19 ms·

Seagate hit with $300M penalty for selling sanctioned storage to Huawei

316 points by pinewurst 4y ago

RecycledEle 4y ago
$20 per HDD does not seem like a deterrent. That's probably less than 10% of the sale price. I wonder if I could smuggle illegal items and pay less than 10% of the sale price when I get caught?
- RecycledEle 4y ago
  I realize I made a math error. 300 / 7 != 20
elmerfud 4y ago
[flagged]
- Entinel 4y ago
  Fox also got off easy though. What Fox wanted to avoid was having their broadcasters on the stand under oath having to tell the truth and that is what they got.
  - elmerfud 4y ago
    I agree fox settled because they knew the odds of a jury laying the smack down was very high but Fox News settled for about 6% of its yearly revenue. Seagate got fined about 2.5% of their yearly revenue of which they get to pay of with future inflated money. Trade sanctions are generally an extension of national security policy whereas defamation isn't and it's difficult to argue that Dominion was actually impacted financially over this. The items Seagate sold in violation represented well over 10% of their yearly revenue. So... Fox News negotiated a good deal, Seagate was just handed an amazingly good deal. I guess because it's easier for former government people to secure Fox News positions than to get cushy no shown jobs at Seagate.
    - Entinel 4y ago
      Fox negotiated with Dominion lawyers not the US govt. Former government employees sliding into positions at Fox is irrelevant to the amount they paid. Dominion is a for-profit company so obviously they wanted to wring the most amount of money they could out of Fox.
      - elmerfud 4y ago
        If you don't believe that the government could have put pressure on Dominion to drop or reduce the scope of their suit then you might be surprised how the government actually works and who dominion primarily works with.
        jen20 4y ago
        Why would it be in the interests of the current administration to apply such pressure and bail Fox News out of their predicament?
        elmerfud 4y ago
        That's exactly the point I'm making. Justice should be blind but future no show jobs at Seagate vs Fox News, we can see it's not.
        jen20 4y ago
        I don’t see how comparing civil and criminal enforcement here is remotely apples to apples, and it’s not clear your arguments follow one another. If you believe that the penalty for Seagate is too low, lobby the government for stricter penalties (most politicians should be receptive, I’d have thought). If you believe the settlement for Fox is too high, ask their lawyers why they went for it.
        elmerfud 4y ago
        I'm really not sure where people are getting this entire idea that one is civil and the other is criminal. I'm guessing they're just making it up or making an assumption that is completely wrong. The fine that is being levied against Seagate is not a criminal fine it is a civil fine. Criminal proceedings would have been launched and adjudicated in court likely resulting in a jail time for people. This is very uncommon and instead the civil penalties for the infraction are what is pursued which is exactly what was done in this case. Except for one being a defamation case and the other being an export violation case these are apples to apples comparisons. These are both civil violations and these are both negotiated deals between the parties. Fox News managed to settle for about half of what the case was asking for which is likely very decent to deal for them as I think they would have lost big time and you never know what a jury will award in a case like this. They got a pretty safe deal although quite costly. Seagate on the other hand was given the deal of a lifetime for their violation. If you look up the maximum penalties allowed to be sought it is twice the amount of the transaction which is the basis for the violation. Reading the article the violation is 1.1 billion dollars. So the maximum penalty should have been 2.2 billion. They were let off with a measly 300 million. This is not about a lobbying the government for stiffer penalties, because those penalties are on the books already, this is about the government giving Seagate a sweetheart deal because people in the department of commerce are setting up future positions to work in companies like this. I would suggest you take a long hard look and you see where a bureaucrats that work for these government organizations go to once they leave these organizations.
- 3np 4y ago
  Fox News not mentioned in OP. Context?
- tyingq 4y ago
  Civil defamation suit vs government fine, so it's hard to compare directly. A fine would be based on some fixed wording in law, where a civil suit is open to define damages in many ways. And the leverage in the Fox lawsuit was pretty heavy, avoiding lots of testimony that wouldn't play well.
  - noobermin 4y ago
    It does seem like government fines should in fact be higher then.
    - delfinom 4y ago
      Government fines are generally hardcoded in law in some way. Complain to your congress person that they need to be increased.
      - tough 4y ago
        Only millionaires get to complain -effectively- to their congress people. You might try to complain, but not so effectively you might find. That America makes lobbying legal is a travesty of democracy in full display, talk about the naked emperor.
