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To put that into context: > Despite being a record fine, Alphabet generated about the same amount of money every 16 days in 2017, based on the company’s report

To put that into context: > Despite being a record fine, Alphabet generated about the same amount of money every 16 days in 2017, based on the company’s reported annual revenue of $110.9 billion for the year.

kryptiskt 8y ago
They should compare with profits, revenue has costs.
ddorian43 8y ago
Don't you have to compare it with profits ? Also, most of the $$ comes from other places, no ?
avar 8y ago
A fine comes out of your profits, not your revenue. From a Routers[1] source they had $110.9 billion in revenue, but a profit of $12.6 billion. So this is somewhere between a third and half of their global profits. 1. https://www.reuters.com/article/us-alphabet-results/alphabets-earnings-miss-profit-estimates-as-spending-grows-idUSKBN1FL6H4 https://www.reuters.com/article/us-alphabet-results/alphabet...
- arghwhat 8y ago
  Variable fines are generally set based on revenue, rather than profits.
  - lostlogin 8y ago
    This method would be very unpleasant for Amazon.
  - close04 8y ago
    Such fines are also recurring if the issue is not rectified. Of course no company that ever had to pay the fine tested this principle :). I'm pretty sure they'll fight it just like Intel is doing.
  - garmaine 8y ago
    If so, this is a flaw. Not all businesses have the same margin.
    - Radle 8y ago
      You can hide profit on the paper, by investing it. So it is impossible to fine under consideration of profits. The only way to do is to use revenue, but judges should still consider the business profit margin.
      - garmaine 8y ago
        That’s not the only way. Independent government auditors could make their own profits assessment and work off that. This is exactly what is done in other jurisdictions and other industries.
        Radle 8y ago
        Let's say you have one profit bringing business unit like google ads. (Let's call it main unit) but you also have internal startups in your company (side units). But you only have one operations department, only one HR department etc. How do you account the expenses of these departments in relation to main business and the side units? You can't. If people are not forced don't write down exactly whether they spent their time on working for the main unit or the side units units, you can't later account it correctly. Unfortunately it's not even clear for the company what happens sometimes. You might for example hire an employee, but place him in a different business unit than originally planned. Or the employee later on changes business units. The other problem with this is even if you require such a strict accounting setup, you can't tell whether employees and/or departments are accounting their efforts correctly, it's just incredible difficult to enforce the rule; to make sure they don't lie. Even if you think hey you can do it, you have to rigorously enforce this for all companies in your juridiction, because as soon as you stop looking, they will stop caring. So the problem is you can't tell the profits before "internal investments" as long as you can't pin down operational costs. You'll see that the only thing that you can accurately account for is the main business units revenue, but you can't give a precise number on operational income. (Which is revenue - product costs - operational costs).
- powerapple 8y ago
  profit is after tax. You don't have to pay tax on a fine, so the actual deduction on profit will be lower.
lclarkmichalek 8y ago
Might be better to look at profit? Their 18Q1 profits were $9.6B, which would make this a hit of roughly 1.5 months?
repolfx 8y ago
To put it in a slightly different context, this is more money than the annual contributions of quite a few EU member states. Google is now a bigger contributor to the EU budget than Belgium, the Netherlands or Ireland. http://www.europarl.europa.eu/external/html/budgetataglance/default_en.html#united_kingdom http://www.europarl.europa.eu/external/html/budgetataglance/... Fines paid to the EU go straight into its own general budget. Combined with the nature of the EU Commission as judge, jury and executioner in cases like this, it is a severe conflict of interest. Member state are refusing to pay more into the budget and the UK is leaving, which will create a massive budget hole. The EU is strongly incentivised to levy fines for vaguely defined, highly debatable "crimes" on US tech firms in order to avoid their own internal political disputes over funding.
- sveme 8y ago
  > EU Commission as judge, jury and executioner The executive fines someone (like you are fined for violating parking regulations), then you can appeal that fine in court, in this case most likely the ECJ. Would you argue that it's wrong to address a coporation's wrongdoings? EU companies are fined regularly as well, might not create such an upheaval in the US media, though.
  - repolfx 8y ago
    If the government believes people have broken the law, in a democracy that means civil servants have to launch a criminal case and win a prosecution. The EU is not structured like that, and thus doesn't have to win any prosecution. Margrethe Vestager just issue a proclamation with a number she and the Commission picked out of the air, and the deed is done.
    - chki 8y ago
      That's a very narrow (and in my opinion even wrong) understanding of what constitutes a democracy. Prosecuting companies via criminal lawsuits might be the American way but that does not mean every democracy has to have those same rules. If an administration fines a company and there is the possibility to appeal to a court that is also a democratic process. My homecountry Germany uses this process (companies are never sued in a criminal lawsuit) and I don't see a reason why that would be undemocratic.

