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> What does a good, meaningful fine actually look like? Would it need to wipe out one quarter’s revenue (roughly $15 billion)? Is a fine meaningless unless it’s

by zaroth 8y ago

> What does a good, meaningful fine actually look like? Would it need to wipe out one quarter’s revenue (roughly $15 billion)? Is a fine meaningless unless it’s recurring (penalties for every quarter or year since Facebook last settled with the F.T.C. for violating user privacy in 2011)? I get that people want to see a company crippled but wiping out a quarter of revenue is a death-blow. I don’t use Facebook at all, but I followed the CA scandal because I thought it was an interesting case that Facebook predictably botched nearly every aspect of handling it. $5 billion is a lot of money. It is not and never can be considered “chump change”. It is irrational to think a Board or management team isn’t going to seriously implement rigorous changes to avoid a $5 billion dollar fine. This is where someone says that if you can violate the law and earn $6 billion and only be fined $5 billion you will violate the law every time. There are numerous problems with this statement. One, you don’t know ahead of time what the fine will be. Two, it assumes there’s no way to earn even $1 of the $6 billion without violating the law. If you can earn $3 billion without violating the law and double it to $6 billion with the violation, but the fine is $5 billion then it’s not “worth it” but even still this fails to account for the tremendous reputational and legal risks. One parting thought. If the behavior which is being fined was directly used to obtain a monopoly position in the marketplace which the company continues to benefit from, that changes the calculus. But was CA’s ability to scrape social network data from Facebook’s API a proximate cause of Facebook’s market position?

