cheap, low quality products... but because they take away opportunities from everyone, nobody who isn't a corporate shareholder has surplus income and are therefore forced to buy cheap, low quality corporate products.
> If I do a crime, I go to jail. If a corporation does a crime, they only need to pay a small fine.
Many corporate executives have gone to prison for crimes they committed while working.
> Corporations can influence laws in ways that I can't. I can't even talk to a politician.
You can talk to a politician if you bother to call or email their office. Stop being obtuse.
> Corporations have far better access to government contracts and the tender process than regular citizens. There is subtle, but harmful corruption constantly taking place behind the scenes.
You want individuals to bid directly for government contracts?
> Not only that, but the people who work for corporations are, to some extent, shielded from the crimes that they commit on behalf of corporations as it limits their liability by design. It absorbs and neutralizes liability. Nobody ends up taking responsibility. The crimes keep getting more frequent; corporations keep finding people who are more and more desperate and willing to commit crimes on their behalf.
Opinion, not fact. Maybe you're complaining they should be held more accountable, which is valid. But working under a corporation can't prevent anything if the DOJ decides to go after the individual perpetrator.
Thanks for falling for the author's clickbait though..
> The concept of a corporation is fundamentally unjust.
No it is not.
The benefits of the current system are enormous, incomprehensibly enormous. The quality of life enjoyed by the average person even in developing countries would have been unimaginable by many measures to people living just a few centuries ago.
All the little first world boys whining on social media are perfectly happy to have clean water to drink, electricity on demand, video games to play, food to magically show up in their local grocery, roads to travel on—all these things that require the coordinated work of billions are just happen and are assumed to happen, there is never a complaint that their garbage is collected on schedule or that fresh fruits have been cultivated and harvested and shipped from the other side of the world for their enjoyment.
It is only when:
- they are asked to contribute something back to this system
or especially when
- someone else has more than them
That they decide a grave injustice is being committed.
> The benefits of the current system are enormous, incomprehensibly enormous.
I completely disagree. You're conflating the benefits of technological innovation which are substantial with the benefits of socio-economic and legal 'innovation' which are non-existent and in fact negative.
It's like there is a really good horse but it's covered in parasites; e.g. ticks and you're praising the parasites for helping the horse win the race. It won in spite of the ticks, not because of them.
If you look at the west (e.g. US, Europe) in the 1800s and 1900s, most families could buy a nice house with land on just one income without even taking on debt. They could achieve this even while there were world wars going on and far less advanced technology than we have today.
The narrative about things improving for developing countries (or any other country) is nonsense. It's thinly veiled propaganda, just like ESG and Wokeism. If things were improving in developing countries, why would people from these countries be trying to immigrate to the west in unprecedented numbers today, even while the west itself is clearly declining? The GDP per capita of essentially all African countries is as low as ever. Only China has been doing well; but that's only because the west gave them a monopoly on manufacturing at its own expense due to short term thinking; which happens to be incentivized by corporate bonus structures in the west.
I don't even want to start talking about the media and how it interacts with big corporations and big government... But it would explain why you think everything is going great; all while an increasing number of people, highly skilled people are living in poverty. The level of deception in the media is unlike anything we've ever experienced before.
> The benefits of the current system are enormous, incomprehensibly enormous.
Sure. What are the drawbacks? Where are the opportunities for improvement?
Also, you provided a list of things we enjoy today that you're presumably attributing to capitalism. But clean water and roads are usually provided by governments, and electricity and garbage collection (in the US) are generally in a weird liminal space where it's usually corporations but they're heavily regulated (and there's usually some political corruption at the interface between the corporations and the regulators). Our modern food distribution system is a marvel, but it depends on the exploitation of a poorly paid underclass of often undocumented migrant workers to do much of the farm labor. And video games are nice, although some corporations are trying to turn video games into weird casinos (see: lootboxes).
Claiming that the status quo is great and critics are being merely self-interested is deliberately turning a blind eye to the many drawbacks, flaws, and areas that can be improved with the current system. "We have clean water now; DO YOU HATE CLEAN WATER?!" is a disingenuous, bad faith argument. It's the "We should improve society somewhat" comic.
The status quo is that the quality of life for nearly everyone in the planet is improving faster than it ever has before in history and the rate of the improvement is accelerating as well.
I am living in a country which currently has a “socialist” government who have made a big show recently of implementing anti-capitalist policies to stick it to the greedy rich. We do not have clean water. I need to buy bottled water for drinking/cooking. The situation is getting worse as these policies come into effect. The government can’t do shit without someone to pay for it.
This is a fantasy land where you take your pick of attributes from different countries and pretend you can have all the things you want without giving anything up and all the money is going to come from other people.
The situation is like the anti-vaxers living in a protected bubble while simultaneously blaming it for all their problems.
The fines should be measured in units of time, not % of revenue, or some fixed dollar number. All other measures can be gamed, except time. For example, Meta would think twice about violating privacy if they were suspended from doing business for a month, or their fine amounted to a month of revenue with definite start and end dates.
We already do the same thing with people (taking away their freedom for lengths of time), it’s time to have the same punishments for corrupt corporations.
Shutting down their operations completely for lengths of time would also have other consequences besides financial.
As a citizen I don’t want government taking away my ability to communicate with family because my government wants some access controls.
I’m all for punishing companies. An easier solution is to combine fines with criminal penalties on citizens who break the laws. Ie if you work for a company and spy on someone, you go to jail as if you didn’t work for the company.
> The fines should be measured in units of time, not % of revenue
Why not just increase the percentage so it's no longer profitable to break laws?
If say Meta was found to violate users privacy and illegally gained a 5% extra net revenue because of it, fine them 10x of what they gained, so 50% of the revenue.
I'm fairly sure they'd start moving fast without breaking things if that was the case.
I don't think TFA failed to differentiate revenue and profit, though. I think the point is these companies have enough revenue to pay off the fines, and 358 days to return to profitability for the year, even starting out with an operating loss.
Revenue. Hard to manipulate (and doing so is illegal in itself), easy to measure and the top line is where it hurts. And no, I don't think fines should be high enough to destroy businesses the same way a speeding or parking ticket shouldn't bankrupt people.
Base the fine on revenue, measure the time needed to pay the fine in profits or cash flow. That would show some basic financial and accounting literacy, the bare minimum I ask for if you want me ro take an article about financials seriously.
Revenue + payment deadline based on cash flow makes sense to me too.
If we're really serious about materially-impactful fines, they need to impact more than one quarter. And conversely, companies need to be free to amortize payment in ways that hurt but don't cripple them.
