Why corporations behave badly despite multi-million dollar fines and other sanctions

Hardware Hub Tech Policy & News
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Seems like these days, tech multinationals are constantly in the news for behaving immorally and getting fined for it.

Whether it’s intel or apple for anti-competitive practices in product servicing and sales, or facebook and google for manipulating and abusing their users, It’s a fairly common headline.

So why does it keep happening? Why do these companies keep behaving badly despite the clear consequences?

well, Apple, for example, makes 200 billion dollars a year. A 15 million dollar fine is less than a thousandth of a percent of that annual revenue, and that’s 3 times what they were just fined in australia.

an equivalent fine against an individual that makes 40 thousand a year would be 3 dollars. Massive government fines are literally peanuts to corporations this large.

If you only got charged 3 dollars for littering (if you get caught), and it costs you a monthly fee of $200 to get trash pickup, what are you gonna do?
Now imagine there’s 5 other people who get paid every time you litter, and they can take away your holiday bonus if you don’t.

The stakes are way too low for these behemoths to ever even consider not behaving badly. Their only duty is to the shareholders, and a government fine is bordering on a rounding error,especially if terrible business practices let them keep making that same money year to year.

Some states fine people as much as $2500 for littering. That’s a significant percentage of the average person’s annual income.

For apple, scaling up from the same 40k income as before, a similar fine would be around 12.5 Billion, and if we hold corporations to the same level of accountability as people (which we should) – that’s the rate we should be fining them for minor offenses.

When people really fuck up, our justice system regularly fines them 25% or more of their income, in addition to jail time and/or community service. We can’t put corporations in jail, but a 50 billion dollar penalty for operating outside of the law would help keep them honest.

so next time you see a multinational getting fined millions, look up their revenue and ask yourself if it’s going to make any difference.

(this may have already occurred to you, it’s not exactly hard to figure out, and that’s fine. I’m just posting here to encourage discussion among those who haven’t thought about it)

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Its not even the amount. Its the profit they make for doing it. Doesnt matter how much you fine them if they still make a profit because they did it.

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yes, and increasing the amount to the same levels that we fine the average person for minor civil offenses completely reverses those margins

a class action that causes a recall and a settlement costs significantly less than a faulty design that saves per-unit, but cutting revenue 6% for the year scares the shit out of shareholders, enough to make them keep a tight leash on their interests.

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Ttey way to fix this is to stop using technology so much. And I love technology and all, but it is a bit too much now that we basically have star trek technology.

Personally I want my flip phone that I liked back. I want to go on ting, get 2 sims, and have one in my V20 and another in a decent flip phone that can store and play music. If I want my v20 I can just move the service.

I know the way I do things is silly, but surely someone agrees with me that its kinda too much at this point.

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how exactly does this keep global corporations accountable for their actions?

it doesn’t matter if it’s tech, manufacturing, chemicals, service, food, shipping, or anything else. The same incentives apply.

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You use them less. They’re dependant on us, at least in america. Not so much the other way around.

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a) again, how does that make them accountable for their behavior

b) even if it did, how do you propose people just magically eat, drive, use metals, plastics, electronics, organics, electricity, light, water, buildings etc less?

c) this is an asymmetrical relationship. they can grift everyone for 1 dollar and make 350 million. you can refuse to purchase a 10 dollar product with a million other people and the larger companies wouldn’t blink. dollar votes are a total fallacy in a global economy with heavy regulatory capture.

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Eye opening post. Reminds me of how I got fined $1500 for simple possession of less than 1 gram of marijuana my freshman year of college. I maybe made $5,000 that whole year…

That’s the American justice system for ya. Equal under law, not equal in enforcement. You never see the math compared like that in the headline articles

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What about most people that basically have to have a smartphone for work? I use apps to communicate with co-workers, track my time for billing, access customer info, everything. I’m probably 200% more efficient with a smartphone.

Not that I enjoy being tied to technology and I love vacations because I get to turn the shit off, but it’s simply the way the world works now.

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Thats different. I’m talking about just normal life. The fact that we are all so intertwined now by only 1 device in our lives is a bit much IMO. OBV if you have it for work, then you need that. But just in private I think cutting down on that could be a good place for the consumer side.