badrabbit 8y ago
Here is what you dont get,the idea is to give them a death blow. Nobody is interested in giving FB a warning. If you ask me, prison time for execs in addition to at least $10B yearly fine makes sense. They intentionally did things that harmed millions of people, the idea is not to just make them think twice before they do something like that again,but to make the message loud and clear: "that move is a fatal move". Not just for FB but for all others who make money out of user surveillance (snapchat,linkedin,google,etc...). We don't want to give them a risk they can calculate and evaluate,we want to give them a risk as clear as death, a risk no company will even bring up in any meeting.
- gonzo41 8y ago
  Remember when VW did all that computer magic with emissions controls. Only a mid level engineering manager went to jail. The diesel emissions will probably cause cancer in people in the streets. CEO's need to start going to the gaol long term , and we need to start banning those involved from being able to run, own, or hold shares in corporations outside of blind trusts ever again.
  - amluto 8y ago
    You’re out of date: https://www.apnews.com/faeff4b8855c4b0daf538599ae3f9db2 https://www.apnews.com/faeff4b8855c4b0daf538599ae3f9db2
  - scrooched_moose 8y ago
    You're far out of date on that story. https://www.apnews.com/faeff4b8855c4b0daf538599ae3f9db2 https://www.apnews.com/faeff4b8855c4b0daf538599ae3f9db2 https://www.theguardian.com/business/2017/dec/06/oliver-schmidt-jailed-volkswagen-emissions-scam-seven-years https://www.theguardian.com/business/2017/dec/06/oliver-schm... https://www.reuters.com/article/us-volkswagen-emissions-stadler/head-of-vws-audi-arrested-in-germany-over-diesel-scandal-idUSKBN1JE0R3 https://www.reuters.com/article/us-volkswagen-emissions-stad... https://money.cnn.com/2018/04/20/news/porsche-arrest-volkswagen-diesel-emissions-scandal/index.html https://money.cnn.com/2018/04/20/news/porsche-arrest-volkswa...
  - user5994461 8y ago
    The car industry support hundreds of thousands of jobs all over the world and in the respective countries of each manufacturer. There would never be any strong action taken against them, this would be hurting the government who took it and its people. On a side note. Big internet companies will never enjoy the same level of political support. They don't support any job and don't pay any tax where they get their money from. It's a bunch of nerds in the west coast and that's barely caricaturing. If anything, the bigger fines will come from Europe rather than Washington, because politics.
    - 8y ago
deleted 8y ago
[deleted]
smt88 8y ago
I do think there should be a "death penalty" for companies, but you don't need to punish the company (and many innocent employees) to prevent unethical behavior. Instead, you need to: 1) hold the C-suite and the Board accountable for the crime(s) 2) eliminate all their compensation from the years they were committing the crime 3) force the company to replace the entire C-suite Fining someone like Zuckerberg and letting him retain control is like finding out your babysitter is giving your child alcohol, fining them, and then letting them continue watching your child. It makes no sense in any other context.
- yeahitslikethat 8y ago
  No one who works for any of these companies is innocent. You think they don't have water cooler conversations that include statements like, "but we can work anywhere after working here." What harm will come to all those employed accomplices to these crimes against humanity?
  - djohnston 8y ago
    ^ this is your brain on NYT
- meddlepal 8y ago
  And then only after implementing this set of policies do you realize none of these board or executive teams are located within your borders anymore.
  - cco 8y ago
    Doesn't that help solve the problem then?
coldtea 8y ago
>I get that people want to see a company crippled but wiping out a quarter of revenue is a death-blow. Yeah, so? Smaller companies get death-blow fines all the time, why shouldn't big sharks get the same?
scarface74 8y ago
$5 billion is a lot of money. It is not and never can be considered “chump change”. It is irrational to think a Board or management team isn’t going to seriously implement rigorous changes to avoid a $5 billion dollar fine. Well, seeing that the board is powerless since Zuckerberg has a controlling interest in FB....
luckylion 8y ago
> I get that people want to see a company crippled but wiping out a quarter of revenue is a death-blow. So is a lengthy prison sentence for individuals. Should we get rid of those to make it fair? > There are numerous problems with this statement. One, you don’t know ahead of time what the fine will be. You can take an educated guess going off of what happened to you and others on previous occasions. If there are no examples of a fine that is "a death blow", your risk to receive one is low. Hell, you might not even get caught. It's hard to tell how much they get away with because there's no leak or whistleblower. I'm pretty sure that the reason FB isn't putting bogus charges on users' credit cards isn't that they wouldn't because of ethical reasons. It's that a) they'd likely get caught and b) they'd get into a lot of trouble. Companies aren't sex offenders or committing crimes of passion, they are much closer to rational actors, deterrence works great on them.
aeturnum 8y ago
> I get that people want to see a company crippled but wiping out a quarter of revenue is a death-blow. What do we think would change if "Facebook" as a company went bankrupt? Certainly, the website would continue operating - it's profitable. The technology is still worth whatever it's worth. I have a hard time imagining that a purely financial threat to the corporate entity changes the product too much. What it does change is the incentives to the capital involved. It threatens equity. If we all agree that the Facebook "tech" is morally neutral(ish) then the purposes its being put to are what we should challenge. Breaking the back of the company's financials seems like a reasonable way to do that.
- ianai 8y ago
  Their data centers can be seized and net connections cut.
  - aeturnum 8y ago
    But like...why would bankruptcy do that? The servers aren't worth that much. Their contents are worth more secret! The secrecy of their data is how Facebook makes money. If the company that operates those servers gets shut down, I don't see how the group that takes over the business (whoever it is) shuts down the servers. Maybe everyone freaks out and Facebook loses a lot of people, maybe we don't get updates for a bit. Those seem possible, probable even. But things that make money don't get taken apart in bankruptcy. I could be wrong! But I don't know of any historic examples where things like that happen.
    - jazzyjackson 8y ago
      Facebook did not keep user data secret, they used it as a lure to attract Farmvilles and 'Which Hogwarts House are YOU' surveys to make sure people spent more time on the platform, because having a billion people look at the website every day is how facebook makes money. Using the data they have to make sure ads are efficiently targeted is a par for the course -- but it does no harm to facebook if someone else has all my user data, if I spend all my time on facebook, facebook is the only one who makes money selling ads to me.
treis 8y ago
>I get that people want to see a company crippled but wiping out a quarter of revenue is a death-blow. No, it's not. 15 billion is less than 3% of Facebook's market cap. It's less than the swing in Facebook's value after market close on Wednesday. Also probably less than the value they got through violating their consent decree.
- codethief 8y ago
  A company's market evaluation has nothing to do with its internal cash flows. Put differently, 15 billion being less than 3% of Facebook's market cap says nothing about how much such a fine would affect Facebook.
  - immawizard 8y ago
    Assuming the fine is one-off and market doesn’t devalue facebook because of the fine itself, couldn’t Facebook issue new stock to offset the fine, effectively losing 3% of stock value in the end?
    - codethief 8y ago
      Your question is basically "Couldn't Facebook just ask someone else to pay their fine?" – to which the answer is yes, they certainly could. But I highly doubt it'd work. I mean investors would basically be bailing out Facebook and wouldn't get anything in return. Look at it from the perspective of existing investors: They would be forced to buy the new shares Fb is issuing in order to maintain their respective percentage of shares and, thus, their expected future dividends. There's nothing to gain from that – in fact, their investment's expectation value just goes down as they now need to pay an additional price for the same expected future return. Needless to say, shareholders don't value such a move, so any CEO trying to pull off such a thing would likely be removed immediately.
      - treis 8y ago
        >There's nothing to gain from that What about not getting shut down for failing to pay a fine?