F.ex. if Alphabet and Meta's entire 2024 would be down because of fines, the market would presumably apply more pressure on their leadership.
just with the slightly difference of violating the park space of a single vehicle vs. violating the personal data of millions if not billions of users... quasi equal!
Last time I got a speeding ticket, it was considerably less than 2% of my gross salary. The basic idea so is the same, the amount of the fine is up for discussion so.
Case in point: income based speeding tickets in Scandinavia vs. fixed amounts elsewhere (I favor the former, as things stand I don't care about the, for me, negligible amounts for 10 km/h speeding every once in a while, which is rather unfair, as I know a lot of people who cannot ignore the existing speeding fines in Germany).
Edit: Regarding corporate fines, authorities should be a lot more aggressive claiming those. E.g. payable immediately after first trial, put in escrow until appeal. And change accointing laws so the fine in escrow cannot be shown in cash balances and has to be taken into account for profit and loss.
Quantifying the revenue increase of said illegal behavior is close to impossible. Also, you want to discourage this behavior, so take the easier to quanitify and higher number.
Was the larger point (these companies are too damn big/powerful) so unimportant that it could be dismissed by lay-person usage of terms intended to highlight points of fact for gen-pop?
No one expects them to actually pay the fines with the exact pile of cash they've made in revenue this year (which, of course, isn't actually a pile of cash).
You're missing the point, that the fines are nowhere large enough to be consequential. If the fines were anywhere close to large enough, the company would no longer able to operate their criminal business model profitably, and I would shed zero tears, even if it meant complete failure of the business. Any fine that merely reduces profit is effectively just a tax.
7 days of pure loss on a company with 2% margin is enough to wipe out profitability for a year.
People who use revenue are unqualified to spout any opinions on this stuff because it shows they lack a super basic understanding of how businesses function.
I would be more surprised if HN didn't sprint to defend big tech, profit numbers are worthless because they can easily make those look however they want. Revenue is a much more useful indicator when looking at these giga corpos from the outside.
Agree. It's safe to ignore such articles. On the other hand, we'd do ourselves a disservice if we ignored: a fine is not a fine if it doesn't cause pain.
As it is, these relatively small fines to large companies are simply the cost of doing business. The behaviour does not change.
I don't expect it's about having an axe to grind, but about running a content marketing mill where neither factual correctness nor originality matters. (The proposed call to action for the "fines aren't big enough" problem is, after all, to sign up for a paid email service.)
The poor guy has a quota to meet, and there was nothing in the news this week to use for rabble rousing, so the only option was to recycle some of the old content.
Accounting is confusing, and I am dar from an expert. Some basic knowledge is extremely helpful so, IMHO. It explains a ton of things happebing in a company, and being able to read your employers balance sheet, if you work for a public company, is eye opening sometimes.
To your point, in Jeff Bezos' 2004 letter to shareholders(1) he writes about how free cash flow and GAAP profit are not the same. It's easy to assume that profit would be the same as how much more is left in the bank at the end of the year vs. the beginning of the year, but it's not. And understanding these things illuminated how Amazon was operating.
I joined Amazon shortly after this letter, and internally the strategy was to minimize profit as the IRS would calculate it in order to pay no taxes while maximizing free cash flow. And it was built as a conceptual "dial" that Bezos could turn at any time to start making a profit. Wall Street did not understand this about Amazon for close to a decade after the dot com crash (or half a decade after he broadcast it in this letter).
As a result, Amazon's stock was hammered because investors thought Amazon couldn't find a way to make money. All the while, they were plowing tons of excess money back into long term bets like massive distribution centers, optimizing shipping logistics, AWS (be the internet equivalent of utility companies), and Kindle (don't let anybody else cannibalize the paper book business). These were all being done with an eye toward massive future scale (e.g., at the time, many thought AWS was designed to use Amazon retail's excess server capacity, but it was the opposite... Amazon retail should fit in AWS' excess capacity).
Nobody expected all this from a "glorified book store" who "couldn't figure out how to turn a profit". But they were looking past the growing free cash flow and massive R&D investments in the financial statement, all unburdened by taxes.
Revenue can't really be hidden. Profit is an accounting decision. Like how companies sell their IP to an Irish subsidiary and then "license" it and pay "royalties".
Profit margins for Big Tech are pretty healthy too so even if it's 7 days of revenue, it's likely not many more days of "profit". Also, those fines are a taxable deduction so let's not forget that.
Companies can (and do) report net losses while spending billions per year on stock buybacks and executive compensation. Revenue isn't some magic number for company health but profit isn't either.
Per some ads I vaguely recall, Proton seems to be positioning itself as a super sekure place where the gubment can't spy on you; Big Tech Bad seems to be a no-brainer SEO blog theme.
The author is publishing on a VPN company website; probably on the Proton AG payroll and performing her job. Sell VPN services.
It's really obvious. It's like reading something about companies fined for performing illegal disposal of carcinogens that potentially contaminate drinking water on a water purification company's website. It does not take a genuis to figure out the connection.
What is less obvious and decisively more deceptive, IMO, are Big Tech blog communications. There is no small amount of material about computer software and hardware, and various projects, but not all that much on programmatic advertising and its great utility to mankind.
Big Tech might sell some software and hardware, not nearly enough to pay these fines, but its "axe to grind" is data collection, surveillance and delivery of advertising services. The hardware and software are a Trojan Horse to support an online ad services business. Most of what is being discussed on these blogs is not for sale. They are not pitching advertising services, they are trying to attract audiences that will, knowingly or unknowingly, be targets for or otherwise support their efforts to conduct surveillance.
The only way to tackle this is to put leadership in prison. If that is not possible give them the oligarch experience; frozen assets, interpol warrant, etc.
It makes no sense that breaking the law gives milder consequences just as long as your crime is transnational and very extensive in scope.
Once you reach a certain level of wealth, fines are no longer consequential. When you can restructure both your corporate and personal assets to span multiple countries with different regulations and poor cooperation, you've effective avoided them.
They're related, though. A portion of fines fund enforcement activity. (IMHO, a higher portion should go to enforcement. Right now way too much goes into general funds.)
No government is going to fine Amazon or Google enough to break the company. It would displace thousands of workers, and have a serious impact on the local economy where those companies are based, if not the whole country. If the fine is large enough to have a material impact, it's the rank and file who are laid off as the company restructures, and the company then uses tricks like tax offsets to pull through from a loss of profit. This is before considering political ramifications, e.g. it's in the US' best interests to have the largest tech companies, and clipping their wings too much would cede ground to foreign competitors.