- hobs 4y ago
  Building a case to destroy a democratically elected government vs selling something that is against sanctions. The idea that 750m is enough to pay your blood debts for actively inciting an insurrection while knowing everything you say is false is actually the odd one out, not a corporation selling things it knowingly shouldn't.
  - elmerfud 4y ago
    You're believing your echo chamber hype. The only people who believed it was people who already wanted to believe it. Because we heard 4 years of Russian collusion lies repeated almost daily. No matter how many times they were proven to be lies and the people who were predisposed to believing those lies believe them even more and the people who were not were not swayed by the lie. The issue with Dominion Fox News is exactly the same. The lies spread by Fox News were only believed by the people who already wanted to believe it.
    - scarface74 4y ago
      They weren’t lies: https://thehill.com/opinion/white-house/548794-there-was-trump-russia-collusion-and-trump-pardoned-the-colluder/ https://thehill.com/opinion/white-house/548794-there-was-tru... And no one calls “The Hill” “liberal media”
      - elmerfud 4y ago
        An opinion piece does not good journalism make. That would be like a someone citing Sean Hannity show as a source.
        scarface74 4y ago
        Are the supporting facts wrong?
        elmerfud 4y ago
        If you're correctly using the word facts, then they cannot be wrong. Such is the nature of a fact. If you're saying that the opinions pieces conclusion is stating a fact that there was a Russian collusion with the Trump campaign based upon the various investigative reports then I would submit that you have not read the supporting information. Indeed of Russia has interfered in a great many elections in an attempt to influence their outcome. This was true and 2016 as it's been true for as long as Russia has been a thing and before that the USSR. This is only news to someone who is willfully ignorant of international politics and I also ask you what do you think the CIA does on a day-to-day basis? The reports have continually found that there was no collusion between Russia and the Trump campaign. Reading from the reports you can see they considered a troubling amount of connection between the two but that is the benefit of 5+ years of investigation a hindsight. The reports do not anywhere point out collusion which is an active working together of both parties. It only points out that there was external influence. People who don't like Trump attempted to invent collusion where it didn't exist. This is no different than people who did not like Hillary Clinton who wanted to invent reasons to lock her up over an email server. Both sides showed an extreme ignorance where the facts are involved. Hence why Hillary was not charged with that crime and Trump was never charged with collusion.
- delfinom 4y ago
  Because you don't understand how anything works. Fox vs Dominion was not a criminal case, nor was the government involved. It was two private parties and one party (Dominion) was claiming $2 billion in damage to their business from defamation. The government doesn't do anything here other than a judge preceding over the case. Dominion can even bring up business records, sales forecast and more to back up their damages claims. Ultimately Fox settled because they feared things from discovery going public and Dominion having a strong case against them. There was not even a judge involved in the settlement. It's the two private parties agreeing to end the lawsuit in exchange for terms, in this case payment. Meanwhile with the Seagate case, this is in criminal territory, the government would be prosecuting the company directly but also has laws that defines the existence of fines and the size of the fines.
  - elmerfud 4y ago
    I understand perfectly. Defamation doesn't have to have damages to get an award, you only need to show that it occurred. Based on dominion's financials the don't appear to be impacted financially nor in the eyes of the public either. What you're failing to understand is that things like this are very muchn out of balance. I'm not saying fox should be less, I'm saying those knowingly in violation of national security export restrictions should be punished more. There's a big difference between "you said lies about me" and "I sold equipment to our enemies". That you missed that point is sad.
    - yamazakiwi 4y ago
      It's difficult to convincingly argue which of the two occurrences is more damaging. It is easy, however, to reduce one of those occurrences you view as less damaging into "You said lies about me", to promote your narrative.
    - COGlory 4y ago
      Fox settled - it could have gone to court and Fox could have won. It's not like the government had much say in the amount which Fox settled for. Fox paying $750 million was their own decision.
Entinel 4y ago
> it has reached a settlement agreement with the Department that will see it pay $300 million over five years, in quarterly chunks of $15 million. > ...Seagate persisted and between August 2020 and September 2021 sold 7.4 million hard drives to China, in 429 transactions worth a combined $1.1 billion. Useless fine. This is a rounding error to Seagate.
- gruez 4y ago