by zaroth 8y ago

badrabbit 8y ago

Here is what you dont get,the idea is to give them a death blow. Nobody is interested in giving FB a warning. If you ask me, prison time for execs in addition to at least $10B yearly fine makes sense. They intentionally did things that harmed millions of people, the idea is not to just make them think twice before they do something like that again,but to make the message loud and clear: "that move is a fatal move". Not just for FB but for all others who make money out of user surveillance (snapchat,linkedin,google,etc...). We don't want to give them a risk they can calculate and evaluate,we want to give them a risk as clear as death, a risk no company will even bring up in any meeting.

gonzo41 8y ago
Remember when VW did all that computer magic with emissions controls. Only a mid level engineering manager went to jail. The diesel emissions will probably cause cancer in people in the streets. CEO's need to start going to the gaol long term , and we need to start banning those involved from being able to run, own, or hold shares in corporations outside of blind trusts ever again.
- amluto 8y ago
  You’re out of date: https://www.apnews.com/faeff4b8855c4b0daf538599ae3f9db2 https://www.apnews.com/faeff4b8855c4b0daf538599ae3f9db2
- scrooched_moose 8y ago
  You're far out of date on that story. https://www.apnews.com/faeff4b8855c4b0daf538599ae3f9db2 https://www.apnews.com/faeff4b8855c4b0daf538599ae3f9db2 https://www.theguardian.com/business/2017/dec/06/oliver-schmidt-jailed-volkswagen-emissions-scam-seven-years https://www.theguardian.com/business/2017/dec/06/oliver-schm... https://www.reuters.com/article/us-volkswagen-emissions-stadler/head-of-vws-audi-arrested-in-germany-over-diesel-scandal-idUSKBN1JE0R3 https://www.reuters.com/article/us-volkswagen-emissions-stad... https://money.cnn.com/2018/04/20/news/porsche-arrest-volkswagen-diesel-emissions-scandal/index.html https://money.cnn.com/2018/04/20/news/porsche-arrest-volkswa...
- user5994461 8y ago
  The car industry support hundreds of thousands of jobs all over the world and in the respective countries of each manufacturer. There would never be any strong action taken against them, this would be hurting the government who took it and its people. On a side note. Big internet companies will never enjoy the same level of political support. They don't support any job and don't pay any tax where they get their money from. It's a bunch of nerds in the west coast and that's barely caricaturing. If anything, the bigger fines will come from Europe rather than Washington, because politics.
  - 8y ago

deleted 8y ago

[deleted]

smt88 8y ago

I do think there should be a "death penalty" for companies, but you don't need to punish the company (and many innocent employees) to prevent unethical behavior. Instead, you need to: 1) hold the C-suite and the Board accountable for the crime(s) 2) eliminate all their compensation from the years they were committing the crime 3) force the company to replace the entire C-suite Fining someone like Zuckerberg and letting him retain control is like finding out your babysitter is giving your child alcohol, fining them, and then letting them continue watching your child. It makes no sense in any other context.

yeahitslikethat 8y ago
No one who works for any of these companies is innocent. You think they don't have water cooler conversations that include statements like, "but we can work anywhere after working here." What harm will come to all those employed accomplices to these crimes against humanity?
- djohnston 8y ago
  ^ this is your brain on NYT
meddlepal 8y ago
And then only after implementing this set of policies do you realize none of these board or executive teams are located within your borders anymore.
- cco 8y ago
  Doesn't that help solve the problem then?