At the end of the day, the C-suite either know that the law is being broken, or they don't. One makes them responsible, and the other makes them criminally negligent. I absolutely believe that C-suite executives of VW, for example, should have been thrown in jail for diesel-gate. Not knowing the law is not an excuse for breaking it. Similarly, if you're presiding over a company, and your company is breaking the law, plausible deniability shouldn't be a defense. If you're getting paid to run the company, you are responsible.
How do they make any user do anything? These aren't water utility companies, there is a limit to how they can be fined and still compete. I assume many things are already priced at the highest number the market will pay. How, for example, will FB/meta pass the cost to social-network end users?
I just prefer personal accountability because it seems a fair and just way to organize things. These things don't happen as a force of nature: it's someone (or a bunch of people) making a decision, and then someone (or several people) implementing it.
If I scam someone in my brick and mortar store with fake products I will be held personally responsible as the owner, and rightfully so. And if other people knowingly participate in the scam they will be held responsible too. Never mind all the other stuff like lying reviews, dangerous products, etc.
So why aren't we holding Jeff Bezos and the rest of Amazon leadership's team similarly accountable? They're not innocent bystanders here.
Somehow there's this idea that personal accountability just doesn't apply except in cases of VERY blatant outright fraud (Enron, VW Diesel, Theranos), and even then it's haphazard and often weak (no one went to prison for e.g. Deepwater Horizon). IMO it's one of the worst ideas in the history of bad ideas. The bigger the company (and thus stakes, and negative effects) the lower the accountability is.
The Devil's Dictionary from 1906 already observed this with:
"CORPORATION, n. An ingenious device for obtaining individual profit without individual responsibility."
I don't think it's draconian at all, or conflicting with personal freedoms. How would it conflict?
Shareholders aren't making these decisions. But if shareholders voted for something they knew was illegal or could have known was illegal, then yes, maybe they should be held to account too.
What are "these decisions"? I assumed you are talking about punishing people like Bezos for the activities of Amazon, even without proof he had direct knowledge/involvement of them, purely based on his position as a c-suite figurehead?
I don't care who has direct involvement or knowledge; you're accountable for what you operate and if you operate something with rampant scams then you're accountable for that.
They're operating a platform that enables criminal activity and they benefit from it. They've been told this (and even without it, they can and should have known). And then they elected to not do all that much about it. "Don't do anything" is just as much of a decision as "do something" is.
Last time I looked at this they were literally recommending scams with "Amazon's Choice"[1]. That one is now gone, but you just need to "sort by price" (a reasonable thing to do) to find tons of scams.[2] None of this is new information. This has been going on >10 years. There's tons of stories about this sort of thing.
"Yeah, there's tons of scams on our site, and yeah, we're making a profit off those scams, but what can we do?" just doesn't fly. Rampant illegal activity you're making a profit on but somehow no one is accountable? Screw that.
Because at a certain point, fines punish lower level workers rather than management. Furthermore, if the company is large enough, fining it to the extent that it collapses has material effects on the economy, which governments are incentivized to avoid. This isn't to say that there shouldn't be financial consequences for breaking the law -- of course there should. But management should also be thrown in prison when the company breaks the law, because they're in a position of responsibility (it's what they get paid for). Either they knew -- in which case they're personally liable -- or they didn't, in which case they're criminally negligent, and again, personally liable.
There is saying of Muhammad at least Imran Khan (Pakistan former prime minister) keeps reciting/saying that its Muhammad saying that nations have died/have destroyed themselves when the laws for the rich were different from the laws for the poor.
I feel sometimes US is going through something like this poor people go to jail for doing things rich/ruling class pay a fine for and it is causing anti state feelings to emerge from different parts of the populace. So far the discontented are separate movements divided along race, education and party lines. But they are mostly asking for the same thing better lives.
There is an endless supply of corporate robots to replace them.
Instead there are options:
1. Govt walks in and just nationalizes them ala Japan post world war 2 where Mitsubishi, Sumimoto etc where just turned into puppets over night As in hostile takeover to influence how they use their loot.
2. Govt can then use the SpaceX model to disrupt brick and mortar sectors world wide (cement, steel, ships, planes, energy, fertilizer etc etc). The test will be bringing prices down of everything not just for Americans or the west but for everyone. other wise immigration waves just like the drugs flowing into the west will never stop.
Tech is supposed to fuck prices up. Google once upon a time did it for email, chat, video, search etc. I don't see why it can't happen with everything. We need grand goals not just how to add 6 more cameras into another fucking phone.
If we still lived under monarchy, I'd agree 100%, but we don't.
There's at least a theoretical chance of voting the government out in favour of someone marginally better. I don't know what are the odds of that happening, but it's definitely bigger than 0%. And if we're not in the board of directors of a company, our odds of making them less corrupt is precisely 0%.
> Tech is supposed to fuck prices up. Google once upon a time did it for email, chat, video, search etc. I don't see why it can't happen with everything. We need grand goals not just how to add 6 more cameras into another fucking phone.
Which raises the question: Are these actually tech companies? Or simply 21st Century advertising (platform) companies - dependant on technology - whose primary goal is to exploit human nature for profit?
Abandon the idea that these are still tech companies and the world makes more sense (and gets more dystopian).
There are tech companies and there are tech startups. They behave differently, and it gets incredibly hard to remain a startup when the employee headcount is in 5-6 figures. The ability to f-* prices up is more a startup thing, imo. I think these large tech companies are, as you say, something different now.
Neither of these options are what has been commonly referred to as “piercing the corporate veil”: hold the shareholders accountable for the decisions of their hired executives. We’ve been talking about this exact issue so long that it has a name we’ve stopped using.
The shareholders are already held accountable by the practice of fining. The shareholders have a "merely financial" interest. The ptoblem with not piercing the corporate veil is specifically that execs end up getting a "free pass" as it were to do scummy things.
> There is an endless supply of corporate robots to replace them.
If people will be held personally responsibly they have good incentives to not do this kind of stuff. Right now the incentive is exactly the other way: do anything to earn a profit and it will be good for your personal bank account. If it turns out some stuff was illegal, then well, not something that will be your problem as long as you didn't commit outright blatant fraud.
That Travis Uber guy may have fallen from grace somewhat, but he's still more wealthy than most of us will be, and part of why he's wealthy is because he knowingly (and very explicitly) broke a bunch of laws, never mind he resigned for reasons other than being a Uber's criminal activities.
Tech controls politics through social media, you cannot stop it now. They can moderate any negative content which might hurt their plans. Not a good situation.