  0.3B fine on 1.1B of sales might not seem much, but that probably wipes out all their profits from those transactions.
- swarnie 4y ago
  300m fine on 1100m of sales. If their margins are under 30ish percentage it would wipe out any profit made on the illegal activity. Personally i think its a rather fitting fine and this model should be used more often.....
  - pc86 4y ago
    Treble damages always seemed fair to me. Have an independent third party determine the profit made from illegal activity (to avoid, or at least hinder, shady accounting practices). Triple it, and that's the fine. Obviously wipes out all the profit, has a punitive aspect to it including a buffer if they successfully hide some profits, and you can spread the fine out if you want to avoid bankrupting the company.
noobermin 4y ago
They had 1.65B net income in last year, and they have to pay 0.06B every year for five years, so it's around 4% of their net income. It's not business ending or severe but it isn't exactly cheap. Also as the article notes, future years may not be as rosy and it will not be fun having a fixed cost hanging over their head.
- jgalt212 4y ago
  Indeed, this one will sting for Seagate. That's like a $10B fine for Apple.
  - manojlds 4y ago
    I don't know what point you are trying to make with that $10b fine for Apple comparison. We know the number and the % of their income. That's enough without meaningless comparisons.
    - jgalt212 4y ago
      > That's enough without meaningless comparisons. The comparison is far from meaningless. If penalties have no sting, they have no deterrent value. Did you object the particular mega-company comp? If so, pleas feel free to insert your own.
      - Maursault 4y ago
        $10B is a lot of money, no doubt, but it only represents about a fifth of what Apple currently has in cash. How much cash does Seagate have? Probably none. So it would be more like a $60B fine for Apple.
        malfist 4y ago
        > How much cash does Seagate have? Probably none You know all public companies disclose this quarterly right? You could just look it up instead of giving an incorrect answer. They have $766m on hand. This is less than half of what seagate has on hand.
shuckles 4y ago
So what happens to the corporate counsel who advised on the contract in such cases?
- monetus 4y ago
  "The company will almost certainly go after its outside counsel." Can anyone chime in on this? What liabilities does the counsel likely have?
  - tiahura 4y ago
    Potentially, they could be responsible for the 300M. Segate would have to prove that outside counsel failed to use that degree of skill, care, diligence, and knowledge possessed and used by a reasonable, careful, and prudent attorney acting in the same or similar circumstances. So, just because the attorney got the wrong answer, doesn’t mean they are automatically liable. Additionally, depending on the jurisdiction, comparative fault may be an issue. Ie, outside counsel can argue, even if we were negligent, so were you, and it’s X% your fault.
    - shuckles 4y ago
      I would be really curious to read examples of such disputes. Even legal filings from both sides, evidence, outcomes, etc. Please share if you know of any!
jrochkind1 4y ago
Wait, why is it illegal to sell hard drives to China?
- DrThunder 4y ago
  [flagged]
  - 2Gkashmiri 4y ago
    [flagged]
    - jwestbury 4y ago
      How is any of this relevant to a discussion of Huawei? "Yeah, but someone else is doing it, too" isn't a useful point to make.
      - 2Gkashmiri 4y ago
        Do you have any documented backdoors found on any huawei product?
      - noarchy 4y ago
        Anytime there is discussion of China here, you can set your watch to the whataboutist replies rather reliably.
    - boringg 4y ago
      Uhhhhh apples to oranges. The level of functionality on behalf of the government is completely different (being that Huawei is an arm of the PRC) making your comparison off base. Documented intel management engine…
      - 2Gkashmiri 4y ago
        Last I know, there is no tangible evidence linking documented backdoors in huawei network equipment. If my memory serves me right, huawei was ahead of others in 5G and american and other companies saw that as a threat and suddenly huawei equipment had unknown backdoors and suspicions. I would be happy to be proved wrong but how does being funded or managed or owned by PRC influence anything unless there are actual backdoors? Just because huawei is funded by PRC does that make them guilty?
DrThunder 4y ago
Joke's on Huawei... the drives will all fail early. Seagate is just fighting for freedom by collapsing Huawei with their terrible drives.
- unmole 4y ago
  Meh. These probably ended up in enterprise storage appliances like OceanStor. From what I remember the software stack did a pretty reasonable job of dealing with disk failures.
  - deleted 4y ago
    [deleted]
- nacs 4y ago
  As an unfortunate owner of 2x 3TB Seagate Barracudas that died within months of purchase, your statement is the truth.
unmole 4y ago
I used to work for Huawei's storage division. When the sanctions hit, the company could no longer buy hard disks from American and Japanese companies. And there weren't any Chinese manufacturers either. Flash storage however was easy to procure. So, the product roadmap was thrown away and we pivoted to All-Flash storage.
- Y_Y 4y ago