coldtea 8y ago

>I get that people want to see a company crippled but wiping out a quarter of revenue is a death-blow. Yeah, so? Smaller companies get death-blow fines all the time, why shouldn't big sharks get the same?

scarface74 8y ago

$5 billion is a lot of money. It is not and never can be considered “chump change”. It is irrational to think a Board or management team isn’t going to seriously implement rigorous changes to avoid a $5 billion dollar fine. Well, seeing that the board is powerless since Zuckerberg has a controlling interest in FB....

luckylion 8y ago

> I get that people want to see a company crippled but wiping out a quarter of revenue is a death-blow. So is a lengthy prison sentence for individuals. Should we get rid of those to make it fair? > There are numerous problems with this statement. One, you don’t know ahead of time what the fine will be. You can take an educated guess going off of what happened to you and others on previous occasions. If there are no examples of a fine that is "a death blow", your risk to receive one is low. Hell, you might not even get caught. It's hard to tell how much they get away with because there's no leak or whistleblower. I'm pretty sure that the reason FB isn't putting bogus charges on users' credit cards isn't that they wouldn't because of ethical reasons. It's that a) they'd likely get caught and b) they'd get into a lot of trouble. Companies aren't sex offenders or committing crimes of passion, they are much closer to rational actors, deterrence works great on them.

aeturnum 8y ago

> I get that people want to see a company crippled but wiping out a quarter of revenue is a death-blow. What do we think would change if "Facebook" as a company went bankrupt? Certainly, the website would continue operating - it's profitable. The technology is still worth whatever it's worth. I have a hard time imagining that a purely financial threat to the corporate entity changes the product too much. What it does change is the incentives to the capital involved. It threatens equity. If we all agree that the Facebook "tech" is morally neutral(ish) then the purposes its being put to are what we should challenge. Breaking the back of the company's financials seems like a reasonable way to do that.

ianai 8y ago
Their data centers can be seized and net connections cut.
- aeturnum 8y ago
  But like...why would bankruptcy do that? The servers aren't worth that much. Their contents are worth more secret! The secrecy of their data is how Facebook makes money. If the company that operates those servers gets shut down, I don't see how the group that takes over the business (whoever it is) shuts down the servers. Maybe everyone freaks out and Facebook loses a lot of people, maybe we don't get updates for a bit. Those seem possible, probable even. But things that make money don't get taken apart in bankruptcy. I could be wrong! But I don't know of any historic examples where things like that happen.
  - jazzyjackson 8y ago
    Facebook did not keep user data secret, they used it as a lure to attract Farmvilles and 'Which Hogwarts House are YOU' surveys to make sure people spent more time on the platform, because having a billion people look at the website every day is how facebook makes money. Using the data they have to make sure ads are efficiently targeted is a par for the course -- but it does no harm to facebook if someone else has all my user data, if I spend all my time on facebook, facebook is the only one who makes money selling ads to me.

treis 8y ago

>I get that people want to see a company crippled but wiping out a quarter of revenue is a death-blow. No, it's not. 15 billion is less than 3% of Facebook's market cap. It's less than the swing in Facebook's value after market close on Wednesday. Also probably less than the value they got through violating their consent decree.

codethief 8y ago
A company's market evaluation has nothing to do with its internal cash flows. Put differently, 15 billion being less than 3% of Facebook's market cap says nothing about how much such a fine would affect Facebook.
- immawizard 8y ago
  Assuming the fine is one-off and market doesn’t devalue facebook because of the fine itself, couldn’t Facebook issue new stock to offset the fine, effectively losing 3% of stock value in the end?
  - codethief 8y ago
    Your question is basically "Couldn't Facebook just ask someone else to pay their fine?" – to which the answer is yes, they certainly could. But I highly doubt it'd work. I mean investors would basically be bailing out Facebook and wouldn't get anything in return. Look at it from the perspective of existing investors: They would be forced to buy the new shares Fb is issuing in order to maintain their respective percentage of shares and, thus, their expected future dividends. There's nothing to gain from that – in fact, their investment's expectation value just goes down as they now need to pay an additional price for the same expected future return. Needless to say, shareholders don't value such a move, so any CEO trying to pull off such a thing would likely be removed immediately.
    - treis 8y ago
      >There's nothing to gain from that What about not getting shut down for failing to pay a fine?