Double the fine every time a business violates the same law. Businesses that treat fines as a "cost of doing business" will quickly see their costs trending toward infinity and will be forced to change or declare bankruptcy.
> The only way to tackle this is to put leadership in prison.
This is not the kind of democracy I want to live in.
I'd much, much rather see a grassroots movement pushing to once again return to the marketplace of ideas, where for each "category" you have a host of apps competing against each other, not just one or two.
As a society, we should learn to hone the oscillatory nature of the complex system that is a tech niche: a niche forms => many apps populate the space => one app begins dominating => it consumes the rest (e.g: buy outs) => eventually the "one" app is replaced by a new market of apps.
We're failing on the last step and I'd like to get there without using the government's monopoly on violence.
> rather see a grassroots movement pushing to once again return to the marketplace of ideas, where for each "category" you have a host of apps competing against each other, not just one or two.
IMHO, what we need to return to is "free (provider choice) and competitive (provider price) access to the market."
E.g. what the internet and web originally were, which begat the current tech giants (including the modern versions of Microsoft and Apple) by allowing them to circumvent existing gatekeepers.
Which, critically, means removing the requirement to pay a tithe of your success (or attempt) to anyone.
Because that's where big tech is currently financially entrenched -- to be on our platforms (i.e. any used platform), you have to pay us.
Which leads to tails-you-lose-heads-I-win scenarios, which strategically block any future challenger from emerging, because they're sacrificing so much of their profit to existing gatekeepers.
The EU got their regulatory targets correct -- either you can be a gatekeeper, controlling access to a large number of users, and abide by heavy limitations on your ability to tax companies that go through you; or you can not be in a gatekeeper position and compete fully.
But you don't get to be a gatekeeper and do anything you want.
The challenge is that there’s no actual law that you would arrest them under.
So the real goal is to have Congress create a law that states that if a CEO is not a fiduciary of the employees (in contrast to an fiduciary of investors) they should be jailed
Seems like that would be a good law
Investors - despite the claims from fund managers - aren’t moving countries to avoid this stuff because the actual LPs are American institutional 401k and Funds which theoretically are employees.
So a law requiring corporate management to prioritize labor over capital would I think actually make a good impact.
Let's compare. In China, two people were executed for a tainted milk scandal [1], In the US, Purdue and the Sackler family were significantly responsible for the opioid epidemic. They knowingly liked about OxyContin. Not only have they avoided prison but the government tried to give them a deal where they could pay a fraction o the fortune they made doing it over a number of years so it would essentially be paid by earnings on the billions they get to keep [2].
Fines are the cost of doing business. They are nothing more than an expense item. People who knowingly cause people to die or otherwise cause great harm as leaders of a compnany should go to prison way more often. Every penny the Sacklers made should be seized by the government.
It's so easy to tell when Europe is voting on a post versus the US. Fines against these companies are predominantly rent seeking. You should be extra suspicious when the fines are coming from countries where they don't have offices.
FTA:
> Big Tech companies can further water down the potential sting of these fines by delaying payment for years(new window). They’ve done this by filing appeals, counter-suing, or simply refusing to pay. Some notable examples include:
Sorry, but I give the companies the benefit of the doubt here: they have good legal teams and don't generally fight things when they can't win. Fighting these fines isn't evidence that big tech is evil and refuses to follow the low, it's evidence that these countries are rent seeking by charging them bogus fines, which their world-class legal teams (rightly) contest.
Thr EU is fining EU based companies as well. And all Big Tech companies have offices in the EU.
The way proper legal systems work, is both sides litigate a case if they see a chance of winning it, goes for both involved parties. As much as big tech isn't per-se evil for having to pay fines, the governments involved aren't rent seeking...
> You should be extra suspicious when the fines are coming from countries where they don't have offices.
They're doing business in these countries, and making a profit from that. Where they do or don't have an office isn't that important: it's about who they're doing business with.
And it's really very simple: "obey the law or sod off". If you think that's too much bother then that's completely fair – no hard feelings. Just don't do business then.
> Where they do or don't have an office isn't that important: it's about who they're doing business with.
It's important because it frames the lawsuit. If the company has a large presence in the country and is employing thousands of high-earning tax payers and leasing expensive offices, then the governments are not likely to bring frivolous fines against the company for no reason. On the other hand, if the company is making money and not paying anything back into their economy, the government has nothing to lose by attempting to extort them.
> And it's really very simple: "obey the law or sod off". If you think that's too much bother then that's completely fair – no hard feelings. Just don't do business then.
It's completely arbitrary in a lot of these cases. India fining Google $161m for smartphone market dominance and demanding specific remedies like not installing Google Chrome, YouTube, and Google Maps? How the hell was Google supposed to anticipate that?
Almost all of these in the table are like this. France fining Microsoft $64m (!) because their advertising cookie opt-out flow was not deemed clear enough? It's not that the flow didn't exist, mind you, it's that the button wasn't on the same page as the "accept cookies" button. Where in French or EU law does that exact requirement exist?
The miniscule amounts of money fined from companies are not going to affect the EU budget. It is interesting that, whenever a post about the EU comes up, (a small minority of) Americans will act like they are tyrants trodding over the poor billion dollar corporations as if they shouldn't have to follow European laws despite doing business there. If a tourist commits a crime, they're deported. The EU is being incredibly lenient with their fines.
In addition, why give them the benefit of the doubt? Seriously, they have violated multiple laws every damn year, sometimes the same laws repeatedly. Why give them any doubt? They obviously do not act in good faith.
Thank you. There was really no reason for the author to use revenue instead of net income other than to make the problem they were reporting seem just a little bit worse.
That's terrible. After all, the purpose of fines is to bankrupt companies for the emotional benefit of angry and resentful people, and not to discourage certain behaviour in proportion to how bad it actually is.
Not to direct attention away from the issue at hand, but how do these collected fines get used? I can't help but wonder with such exorbitant sums of money if some organization secretly does not want these fines to go away...
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[ 2.8 ms ] story [ 226 ms ] threadThe EU has been issuing fines to google as mentioned ($8 billion still owed) but I never understood why they can't simply charge a 20% of revenue within the EU.
The fines are not to redeem some income for the EU, they're to deter bad actors. This is just not happening.
They have to book EU revenue somewhere in the EU, so it's entirely knowable how much they make.
This is also why the fines are based on revenue, to avoid transfer pricing shenanigans.
There exist other classes with actual post-buy liabilities, e.g. stock options, as one particularly unlucky poor sod discovered at the start of the 2020 plaguefest [1], but normally these are (supposed to be) heavily gated for actually qualified investors for precisely that reason.
