You can get a parking ticket practically every day and continue living your life as usual (ask me how I know).
It does not seem at all clear to me that any tech company could sustain routine fines of this scale and remain a going concern. By Swisher's numbers in this post, 3 more fines of this size would deplete Facebook's cash reserves. A $5B fine represents most of the valuation of Slack, and an integer multiple of Discord, or any of a number of other "unicorn" companies Facebook could have bought, rather than shoveling that cash, in effect, into a furnace.
It's also not clear what the underlying violations of the consent decree are. What this analysis loses sight of is that the deterrence question isn't simply about what it would take to stagger Facebook as a company, but rather what it would take to deter them from the particular violations they're charged with. If this is about lax controls over data exposed in Facebook's API (generalizing from the Cambridge Analytica scandal), what's our guess as to how much money Facebook made by allowing partners to do that, or how much money they saved by not building and managing better controls? It seems unlikely to be an amount denominated in billions.
A company can be a goliath with hundreds of billions in reserve, but if a group inside that company that generates just tens or hundreds of millions of dollars reliably generates 5 billion dollar fines, that group is getting "reorganized".
The debate has lost sight of even 'how can we punish Facebook for CA' and moved into 'how can we punish Facebook simply for being Facebook'.
At that point, there's no need to tie the figure to anything - someone could (and probably will) come along and say 'make the fine 500bn instead' and it will have just as much basis in reality.
Which is fine - many do think that the world without Facebook in it would be a better place. But this is certainly not about ‘how can we coerce Facebook into being a more responsible actor’.
>It does not seem at all clear to me that any tech company could sustain routine fines of this scale and remain a going concern.
It will be fine if they stop doing the things that cause the fines. A $3-5B fine is nothing compared to the settlements that were extracted from banks, and the tech industry is much more profitable.
Why does everyone talk about increasing fines? Wouldn't it be a far more effective deterrent to charge some FB exec team for breaking some law (haven't they already done that in the "friendly fraud" case?) and put them in jail?
the main point of a corporation is a shield of liability. both morally and legally. In a corporation, nothing is anybody's fault. Everyone, even up to the CEO, is a process that runs a script commonly called a policy. So you can't even be a member of the corporation without "following policy". But following policy shields you from any blame or accusation of wrongdoing, because it is always acceptable to say "wasn't our choice we were just following policy". The policy just comes out of nowhere. Nobody puts their name on the policy and says "This is what you do because I say so". So you can never track down who created the policy. It was created by people, but those people quickly disbanded and are not traceable to its inception. The CEO has a policy which is simply a contract to "shareholders". But not any individual shareholder, even "the board" isn't accountable, because they "represent" the "millions of shareholders". So no, it wasn't their idea. And you can't hold millions of people responsible. So no, there is no such thing as holding a corporation responsible.
Yes, let's see Facebook executives going to jail, with Mark first in line. The duration is almost irreverent, as they'd forever be labeled "ex-con". Plus the fine, too, needs to be real.
I would be interested to hear exactly how much is handed over at the end of the day. How much is forgiven? How much can they deduct from their taxes somewhere else? How much is quietly renegotiated a couple years after the headlines disappear.
Serious question: Has there EVER been a case where a fine has been truly damaging/punitive to a company? Every instance I remember seems to be of the parking ticket variety.
They are worse than parking tickets. A parking ticket is a loss in most all circumstances. It may be small, but the incentive is there to avoid the ticket. In these business cases, they are a net gain. The company does something illegal, makes a bunch of money off of it, and gets a fine for less than they made. They earn more by breaking the law and are incentivized to do so.
Edit: Arthur Andersen, for instance, was convicted of a crime and had to surrender its CPA license, putting the company out of business.
Fines are just supposed to change behavior. $3 billion is a lot of money regardless, and it’s likely Facebook will invest additional resources in the future to help avoid future such fines.
I don't like Facebook and I don't like their privacy practices. However, $5B is approximately 20% of their cash on hand so I think that we aren't talking about "parking ticket" level fines.
For real changes in behavior though, it'd probably take something radical like fining their board directly instead of punishing the shareholders.
Happens all the time to small businesses. You piss of the wrong person, phone calls get made and crippling fines are levied. At least that's how it works in my state. I can't think of it ever happening to a big business though.
There’s an “operational understanding” that companies should rarely be prosecuted or fined substantially because it can easily bankrupt them. I find this mindset ridiculously offensive.
Read up on the SNC Lavalin affair going on in Canada right now and you'll understand what typically happens.[1]
Company pays bribes in Libya. Attorney General presses charges. Prime Minister gets scared that company will go under if severely punished (lost jobs = lost votes) so puts pressure on Attorney General to "go easy on them".
Whenever they want to actually damage a company they just don't fine them. They pass a new bill, create new regulations, or take action against individuals in the company in order to "send a message" without hurting the business as a whole, to avoid scaring off other companies. which is exactly what a serious fine would do, as it should, and as everyone (but the investors) want.
At this point we might just as well introduce a hefty "privacy violation tax" (though with an euphemistic name) and treat FAANG as the new tobacco industry. Because these kinds of issues will never go away, they are firmly woven into these corporations' business models. Fines can't change that.
Not a fan of facebook but $5B is a big fine, NYTimes hosting multiple OP EDs claiming its not is disingenuous shilling more about them seeing FB as a competitor for advertising dollars and news.
That’s like saying that $5,000 is a big fine. If you make $50,000 a year or less before tax, $5,000 is hefty. If you make $20,000 a year or less before tax, and have no savings, it will probably bankrupt you. iIf you don’t have any significant income, you will probably never pay it off.