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and completely irrelevant to corporate overreach.

as much as it might help your mental health, see:

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In the past, when “modern amenities” became necessary parts of life, think running water, electricity and telephone communication, the contemporary society faced the new reality and regulated those basic necessities as utilities.

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My point is if you don’t interact there’s not as much power. I think unplugging some would help people, but then again no one wants to listen to some crazy hacker who lives in the woods.

Whatever. Continue mortals.

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Yes, an advertisement engine, direct line to youtube, etc, are human rights requirements now aren’t they.

I retract my statement, technological heroine isn’t that bad!

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Yes, and that point is horseshit. Flint’s water got full of lead via the same processes before the internet was even a thing.

Unplugging can be good for you, but it’s not some magical pixie dust that stops massive corporations from abusing people.

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We need mandatory jail time for certain actions. Especially when texts and emails are discovered that point to people knowingly breaking the law and maximum penalties when these asshats are dumb enough to laugh about getting away with it and having electronic records of their asshattery. That should be automatic suspension from society via lengthy jail time.

But it isn’t going to happen any time soon. I remember when the SEC (I think) was being grilled over the bank bail-outs and how there was tons of wrongdoing which led up to the situation, yet hardly anyone was jailed. On rare occasion a clerical error will be blamed on the lowest man on the totem pole and briefly jailed, but it’s pretty rare for executives to be jailed. Between lobbyists making buddies with government officials and the revolving door between both worlds, they aren’t going to jail people.

Fines are just another business expense. It’s clear when a business is a repeat offender that they knew what they were doing and took it in to account. If this type of blatant abuse had mandatory jail time for the highest up executives involved, then this stuff would rarely happen. Our system of government encourages it. Unfortunately all other systems of government suck just as bad or worse.

There are plenty of people out there using technology to cure cancer and shit, so blaming technology isn’t going to do anything positive. With so many sheep around, the wolves start to encircle them. Spawn more overlords.

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Fines are only treated as a business expense because the scale of those fines hasn’t kept up with the scale of business. There’s no way to bounce back from losing a quarter of your revenue all at once, and there’s nothing you can do to treat it as a sunk cost.

that’s another big implementation hurdle, at least in the US. Civil offenses at scale are still technically civil offenses here, and the people who perpetrate white collar crime can afford very good lawyers. It also doesn’t help that you can’t make money off the private prison system for jailing this type of criminal.

Increasing the scale of fines would be a hard but doable lobbying effort, whereas changing our entire privatized prison system to shift the jail rates for the rich is next to impossible

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I don’t think any solution is realistically going to happen any time soon. With fines that can be negotiated down or deffer from the individual to the legal entity, it might discourage the culture, but not the person. We see too many of these leeches jump ship from one business to the next, as long as ‘they’ get away with it. Mandatory jail sentences would put seeds of doubt in each persons mind and people would be quick to sell each other out, lest they be jailed themselves.

You are right, larger fines would be the better solution, but I fear our culture of deifying villains creates subcultures wholly comprised of people with a villainous nature. The same nature of the lawmakers who refuse to change anything because they are cut from the same cloth, have or will work for the same corporations, and break bread with one another.

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I’ve always been a strong believer that if a company fucks up big time, you hit them with a fine that makes their stock take a 30% long-term dip and it will teach them to follow the rules.

Or, you could break them up.

Sorry Apple, time to split you up into a hardware manufacturer and a software house.

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no-one’s gonna hire a person that’s costed another company and its shareholders a ton of money for illegal conduct. If they want to continue to grift it’ll have to be at a much smaller scale.

Upper management (the people typically commiting white collar crime) aren’t accountable to anyone but the shareholders, so you have to make them unattractive to shareholders. The massive fine might hit the company and not the individuals, but it’s still a black mark.

No, just fine them that value. That’s the point. You encourage major shareholders to dig in on a dip from regulatory oversight, maybe even buy more stock and encourage worse behavior. Just directly extract the value by levying a proportional fine that will badly effect the bottom line without speculation. Relying on the markets for justice is like relying on a slot machine for income.

Maybe even implement a recidivism policy whereby the maximum is mandatory after the first fine.

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