Personally, I'd keep it that way... and nationalize companies that can't pay their fees, without paying out the shareholders. That way, the shareholders get punished, the jobs created by the company aren't lost, and the government gains something of value.
[1] https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-y...
You're talking about situations where people are borrowing shares and selling them, with the hope of buying the share back later to pay back the borrowed share. Obviously that's a bad scene if you borrow / sell the share and then it goes from $20 to $20,000,000,000.... Your liability in these scenarios is infinite, but it is also part of the trading system to manage those exploding liabilities.
If you buy a property, and it turns out that property is a former toxic waste dump, you own that liability from that asset. What you thought would make a wonderful daycare is now going to cost you millions to remediate.
If you buy into a partnership, and one of the other partners does a silly thing and now the partnership owes someone millions, you're on the hook for that.
If you buy a stock, your liability is the money you've invested in the stock, which is why stocks are such a wonderful innovation (as seen from a 1400's perspective where debts are paid back by all owners).
Wouldn't fining more accomplish the same goal? If it was big enough, it would cause major drawdowns in the stock price, which would cause financial losses for the shareholders.
Shareholders are even further detached from this process, often having very little knowledge of what happens within organisations. Often having no influence on what happens within organisations. You likely own stock yourself through your pension funds, and if you made these laws your pension would be fined for what the index fonds it invest in does.
I guess from some political points of views all of this would be a good thing based on our current inequality in society, but the way to solve this isn’t through collective punishment. It’s through taxation. Right now, the entire economy is very much geared in favour of increasing the inequality by transferring more and more wealth to those who already have it. It hasn’t always been like this, 50 years ago, before the age of new public management, the taxation on things like wealth, stock and so on were high and the wealthy in our society paid most 80% of their total (not income tax) wealth generation. Today it’s often less than 10-20% through various tax law loop holes, and that’s if you keep your wealth generation absolutely legal.
Af far as organisation fines go, the situation is sort of similar to the general economy, in that major organisations and wealth owners have “rigged” the system in ways where it’s very hard to punish major corporations on a global scale. In Denmark we might find Facebook or Google guilty of something and fine them up to 10% of their income, but its income in Denmark, which is frankly so small on the global scale that they often don’t even bother fighting it in our courts like they do with the larger EU rulings. This could change, but it’s hard to do so, as the US isn’t interested in forcing US non-token companies fines to foreign countries. Similarly it would seem that even within the US there is competition between the various states to be the most company friendly.
So fine is applied at end of some day. Now all shares are marked. And when they are sold next time this fine is paid.
Also, you are aware of the idea of having limited liability companies?
You could participate in electing a board. That elects CEO and other C-level that spend all their waking hours ensuring that no one in company breaks rules. I think that is absolutely reasonable thing to ask, specially with pay they are getting.
One corner stone of free societies is private ownership of enterprises. And that comes with the idea of shielding investors and owners from certain decisions of the comoany, which is a legal person apart from the legal person of the investor / owner...
Their liability is limited to that 100. Just that next time they transact on the share they entirely justly lose most of it. As they did horrific job in controlling their property.
And by the way, if I am a memeber of the board and my management and I engange in anti-trust violations together, I am legally and criminally liable already under existing law. If I am a member of the board, and my management does something illegal without my knowledge, I am off the hook as well (again rightly so). If I engage in a cover up, well, then things change again (and again rightly so).
Some people have weird ideas about the rule of law is supposed to work in a democracy.
I'd expect they're at the levels they are because laws atrophied during the 80s - 00s, and this is indeed the maximum remedy that can currently be sought.
Providing for tighter penalty scaling with relation to company size would go a long way to fixing this, including for small firms.
Also how would it work if the product is already "free" to the consumer, ie Facebook or Google?
Perhaps a stronger deterrent would be injunction-based: companies found to be in violation of regulations and laws might be enjoined completely from operating in a commercial space. "One strike and you're out."
> and laws might be enjoined completely from operating in a commercial space. "One strike and you're out."
They can just move the 'assets' of that bad actor to another one and continue as normal ?
And actually it is going to be much worse because we haven’t deducted operating costs to find profit
Make them hurt otherwise it won't stop.
Edit: "This" meaning the claim that they've made enough to pay back fines, not how those fines are decided.
However it is a known practice. Most Hollywood studios do it. That's why actors which claimed a percentage of profits of the movie would get $0.
Handy wikipedia link
If profit is the only benchmark then companies can use some creative accounting practices to reduce their exposure.
For large companies, particularly those where investors prioritize growth, cash flow is often more interesting than profit.
If I do a crime, I go to jail. If a corporation does a crime, they only need to pay a small fine.
Not to mention that they have many thousands of people working for them doing crimes on their behalf for which are never caught and never punished. Just the scale of a corporation, makes it impossible to prevent crime. They are crime factories by design.
If a nation state kills someone, it's not called murder. If a corporation commits fraud, it's not called fraud... So long as they don't run out of money.
Corporations can influence laws in ways that I can't. I can't even talk to a politician.
Corporations have far better access to government contracts and the tender process than regular citizens. There is subtle, but harmful corruption constantly taking place behind the scenes.
Not only that, but the people who work for corporations are, to some extent, shielded from the crimes that they commit on behalf of corporations as it limits their liability by design, not to mention all the opportunities for cover ups and deflection of liability that they provide. It absorbs and neutralizes liability. Nobody ends up taking responsibility. The crimes keep getting more frequent; corporations keep finding people who are more and more desperate and willing to commit crimes on their behalf. People create shell companies just to launder borrowed money to corporations, in the hope that they will get a well paid corporate job from them after their shell company runs out of money... The list of schemes/crimes is endless and beyond my imagination.
The first corporations ended up bankrupt. E.g. Both Dutch and British East India Company, South Sea Company, Mississippi Company... They ALL turned into bubbles and collapsed spectacularly, every single time. That was before the fiat monetary system came along and started propping them all up... Now the scam never ends. The entire economy is fully monopolized by these proven scam constructs. They suck up all opportunities and produce cheap, low quality products... but because they take away opportunities from everyone, nobody who isn't a corporate shareholder has surplus income and are therefore forced to buy cheap, low quality corporate products.
Many corporate executives have gone to prison for crimes they committed while working.
> Corporations can influence laws in ways that I can't. I can't even talk to a politician.
You can talk to a politician if you bother to call or email their office. Stop being obtuse.
> Corporations have far better access to government contracts and the tender process than regular citizens. There is subtle, but harmful corruption constantly taking place behind the scenes.