  Seagate is officially Irish and does have factories there, maybe they hoped this was sufficient? In any case why not go for a Taiwanese manufacturer?
  - nradov 4y ago
    Regardless of where final assembly takes place, if the devices include any US components then they are likely subject to sanctions.
  - imglorp 4y ago
    I wonder how much of the mainland static about Taiwan is really about seizing TSMC in particular. It represents too many global IP and fab eggs.
    - JumpCrisscross 4y ago
      > wonder how much of the mainland static about Taiwan is really about seizing TSMC Virtually none. (It’s not something that can easily be seized.)
      - kjellsbells 4y ago
        I don't know if an adversary would prefer to grab the people of TSMC or the facility, but as a defender that has been thinking about this for a long time, I would imagine that TSMC have contingency plans to get the smart people out and dynamite the facility, no? Somewhat like the story of US soldiers mopping up rocket scientists working for Germany in 1945 and getting them stateside.
vfclists 4y ago
$1.1 billion in sales, $300 million in inflation riddled dollars paid over 5 years, I would say it is a good deal depending on the profit margin. What are the profit margins on their drives anyway?
user3939382 4y ago
In my inexpert opinion these sanctions create pressure for China to enter or expand into the sanctioned markets and thereby create more competition with American companies. It seems very short sighted.
- onepointsixC 4y ago
  China already has been doing that. No need to help them do that.
  - analyst74 4y ago
    China is not a single entity. Huawei is not going to choose low quality high price local startup over suppliers with good reputation if they have that choice. Sanction means those uncompetitive local startups don't have to compete with established players, giving them chance to catch up.
    - maerF0x0 4y ago
      > China is not a single entity. However it acts like one much more so than many other countries, and especially under Xi jinping. See also https://archive.is/ZoShw https://archive.is/ZoShw (NY Times Who Owns Huawei? The Company Tried to Explain. It Got Complicated. 2019)
      - DiogenesKynikos 4y ago
        As that article describes, Huawei is effectively employee-owned, though the legal arrangement is not straightforward (because of China's laws on stock ownership at the time Huawei was founded).
        maerF0x0 4y ago
        The article says that it's claimed that Huawei is... but that it's misleading (virtual shares) and that whenever ask the question dodgy answers are given.
liminal 4y ago
If they sold $1.1B in drives, then shouldn't the fine be larger than $1.1B?
- advisedwang 4y ago
  It's a settlement. Maybe the DoC thought the fine should be $600M but they only had a 50% chance of succeeding at trial; getting a guaranteed $300M win is then rational.
- rtpg 4y ago
  If you’re going off the idea that the fine is based on the value of the gain, then you need to go off of the profit made (bit trickier with staff working multiple projects but hard disks aren’t 100% profit)
  - intvocoder 4y ago
    If the fine does not exceed the value of the gain, is there any incentive to comply with the law?
    - tough 4y ago
      Welcome to our globally connected modern world and it's silly rules
    - madsbuch 4y ago
      The amount might very well exceed the value of the gain. My presumption is that the harddisk industry is a margin business. I would be surprised if they have profits of more than 5-10% of the 1.1b.
    - rtpg 4y ago
      My point is that revenue is not gain? Like if I’m a retail store reselling at 10% profit $100 of revenue only represents $10 of gain.
nivenkos 4y ago
Gotta love that good old American "Free Trade"... as long as it benefits them.
- atlasunshrugged 4y ago
  Every country limits trade, in general, but especially to countries that are aggressively working against their interest and trying to become a peer competitor when it comes to technology.
  - paganel 4y ago
    How does China “aggressively work” against the US? And what’s wrong with becoming a “peer competitor” when it comes to technology? Wasn’t that the essence of a free market?
    - tough 4y ago
      Just replace technology with militar capcity, and at the end of the day, the projection of global power. It's not really about tech, but about what such tech enables. Look at AI / LLMs, think how adversaries having those and you not having them might affect any future disinformation wars, etc
- MSFT_Edging 4y ago
  Free trade == good when it undercuts local industries and forces dependency on foreign industry. Free trade == bad whenever we're getting beat at our own game.
- Alupis 4y ago
  It's only free trade so long as all parties play by the same rulebook.
boredumb 4y ago
There is no reason to go into the comments of every post that shows a price of the fee a company paid in order to express why you think a company that is fined should be crippled because of it, the point is to deter people not to lay nuclear landmines for companies to be destroyed over. 99% of these comments are just maliciously lashing out about 'corporations' and no consideration that chomping into 5% of net profits has an effect greater than some bonus packages of the management teams (less cigars to chomp!)
- jgeada 4y ago