But if you make $200,000 a year, it’s depriving you of a new carbon-fibre gravel race bike this season. Annoying, but you can handle it.
“Big” is relative to your financial situation. For Facebook, it’s a parking ticket. For a startup, it would destroy them.
I'm struck by how often I see these types of comments these days, both on this site and others. "Not a fan of facebook, but..." or "I hate facebook, but..." It reminds me of the shift in discourse around Hillary Clinton in the run-up to the 2016 election. I'd talk to reasonable people who'd say, "Well, Clinton is certainly evil, but she's the lesser or two evils" or "I hate Hillary, but Trump isn't qualified." It was basically a case of an entire population trying to process the cognitive dissonance created by a massive disinformation campaign. Every time I see a negative article posted about fb (and it's pretty much daily now), I see in the comments some variation of this same struggle to reconcile our (probably neutral) feelings about fb against this rolling tide of propaganda. It's disheartening how quickly we've accelerated to this dystopia of mass-manipulation of public opinion through social media.
Talking about Kara Swisher?
Kara Swisher has been a tech reporter for decades and is arguably one of the better connected in the Valley (and also one of the most critical of their bro culture and culture of uncontrolled excess).
[+] [-] tptacek|6 years ago|reply
It does not seem at all clear to me that any tech company could sustain routine fines of this scale and remain a going concern. By Swisher's numbers in this post, 3 more fines of this size would deplete Facebook's cash reserves. A $5B fine represents most of the valuation of Slack, and an integer multiple of Discord, or any of a number of other "unicorn" companies Facebook could have bought, rather than shoveling that cash, in effect, into a furnace.
It's also not clear what the underlying violations of the consent decree are. What this analysis loses sight of is that the deterrence question isn't simply about what it would take to stagger Facebook as a company, but rather what it would take to deter them from the particular violations they're charged with. If this is about lax controls over data exposed in Facebook's API (generalizing from the Cambridge Analytica scandal), what's our guess as to how much money Facebook made by allowing partners to do that, or how much money they saved by not building and managing better controls? It seems unlikely to be an amount denominated in billions.
A company can be a goliath with hundreds of billions in reserve, but if a group inside that company that generates just tens or hundreds of millions of dollars reliably generates 5 billion dollar fines, that group is getting "reorganized".
[+] [-] kristianc|6 years ago|reply
At that point, there's no need to tie the figure to anything - someone could (and probably will) come along and say 'make the fine 500bn instead' and it will have just as much basis in reality.
Which is fine - many do think that the world without Facebook in it would be a better place. But this is certainly not about ‘how can we coerce Facebook into being a more responsible actor’.
[+] [-] Despegar|6 years ago|reply
It will be fine if they stop doing the things that cause the fines. A $3-5B fine is nothing compared to the settlements that were extracted from banks, and the tech industry is much more profitable.
[+] [-] bpchaps|6 years ago|reply
[+] [-] unknown|6 years ago|reply
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[+] [-] throwaway_9168|6 years ago|reply
[+] [-] JudgeWapner|6 years ago|reply
[+] [-] Frost1x|6 years ago|reply
[+] [-] bsenftner|6 years ago|reply
[+] [-] sandworm101|6 years ago|reply
I would be interested to hear exactly how much is handed over at the end of the day. How much is forgiven? How much can they deduct from their taxes somewhere else? How much is quietly renegotiated a couple years after the headlines disappear.
[+] [-] paulcole|6 years ago|reply
[+] [-] 6gvONxR4sf7o|6 years ago|reply
[+] [-] javagram|6 years ago|reply
Edit: Arthur Andersen, for instance, was convicted of a crime and had to surrender its CPA license, putting the company out of business.
Fines are just supposed to change behavior. $3 billion is a lot of money regardless, and it’s likely Facebook will invest additional resources in the future to help avoid future such fines.
[+] [-] alyandon|6 years ago|reply
For real changes in behavior though, it'd probably take something radical like fining their board directly instead of punishing the shareholders.
[+] [-] dsfyu404ed|6 years ago|reply
[+] [-] ianai|6 years ago|reply
[+] [-] refurb|6 years ago|reply
Company pays bribes in Libya. Attorney General presses charges. Prime Minister gets scared that company will go under if severely punished (lost jobs = lost votes) so puts pressure on Attorney General to "go easy on them".
[1]https://en.wikipedia.org/wiki/SNC-Lavalin_affair
[+] [-] gyaniv|6 years ago|reply
[+] [-] lazyjones|6 years ago|reply
[+] [-] unknown|6 years ago|reply
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[+] [-] soup10|6 years ago|reply
[+] [-] braythwayt|6 years ago|reply
But if you make $200,000 a year, it’s depriving you of a new carbon-fibre gravel race bike this season. Annoying, but you can handle it.
“Big” is relative to your financial situation. For Facebook, it’s a parking ticket. For a startup, it would destroy them.
[+] [-] guymcgwire|6 years ago|reply
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[+] [-] mikece|6 years ago|reply
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[+] [-] braythwayt|6 years ago|reply
https://en.wikipedia.org/wiki/Ad_hominem#Circumstantial
What you say may be true, but it does not establish that the OP’s argument is false.
[+] [-] atonse|6 years ago|reply
[+] [-] happytoexplain|6 years ago|reply
[+] [-] jmichaelhudson|6 years ago|reply
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[+] [-] cowpig|6 years ago|reply