You want individuals to bid directly for government contracts?
> Not only that, but the people who work for corporations are, to some extent, shielded from the crimes that they commit on behalf of corporations as it limits their liability by design. It absorbs and neutralizes liability. Nobody ends up taking responsibility. The crimes keep getting more frequent; corporations keep finding people who are more and more desperate and willing to commit crimes on their behalf.
Opinion, not fact. Maybe you're complaining they should be held more accountable, which is valid. But working under a corporation can't prevent anything if the DOJ decides to go after the individual perpetrator.
Thanks for falling for the author's clickbait though..
Obviously you have more money than me. They don't answer my emails, ever. I tried.
> You want individuals to bid directly for government contracts?
There should be constructs to represent businesses which are not limited liability.
No it is not.
The benefits of the current system are enormous, incomprehensibly enormous. The quality of life enjoyed by the average person even in developing countries would have been unimaginable by many measures to people living just a few centuries ago.
All the little first world boys whining on social media are perfectly happy to have clean water to drink, electricity on demand, video games to play, food to magically show up in their local grocery, roads to travel on—all these things that require the coordinated work of billions are just happen and are assumed to happen, there is never a complaint that their garbage is collected on schedule or that fresh fruits have been cultivated and harvested and shipped from the other side of the world for their enjoyment.
It is only when:
- they are asked to contribute something back to this system
or especially when
- someone else has more than them
That they decide a grave injustice is being committed.
I completely disagree. You're conflating the benefits of technological innovation which are substantial with the benefits of socio-economic and legal 'innovation' which are non-existent and in fact negative.
It's like there is a really good horse but it's covered in parasites; e.g. ticks and you're praising the parasites for helping the horse win the race. It won in spite of the ticks, not because of them.
If you look at the west (e.g. US, Europe) in the 1800s and 1900s, most families could buy a nice house with land on just one income without even taking on debt. They could achieve this even while there were world wars going on and far less advanced technology than we have today.
The narrative about things improving for developing countries (or any other country) is nonsense. It's thinly veiled propaganda, just like ESG and Wokeism. If things were improving in developing countries, why would people from these countries be trying to immigrate to the west in unprecedented numbers today, even while the west itself is clearly declining? The GDP per capita of essentially all African countries is as low as ever. Only China has been doing well; but that's only because the west gave them a monopoly on manufacturing at its own expense due to short term thinking; which happens to be incentivized by corporate bonus structures in the west.
I don't even want to start talking about the media and how it interacts with big corporations and big government... But it would explain why you think everything is going great; all while an increasing number of people, highly skilled people are living in poverty. The level of deception in the media is unlike anything we've ever experienced before.
Sure. What are the drawbacks? Where are the opportunities for improvement?
Also, you provided a list of things we enjoy today that you're presumably attributing to capitalism. But clean water and roads are usually provided by governments, and electricity and garbage collection (in the US) are generally in a weird liminal space where it's usually corporations but they're heavily regulated (and there's usually some political corruption at the interface between the corporations and the regulators). Our modern food distribution system is a marvel, but it depends on the exploitation of a poorly paid underclass of often undocumented migrant workers to do much of the farm labor. And video games are nice, although some corporations are trying to turn video games into weird casinos (see: lootboxes).
Claiming that the status quo is great and critics are being merely self-interested is deliberately turning a blind eye to the many drawbacks, flaws, and areas that can be improved with the current system. "We have clean water now; DO YOU HATE CLEAN WATER?!" is a disingenuous, bad faith argument. It's the "We should improve society somewhat" comic.
I am living in a country which currently has a “socialist” government who have made a big show recently of implementing anti-capitalist policies to stick it to the greedy rich. We do not have clean water. I need to buy bottled water for drinking/cooking. The situation is getting worse as these policies come into effect. The government can’t do shit without someone to pay for it.
This is a fantasy land where you take your pick of attributes from different countries and pretend you can have all the things you want without giving anything up and all the money is going to come from other people.
The situation is like the anti-vaxers living in a protected bubble while simultaneously blaming it for all their problems.
We already do the same thing with people (taking away their freedom for lengths of time), it’s time to have the same punishments for corrupt corporations.
Shutting down their operations completely for lengths of time would also have other consequences besides financial.
I’m all for punishing companies. An easier solution is to combine fines with criminal penalties on citizens who break the laws. Ie if you work for a company and spy on someone, you go to jail as if you didn’t work for the company.
Why not just increase the percentage so it's no longer profitable to break laws?
If say Meta was found to violate users privacy and illegally gained a 5% extra net revenue because of it, fine them 10x of what they gained, so 50% of the revenue.
I'm fairly sure they'd start moving fast without breaking things if that was the case.
> As of seven days and three hours into 2024, they had already earned enough revenue to pay it all off.
revenue is not the same as profit. this is basic stuff.
from the same article:
> Still, revenue is a more accurate depiction of a company’s size and profitability.
it seems like this is rookie hour.
then we look at the author's previous posts:
https://proton.me/blog/big-tech-ipef With new trade deal, Big Tech wants to be above the law
https://proton.me/blog/big-tech-bigger-fines Why we need bigger fines for Big Tech
got it. there is an axe to grind.
It's obviously not profit, which it would be crazy to "require" to pay fines when looking at companies.
So what would you suggest using as a meter stick?
I assumed from your earlier comment you had a problem with the article using revenue.
If we're really serious about materially-impactful fines, they need to impact more than one quarter. And conversely, companies need to be free to amortize payment in ways that hurt but don't cripple them.
F.ex. if Alphabet and Meta's entire 2024 would be down because of fines, the market would presumably apply more pressure on their leadership.
Case in point: income based speeding tickets in Scandinavia vs. fixed amounts elsewhere (I favor the former, as things stand I don't care about the, for me, negligible amounts for 10 km/h speeding every once in a while, which is rather unfair, as I know a lot of people who cannot ignore the existing speeding fines in Germany).
Edit: Regarding corporate fines, authorities should be a lot more aggressive claiming those. E.g. payable immediately after first trial, put in escrow until appeal. And change accointing laws so the fine in escrow cannot be shown in cash balances and has to be taken into account for profit and loss.
now, what that would be, i have no idea; as i don't think any country wants to ban stuff like Google or Meta services from their population
You're missing the point, that the fines are nowhere large enough to be consequential. If the fines were anywhere close to large enough, the company would no longer able to operate their criminal business model profitably, and I would shed zero tears, even if it meant complete failure of the business. Any fine that merely reduces profit is effectively just a tax.