  Shouldn't the same logic then apply to people? Yeah, figured as much. If you can ruin a person's entire life over a "mistake", you can definitely do the same to a company, or even better, to the decision makers at that company. Doing anything else just encourages continued bad behavior. No speculation, we have decades of observational data showing that companies and executives will do pretty much anything for a buck, legal or not.
  - some_random 4y ago
    Yeah I think many here would be fine applying the same logic to people.
  - marginalia_nu 4y ago
    How about not doing either?
  - chimpanzee 4y ago
    It comes down to self-interest and the balance of power, not morals or human rights or any form of idealism that acts as a soft control of the masses. Corporations are a faceless entity with tremendous power, both to harm and to benefit. The average individual lacking comparative capital or influence has no weapon with which to fight and no gift which which to bribe. Government, the monopolist of violence, wields its power accordingly. Why would it extinguish a benefactor when it can simply crack the whip to keep them in line and remind them of whose hand is on the whip in the first place? Whereas, the larger set of powerless individuals are handled brutally, not because it’s best but simply because it’s expedient and without consequence to the power-holder. A secondary benefit, intentionally achieved by the most insidious of governments, is that the extinguishment of minor troublemakers removes the seeds from which a population might grow to realize their own latent power via cooperative “trouble-making”.
lofaszvanitt 4y ago
So there will be chinese hard drives soon on the market.
buran77 4y ago
A lot of big companies (like BigTech) usually get away with blatant violations of law or regulations for years, the process of doing something to stop them drags on forever, if it even starts... Except if China is involved. Then 18 months later the whole thing is wrapped and justice is actually served.
- sho_hn 4y ago
  It's not just China. I'm in Germany, and you may have heard on the news that we have a lot of refugees/immigrants from places like Syria who we are trying to integrate into our society. A lot of them are very qualified. Some of them have since gotten advanced grad degrees from German universities. And then we may not be able to hire them or have to severely restrict them at work, e.g. when we use Qualcomm chips which are under US export restrictions. I don't have a very deep point to make, except to say that the human costs and the stings that come with the state of the world can go far indeed.
  - ROTMetro 4y ago
    Rephrasing your statement, (current) Syrian nationals chose to go into a field (out of how many?) that they knew was greatly restricted without a change to their (current) nationality, and are then restricted. Nothing to due with punishing refugees/immigrants.
    - sho_hn 4y ago
      There are also Syrian nationals who worked in the field in Syria already, and this is what they know. Besides, if it was "consult the list of lucrative jobs Syrians can't work first", I don't think it would be any less frustrating for them. Do you like your job/field?
    - DiogenesKynikos 4y ago
      The issue is that their qualifications are not recognized in Germany, so they are not allowed to pursue their profession. These people did not just willy nilly decide to move to Germany. They had to leave their home country because of a civil war. At least they're safe, but they're being held back by illogical bureaucratic hurdles.
sdfghswe 4y ago
[flagged]
einpoklum 4y ago
US sanctions are funny: The prime aggressors and occupiers of this planet punishing those who are not sufficiently subservient to them. I don't know how the guy delivering the notice to Seagate of this fine could keep a straight face.
enigma1929 4y ago
https://www.nytimes.com/2014/03/23/world/asia/nsa-breached-chinese-servers-seen-as-spy-peril.html https://www.nytimes.com/2014/03/23/world/asia/nsa-breached-c... "even as the United States made a public case about the dangers of buying from Huawei, classified documents show that the National Security Agency was creating its own back doors — directly into Huawei’s networks." So where is the smoking gun about huawei? We hacked their servers in 2014 so where is the public evidence they're evil / in bed with the CCP?
scrubs 4y ago
Seagate - in this article is skank on parade. I don't think lou gerstner or Berkshire Hathaway guys ever had to go around giving themselves props for honestly. At at the same time: why in the heck didn't the the prosecutors demand all $300 million upfront? Why take installments? Hell, if Seagate can't pay put them into chapter 11/13 and get a judgement to strip assets or cash or stock until paid. Good lord! The US' (I'm American) biggest suckers have got to be shareholders. The amount of checks that moron ceo's write on shareholder profit without being fired or facing criminal consequences while defending themselves with more shareholder cash for corporate lawyers is insane. Folks this is why we got rid of royalty. Seagate isn't the only one. There's bigger but we've got to start somewhere. Corporations are out of hand. It's the little things too. Wells Fargo "helped me" by sending out my new CC number (Cc was not working) to all known corps so they could charge me. Nah, they helped themselves and certainly never got my permission.