kryptiskt 8y ago

They should compare with profits, revenue has costs.

ddorian43 8y ago

Don't you have to compare it with profits ? Also, most of the $$ comes from other places, no ?

avar 8y ago

A fine comes out of your profits, not your revenue. From a Routers[1] source they had $110.9 billion in revenue, but a profit of $12.6 billion. So this is somewhere between a third and half of their global profits. 1. https://www.reuters.com/article/us-alphabet-results/alphabets-earnings-miss-profit-estimates-as-spending-grows-idUSKBN1FL6H4 https://www.reuters.com/article/us-alphabet-results/alphabet...

arghwhat 8y ago
Variable fines are generally set based on revenue, rather than profits.
- lostlogin 8y ago
  This method would be very unpleasant for Amazon.
- close04 8y ago
  Such fines are also recurring if the issue is not rectified. Of course no company that ever had to pay the fine tested this principle :). I'm pretty sure they'll fight it just like Intel is doing.
- garmaine 8y ago
  If so, this is a flaw. Not all businesses have the same margin.
  - Radle 8y ago
    You can hide profit on the paper, by investing it. So it is impossible to fine under consideration of profits. The only way to do is to use revenue, but judges should still consider the business profit margin.
    - garmaine 8y ago
      That’s not the only way. Independent government auditors could make their own profits assessment and work off that. This is exactly what is done in other jurisdictions and other industries.
      - Radle 8y ago
        Let's say you have one profit bringing business unit like google ads. (Let's call it main unit) but you also have internal startups in your company (side units). But you only have one operations department, only one HR department etc. How do you account the expenses of these departments in relation to main business and the side units? You can't. If people are not forced don't write down exactly whether they spent their time on working for the main unit or the side units units, you can't later account it correctly. Unfortunately it's not even clear for the company what happens sometimes. You might for example hire an employee, but place him in a different business unit than originally planned. Or the employee later on changes business units. The other problem with this is even if you require such a strict accounting setup, you can't tell whether employees and/or departments are accounting their efforts correctly, it's just incredible difficult to enforce the rule; to make sure they don't lie. Even if you think hey you can do it, you have to rigorously enforce this for all companies in your juridiction, because as soon as you stop looking, they will stop caring. So the problem is you can't tell the profits before "internal investments" as long as you can't pin down operational costs. You'll see that the only thing that you can accurately account for is the main business units revenue, but you can't give a precise number on operational income. (Which is revenue - product costs - operational costs).
powerapple 8y ago
profit is after tax. You don't have to pay tax on a fine, so the actual deduction on profit will be lower.

lclarkmichalek 8y ago

Might be better to look at profit? Their 18Q1 profits were $9.6B, which would make this a hit of roughly 1.5 months?

repolfx 8y ago

To put it in a slightly different context, this is more money than the annual contributions of quite a few EU member states. Google is now a bigger contributor to the EU budget than Belgium, the Netherlands or Ireland. http://www.europarl.europa.eu/external/html/budgetataglance/default_en.html#united_kingdom http://www.europarl.europa.eu/external/html/budgetataglance/... Fines paid to the EU go straight into its own general budget. Combined with the nature of the EU Commission as judge, jury and executioner in cases like this, it is a severe conflict of interest. Member state are refusing to pay more into the budget and the UK is leaving, which will create a massive budget hole. The EU is strongly incentivised to levy fines for vaguely defined, highly debatable "crimes" on US tech firms in order to avoid their own internal political disputes over funding.

sveme 8y ago
> EU Commission as judge, jury and executioner The executive fines someone (like you are fined for violating parking regulations), then you can appeal that fine in court, in this case most likely the ECJ. Would you argue that it's wrong to address a coporation's wrongdoings? EU companies are fined regularly as well, might not create such an upheaval in the US media, though.
- repolfx 8y ago
  If the government believes people have broken the law, in a democracy that means civil servants have to launch a criminal case and win a prosecution. The EU is not structured like that, and thus doesn't have to win any prosecution. Margrethe Vestager just issue a proclamation with a number she and the Commission picked out of the air, and the deed is done.
  - chki 8y ago
    That's a very narrow (and in my opinion even wrong) understanding of what constitutes a democracy. Prosecuting companies via criminal lawsuits might be the American way but that does not mean every democracy has to have those same rules. If an administration fines a company and there is the possibility to appeal to a court that is also a democratic process. My homecountry Germany uses this process (companies are never sued in a criminal lawsuit) and I don't see a reason why that would be undemocratic.