People who use revenue are unqualified to spout any opinions on this stuff because it shows they lack a super basic understanding of how businesses function.
As it is, these relatively small fines to large companies are simply the cost of doing business. The behaviour does not change.
The poor guy has a quota to meet, and there was nothing in the news this week to use for rabble rousing, so the only option was to recycle some of the old content.
"The more things change, the more they stay the same."
> revenue is not the same as profit. this is basic stuff.
And all of "Big Tech" isn't going to run and pay off their 2023 fines this week either.
It's an illustration. This is basic stuff.
see amazon, who famously strive to show no profit by plowing profits back into growth expense
so return (aggregate all forms) on equity, and revenue, are more interesting, since one gives you vector and the other gives you scale.
so it's one of those statements that seems right, then seems wrong, then seems right again, depending on your level of thinking about it
// making no claims about the blogger, they could be in the first camp rather than the third
I thought only depreciation or amortization would hit profitability.
I guess the EPS line would be impacted in a stock buy back, and that is on the income statement.
I know companies play games with good will write-downs in the years after a merger.
I joined Amazon shortly after this letter, and internally the strategy was to minimize profit as the IRS would calculate it in order to pay no taxes while maximizing free cash flow. And it was built as a conceptual "dial" that Bezos could turn at any time to start making a profit. Wall Street did not understand this about Amazon for close to a decade after the dot com crash (or half a decade after he broadcast it in this letter).
As a result, Amazon's stock was hammered because investors thought Amazon couldn't find a way to make money. All the while, they were plowing tons of excess money back into long term bets like massive distribution centers, optimizing shipping logistics, AWS (be the internet equivalent of utility companies), and Kindle (don't let anybody else cannibalize the paper book business). These were all being done with an eye toward massive future scale (e.g., at the time, many thought AWS was designed to use Amazon retail's excess server capacity, but it was the opposite... Amazon retail should fit in AWS' excess capacity).
Nobody expected all this from a "glorified book store" who "couldn't figure out how to turn a profit". But they were looking past the growing free cash flow and massive R&D investments in the financial statement, all unburdened by taxes.
----
(1) https://www.sec.gov/Archives/edgar/data/1018724/000119312505...
IRS rules for capital expenditure can be followed and split over many years.
Profit margins for Big Tech are pretty healthy too so even if it's 7 days of revenue, it's likely not many more days of "profit". Also, those fines are a taxable deduction so let's not forget that.
It's really obvious. It's like reading something about companies fined for performing illegal disposal of carcinogens that potentially contaminate drinking water on a water purification company's website. It does not take a genuis to figure out the connection.
What is less obvious and decisively more deceptive, IMO, are Big Tech blog communications. There is no small amount of material about computer software and hardware, and various projects, but not all that much on programmatic advertising and its great utility to mankind.
Big Tech might sell some software and hardware, not nearly enough to pay these fines, but its "axe to grind" is data collection, surveillance and delivery of advertising services. The hardware and software are a Trojan Horse to support an online ad services business. Most of what is being discussed on these blogs is not for sale. They are not pitching advertising services, they are trying to attract audiences that will, knowingly or unknowingly, be targets for or otherwise support their efforts to conduct surveillance.
VPN companies do not seem nearly as conniving.
It makes no sense that breaking the law gives milder consequences just as long as your crime is transnational and very extensive in scope.
I don't see how this can possibly be true. Any corp has finite money, and operating costs; If the fines are high enough, they will be consequential.
> to span multiple countries
you can't really evade US fines/sanction and continue to operate in the west.
At the end of the day, the C-suite either know that the law is being broken, or they don't. One makes them responsible, and the other makes them criminally negligent. I absolutely believe that C-suite executives of VW, for example, should have been thrown in jail for diesel-gate. Not knowing the law is not an excuse for breaking it. Similarly, if you're presiding over a company, and your company is breaking the law, plausible deniability shouldn't be a defense. If you're getting paid to run the company, you are responsible.
If I scam someone in my brick and mortar store with fake products I will be held personally responsible as the owner, and rightfully so. And if other people knowingly participate in the scam they will be held responsible too. Never mind all the other stuff like lying reviews, dangerous products, etc.
So why aren't we holding Jeff Bezos and the rest of Amazon leadership's team similarly accountable? They're not innocent bystanders here.
Somehow there's this idea that personal accountability just doesn't apply except in cases of VERY blatant outright fraud (Enron, VW Diesel, Theranos), and even then it's haphazard and often weak (no one went to prison for e.g. Deepwater Horizon). IMO it's one of the worst ideas in the history of bad ideas. The bigger the company (and thus stakes, and negative effects) the lower the accountability is.
The Devil's Dictionary from 1906 already observed this with:
"CORPORATION, n. An ingenious device for obtaining individual profit without individual responsibility."
Plus what's the logic behind the most draconian of implementations? - If we can hold Bezos to account, why not every AMAZON shareholder?
Shareholders aren't making these decisions. But if shareholders voted for something they knew was illegal or could have known was illegal, then yes, maybe they should be held to account too.
What are "these decisions"? I assumed you are talking about punishing people like Bezos for the activities of Amazon, even without proof he had direct knowledge/involvement of them, purely based on his position as a c-suite figurehead?
They're operating a platform that enables criminal activity and they benefit from it. They've been told this (and even without it, they can and should have known). And then they elected to not do all that much about it. "Don't do anything" is just as much of a decision as "do something" is.
Last time I looked at this they were literally recommending scams with "Amazon's Choice"[1]. That one is now gone, but you just need to "sort by price" (a reasonable thing to do) to find tons of scams.[2] None of this is new information. This has been going on >10 years. There's tons of stories about this sort of thing.
"Yeah, there's tons of scams on our site, and yeah, we're making a profit off those scams, but what can we do?" just doesn't fly. Rampant illegal activity you're making a profit on but somehow no one is accountable? Screw that.
[1]: https://news.ycombinator.com/item?id=34588734
[2]: https://www.amazon.co.uk/s?k=2tb+usb+ssd&i=computers&s=price...
Agreed. But law-makers and politicians in charge of the judiciary have been bought. Laws and the enforcement of them won't change any time soon
Instead there are options:
1. Govt walks in and just nationalizes them ala Japan post world war 2 where Mitsubishi, Sumimoto etc where just turned into puppets over night As in hostile takeover to influence how they use their loot.
2. Govt can then use the SpaceX model to disrupt brick and mortar sectors world wide (cement, steel, ships, planes, energy, fertilizer etc etc). The test will be bringing prices down of everything not just for Americans or the west but for everyone. other wise immigration waves just like the drugs flowing into the west will never stop.