316 points by pinewurst 4y ago

$20 per HDD does not seem like a deterrent. That's probably less than 10% of the sale price. I wonder if I could smuggle illegal items and pay less than 10% of the sale price when I get caught?

RecycledEle 4y ago
I realize I made a math error. 300 / 7 != 20

elmerfud 4y ago

[flagged]

Entinel 4y ago
Fox also got off easy though. What Fox wanted to avoid was having their broadcasters on the stand under oath having to tell the truth and that is what they got.
- elmerfud 4y ago
  I agree fox settled because they knew the odds of a jury laying the smack down was very high but Fox News settled for about 6% of its yearly revenue. Seagate got fined about 2.5% of their yearly revenue of which they get to pay of with future inflated money. Trade sanctions are generally an extension of national security policy whereas defamation isn't and it's difficult to argue that Dominion was actually impacted financially over this. The items Seagate sold in violation represented well over 10% of their yearly revenue. So... Fox News negotiated a good deal, Seagate was just handed an amazingly good deal. I guess because it's easier for former government people to secure Fox News positions than to get cushy no shown jobs at Seagate.
  - Entinel 4y ago
    Fox negotiated with Dominion lawyers not the US govt. Former government employees sliding into positions at Fox is irrelevant to the amount they paid. Dominion is a for-profit company so obviously they wanted to wring the most amount of money they could out of Fox.
    - elmerfud 4y ago
      If you don't believe that the government could have put pressure on Dominion to drop or reduce the scope of their suit then you might be surprised how the government actually works and who dominion primarily works with.
      - jen20 4y ago
        Why would it be in the interests of the current administration to apply such pressure and bail Fox News out of their predicament?
        elmerfud 4y ago
        That's exactly the point I'm making. Justice should be blind but future no show jobs at Seagate vs Fox News, we can see it's not.
        jen20 4y ago
        I don’t see how comparing civil and criminal enforcement here is remotely apples to apples, and it’s not clear your arguments follow one another. If you believe that the penalty for Seagate is too low, lobby the government for stricter penalties (most politicians should be receptive, I’d have thought). If you believe the settlement for Fox is too high, ask their lawyers why they went for it.
        elmerfud 4y ago
        I'm really not sure where people are getting this entire idea that one is civil and the other is criminal. I'm guessing they're just making it up or making an assumption that is completely wrong. The fine that is being levied against Seagate is not a criminal fine it is a civil fine. Criminal proceedings would have been launched and adjudicated in court likely resulting in a jail time for people. This is very uncommon and instead the civil penalties for the infraction are what is pursued which is exactly what was done in this case. Except for one being a defamation case and the other being an export violation case these are apples to apples comparisons. These are both civil violations and these are both negotiated deals between the parties. Fox News managed to settle for about half of what the case was asking for which is likely very decent to deal for them as I think they would have lost big time and you never know what a jury will award in a case like this. They got a pretty safe deal although quite costly. Seagate on the other hand was given the deal of a lifetime for their violation. If you look up the maximum penalties allowed to be sought it is twice the amount of the transaction which is the basis for the violation. Reading the article the violation is 1.1 billion dollars. So the maximum penalty should have been 2.2 billion. They were let off with a measly 300 million. This is not about a lobbying the government for stiffer penalties, because those penalties are on the books already, this is about the government giving Seagate a sweetheart deal because people in the department of commerce are setting up future positions to work in companies like this. I would suggest you take a long hard look and you see where a bureaucrats that work for these government organizations go to once they leave these organizations.
3np 4y ago
Fox News not mentioned in OP. Context?
tyingq 4y ago
Civil defamation suit vs government fine, so it's hard to compare directly. A fine would be based on some fixed wording in law, where a civil suit is open to define damages in many ways. And the leverage in the Fox lawsuit was pretty heavy, avoiding lots of testimony that wouldn't play well.
- noobermin 4y ago
  It does seem like government fines should in fact be higher then.
  - delfinom 4y ago
    Government fines are generally hardcoded in law in some way. Complain to your congress person that they need to be increased.
    - tough 4y ago
      Only millionaires get to complain -effectively- to their congress people. You might try to complain, but not so effectively you might find. That America makes lobbying legal is a travesty of democracy in full display, talk about the naked emperor.
hobs 4y ago
Building a case to destroy a democratically elected government vs selling something that is against sanctions. The idea that 750m is enough to pay your blood debts for actively inciting an insurrection while knowing everything you say is false is actually the odd one out, not a corporation selling things it knowingly shouldn't.
- elmerfud 4y ago
  You're believing your echo chamber hype. The only people who believed it was people who already wanted to believe it. Because we heard 4 years of Russian collusion lies repeated almost daily. No matter how many times they were proven to be lies and the people who were predisposed to believing those lies believe them even more and the people who were not were not swayed by the lie. The issue with Dominion Fox News is exactly the same. The lies spread by Fox News were only believed by the people who already wanted to believe it.
  - scarface74 4y ago
    They weren’t lies: https://thehill.com/opinion/white-house/548794-there-was-trump-russia-collusion-and-trump-pardoned-the-colluder/ https://thehill.com/opinion/white-house/548794-there-was-tru... And no one calls “The Hill” “liberal media”
    - elmerfud 4y ago
      An opinion piece does not good journalism make. That would be like a someone citing Sean Hannity show as a source.
      - scarface74 4y ago
        Are the supporting facts wrong?
        elmerfud 4y ago
        If you're correctly using the word facts, then they cannot be wrong. Such is the nature of a fact. If you're saying that the opinions pieces conclusion is stating a fact that there was a Russian collusion with the Trump campaign based upon the various investigative reports then I would submit that you have not read the supporting information. Indeed of Russia has interfered in a great many elections in an attempt to influence their outcome. This was true and 2016 as it's been true for as long as Russia has been a thing and before that the USSR. This is only news to someone who is willfully ignorant of international politics and I also ask you what do you think the CIA does on a day-to-day basis? The reports have continually found that there was no collusion between Russia and the Trump campaign. Reading from the reports you can see they considered a troubling amount of connection between the two but that is the benefit of 5+ years of investigation a hindsight. The reports do not anywhere point out collusion which is an active working together of both parties. It only points out that there was external influence. People who don't like Trump attempted to invent collusion where it didn't exist. This is no different than people who did not like Hillary Clinton who wanted to invent reasons to lock her up over an email server. Both sides showed an extreme ignorance where the facts are involved. Hence why Hillary was not charged with that crime and Trump was never charged with collusion.
delfinom 4y ago
Because you don't understand how anything works. Fox vs Dominion was not a criminal case, nor was the government involved. It was two private parties and one party (Dominion) was claiming $2 billion in damage to their business from defamation. The government doesn't do anything here other than a judge preceding over the case. Dominion can even bring up business records, sales forecast and more to back up their damages claims. Ultimately Fox settled because they feared things from discovery going public and Dominion having a strong case against them. There was not even a judge involved in the settlement. It's the two private parties agreeing to end the lawsuit in exchange for terms, in this case payment. Meanwhile with the Seagate case, this is in criminal territory, the government would be prosecuting the company directly but also has laws that defines the existence of fines and the size of the fines.
- elmerfud 4y ago
  I understand perfectly. Defamation doesn't have to have damages to get an award, you only need to show that it occurred. Based on dominion's financials the don't appear to be impacted financially nor in the eyes of the public either. What you're failing to understand is that things like this are very muchn out of balance. I'm not saying fox should be less, I'm saying those knowingly in violation of national security export restrictions should be punished more. There's a big difference between "you said lies about me" and "I sold equipment to our enemies". That you missed that point is sad.
  - yamazakiwi 4y ago
    It's difficult to convincingly argue which of the two occurrences is more damaging. It is easy, however, to reduce one of those occurrences you view as less damaging into "You said lies about me", to promote your narrative.
  - COGlory 4y ago
    Fox settled - it could have gone to court and Fox could have won. It's not like the government had much say in the amount which Fox settled for. Fox paying $750 million was their own decision.

Entinel 4y ago

> it has reached a settlement agreement with the Department that will see it pay $300 million over five years, in quarterly chunks of $15 million. > ...Seagate persisted and between August 2020 and September 2021 sold 7.4 million hard drives to China, in 429 transactions worth a combined $1.1 billion. Useless fine. This is a rounding error to Seagate.

gruez 4y ago
0.3B fine on 1.1B of sales might not seem much, but that probably wipes out all their profits from those transactions.
swarnie 4y ago
300m fine on 1100m of sales. If their margins are under 30ish percentage it would wipe out any profit made on the illegal activity. Personally i think its a rather fitting fine and this model should be used more often.....
- pc86 4y ago
  Treble damages always seemed fair to me. Have an independent third party determine the profit made from illegal activity (to avoid, or at least hinder, shady accounting practices). Triple it, and that's the fine. Obviously wipes out all the profit, has a punitive aspect to it including a buffer if they successfully hide some profits, and you can spread the fine out if you want to avoid bankrupting the company.

noobermin 4y ago

They had 1.65B net income in last year, and they have to pay 0.06B every year for five years, so it's around 4% of their net income. It's not business ending or severe but it isn't exactly cheap. Also as the article notes, future years may not be as rosy and it will not be fun having a fixed cost hanging over their head.

jgalt212 4y ago
Indeed, this one will sting for Seagate. That's like a $10B fine for Apple.
- manojlds 4y ago
  I don't know what point you are trying to make with that $10b fine for Apple comparison. We know the number and the % of their income. That's enough without meaningless comparisons.
  - jgalt212 4y ago
    > That's enough without meaningless comparisons. The comparison is far from meaningless. If penalties have no sting, they have no deterrent value. Did you object the particular mega-company comp? If so, pleas feel free to insert your own.
    - Maursault 4y ago
      $10B is a lot of money, no doubt, but it only represents about a fifth of what Apple currently has in cash. How much cash does Seagate have? Probably none. So it would be more like a $60B fine for Apple.
      - malfist 4y ago
        > How much cash does Seagate have? Probably none You know all public companies disclose this quarterly right? You could just look it up instead of giving an incorrect answer. They have $766m on hand. This is less than half of what seagate has on hand.

shuckles 4y ago

So what happens to the corporate counsel who advised on the contract in such cases?

monetus 4y ago
"The company will almost certainly go after its outside counsel." Can anyone chime in on this? What liabilities does the counsel likely have?
- tiahura 4y ago
  Potentially, they could be responsible for the 300M. Segate would have to prove that outside counsel failed to use that degree of skill, care, diligence, and knowledge possessed and used by a reasonable, careful, and prudent attorney acting in the same or similar circumstances. So, just because the attorney got the wrong answer, doesn’t mean they are automatically liable. Additionally, depending on the jurisdiction, comparative fault may be an issue. Ie, outside counsel can argue, even if we were negligent, so were you, and it’s X% your fault.
  - shuckles 4y ago
    I would be really curious to read examples of such disputes. Even legal filings from both sides, evidence, outcomes, etc. Please share if you know of any!

jrochkind1 4y ago

Wait, why is it illegal to sell hard drives to China?