Tech is supposed to fuck prices up. Google once upon a time did it for email, chat, video, search etc. I don't see why it can't happen with everything. We need grand goals not just how to add 6 more cameras into another fucking phone.
Its very human to want a hero come save the day but I fear that we'd just be replacing one bad actor with another.
There's at least a theoretical chance of voting the government out in favour of someone marginally better. I don't know what are the odds of that happening, but it's definitely bigger than 0%. And if we're not in the board of directors of a company, our odds of making them less corrupt is precisely 0%.
Corporate combinations are profit machines.
Governments are bureaucracy and vote-getting machines.
Pick your monomaniacalism.
But! Bureaucracy does have the benefit of being defined by law. Which... big tech really doesn't.
Which raises the question: Are these actually tech companies? Or simply 21st Century advertising (platform) companies - dependant on technology - whose primary goal is to exploit human nature for profit?
Abandon the idea that these are still tech companies and the world makes more sense (and gets more dystopian).
Neither of these options are what has been commonly referred to as “piercing the corporate veil”: hold the shareholders accountable for the decisions of their hired executives. We’ve been talking about this exact issue so long that it has a name we’ve stopped using.
https://en.wikipedia.org/wiki/Piercing_the_corporate_veil
If a company is being fined millions of dollars it’s likely because they made decisions which should reasonably land those responsible in prison.
If people will be held personally responsibly they have good incentives to not do this kind of stuff. Right now the incentive is exactly the other way: do anything to earn a profit and it will be good for your personal bank account. If it turns out some stuff was illegal, then well, not something that will be your problem as long as you didn't commit outright blatant fraud.
That Travis Uber guy may have fallen from grace somewhat, but he's still more wealthy than most of us will be, and part of why he's wealthy is because he knowingly (and very explicitly) broke a bunch of laws, never mind he resigned for reasons other than being a Uber's criminal activities.
This is not the kind of democracy I want to live in.
I'd much, much rather see a grassroots movement pushing to once again return to the marketplace of ideas, where for each "category" you have a host of apps competing against each other, not just one or two.
As a society, we should learn to hone the oscillatory nature of the complex system that is a tech niche: a niche forms => many apps populate the space => one app begins dominating => it consumes the rest (e.g: buy outs) => eventually the "one" app is replaced by a new market of apps.
We're failing on the last step and I'd like to get there without using the government's monopoly on violence.
IMHO, what we need to return to is "free (provider choice) and competitive (provider price) access to the market."
E.g. what the internet and web originally were, which begat the current tech giants (including the modern versions of Microsoft and Apple) by allowing them to circumvent existing gatekeepers.
Which, critically, means removing the requirement to pay a tithe of your success (or attempt) to anyone.
Because that's where big tech is currently financially entrenched -- to be on our platforms (i.e. any used platform), you have to pay us.
Which leads to tails-you-lose-heads-I-win scenarios, which strategically block any future challenger from emerging, because they're sacrificing so much of their profit to existing gatekeepers.
The EU got their regulatory targets correct -- either you can be a gatekeeper, controlling access to a large number of users, and abide by heavy limitations on your ability to tax companies that go through you; or you can not be in a gatekeeper position and compete fully.
But you don't get to be a gatekeeper and do anything you want.
So the real goal is to have Congress create a law that states that if a CEO is not a fiduciary of the employees (in contrast to an fiduciary of investors) they should be jailed
Seems like that would be a good law
Investors - despite the claims from fund managers - aren’t moving countries to avoid this stuff because the actual LPs are American institutional 401k and Funds which theoretically are employees.
So a law requiring corporate management to prioritize labor over capital would I think actually make a good impact.
Fines are the cost of doing business. They are nothing more than an expense item. People who knowingly cause people to die or otherwise cause great harm as leaders of a compnany should go to prison way more often. Every penny the Sacklers made should be seized by the government.
[1]: https://www.theguardian.com/world/2009/nov/24/china-executes...
[2]: https://apnews.com/article/supreme-court-opioid-crisis-purdu...
I probably made enough money to pay all my 2023 fines by midday on January 1st.
FTA:
> Big Tech companies can further water down the potential sting of these fines by delaying payment for years(new window). They’ve done this by filing appeals, counter-suing, or simply refusing to pay. Some notable examples include:
Sorry, but I give the companies the benefit of the doubt here: they have good legal teams and don't generally fight things when they can't win. Fighting these fines isn't evidence that big tech is evil and refuses to follow the low, it's evidence that these countries are rent seeking by charging them bogus fines, which their world-class legal teams (rightly) contest.
The way proper legal systems work, is both sides litigate a case if they see a chance of winning it, goes for both involved parties. As much as big tech isn't per-se evil for having to pay fines, the governments involved aren't rent seeking...
They're doing business in these countries, and making a profit from that. Where they do or don't have an office isn't that important: it's about who they're doing business with.
And it's really very simple: "obey the law or sod off". If you think that's too much bother then that's completely fair – no hard feelings. Just don't do business then.
It's important because it frames the lawsuit. If the company has a large presence in the country and is employing thousands of high-earning tax payers and leasing expensive offices, then the governments are not likely to bring frivolous fines against the company for no reason. On the other hand, if the company is making money and not paying anything back into their economy, the government has nothing to lose by attempting to extort them.
> And it's really very simple: "obey the law or sod off". If you think that's too much bother then that's completely fair – no hard feelings. Just don't do business then.
It's completely arbitrary in a lot of these cases. India fining Google $161m for smartphone market dominance and demanding specific remedies like not installing Google Chrome, YouTube, and Google Maps? How the hell was Google supposed to anticipate that?
Almost all of these in the table are like this. France fining Microsoft $64m (!) because their advertising cookie opt-out flow was not deemed clear enough? It's not that the flow didn't exist, mind you, it's that the button wasn't on the same page as the "accept cookies" button. Where in French or EU law does that exact requirement exist?
In addition, why give them the benefit of the doubt? Seriously, they have violated multiple laws every damn year, sometimes the same laws repeatedly. Why give them any doubt? They obviously do not act in good faith.
| Alphabet | 4 days 20 hrs 6 mins |
| Amazon | 1 day 12 hrs 58 mins |
| Apple | 0 day 18 hrs 14 mnins |
| Meta | 18 days 17 hrs 19 mins |
| Microsoft | 0 day 9 hrs 4 mins |
Total: 26 days 5 hrs 40 mins
What's the significance of adding up together the rows? Time passes simultaneously for all these companies.