DrThunder 4y ago
[flagged]
- 2Gkashmiri 4y ago
  [flagged]
  - jwestbury 4y ago
    How is any of this relevant to a discussion of Huawei? "Yeah, but someone else is doing it, too" isn't a useful point to make.
    - 2Gkashmiri 4y ago
      Do you have any documented backdoors found on any huawei product?
    - noarchy 4y ago
      Anytime there is discussion of China here, you can set your watch to the whataboutist replies rather reliably.
  - boringg 4y ago
    Uhhhhh apples to oranges. The level of functionality on behalf of the government is completely different (being that Huawei is an arm of the PRC) making your comparison off base. Documented intel management engine…
    - 2Gkashmiri 4y ago
      Last I know, there is no tangible evidence linking documented backdoors in huawei network equipment. If my memory serves me right, huawei was ahead of others in 5G and american and other companies saw that as a threat and suddenly huawei equipment had unknown backdoors and suspicions. I would be happy to be proved wrong but how does being funded or managed or owned by PRC influence anything unless there are actual backdoors? Just because huawei is funded by PRC does that make them guilty?

DrThunder 4y ago

Joke's on Huawei... the drives will all fail early. Seagate is just fighting for freedom by collapsing Huawei with their terrible drives.

unmole 4y ago
Meh. These probably ended up in enterprise storage appliances like OceanStor. From what I remember the software stack did a pretty reasonable job of dealing with disk failures.
- deleted 4y ago
  [deleted]
nacs 4y ago
As an unfortunate owner of 2x 3TB Seagate Barracudas that died within months of purchase, your statement is the truth.

unmole 4y ago

I used to work for Huawei's storage division. When the sanctions hit, the company could no longer buy hard disks from American and Japanese companies. And there weren't any Chinese manufacturers either. Flash storage however was easy to procure. So, the product roadmap was thrown away and we pivoted to All-Flash storage.

Y_Y 4y ago
Seagate is officially Irish and does have factories there, maybe they hoped this was sufficient? In any case why not go for a Taiwanese manufacturer?
- nradov 4y ago
  Regardless of where final assembly takes place, if the devices include any US components then they are likely subject to sanctions.
- imglorp 4y ago
  I wonder how much of the mainland static about Taiwan is really about seizing TSMC in particular. It represents too many global IP and fab eggs.
  - JumpCrisscross 4y ago
    > wonder how much of the mainland static about Taiwan is really about seizing TSMC Virtually none. (It’s not something that can easily be seized.)
    - kjellsbells 4y ago
      I don't know if an adversary would prefer to grab the people of TSMC or the facility, but as a defender that has been thinking about this for a long time, I would imagine that TSMC have contingency plans to get the smart people out and dynamite the facility, no? Somewhat like the story of US soldiers mopping up rocket scientists working for Germany in 1945 and getting them stateside.

vfclists 4y ago

$1.1 billion in sales, $300 million in inflation riddled dollars paid over 5 years, I would say it is a good deal depending on the profit margin. What are the profit margins on their drives anyway?

user3939382 4y ago

In my inexpert opinion these sanctions create pressure for China to enter or expand into the sanctioned markets and thereby create more competition with American companies. It seems very short sighted.

onepointsixC 4y ago
China already has been doing that. No need to help them do that.
- analyst74 4y ago
  China is not a single entity. Huawei is not going to choose low quality high price local startup over suppliers with good reputation if they have that choice. Sanction means those uncompetitive local startups don't have to compete with established players, giving them chance to catch up.
  - maerF0x0 4y ago
    > China is not a single entity. However it acts like one much more so than many other countries, and especially under Xi jinping. See also https://archive.is/ZoShw https://archive.is/ZoShw (NY Times Who Owns Huawei? The Company Tried to Explain. It Got Complicated. 2019)
    - DiogenesKynikos 4y ago
      As that article describes, Huawei is effectively employee-owned, though the legal arrangement is not straightforward (because of China's laws on stock ownership at the time Huawei was founded).
      - maerF0x0 4y ago
        The article says that it's claimed that Huawei is... but that it's misleading (virtual shares) and that whenever ask the question dodgy answers are given.

liminal 4y ago

If they sold $1.1B in drives, then shouldn't the fine be larger than $1.1B?

advisedwang 4y ago
It's a settlement. Maybe the DoC thought the fine should be $600M but they only had a 50% chance of succeeding at trial; getting a guaranteed $300M win is then rational.
rtpg 4y ago
If you’re going off the idea that the fine is based on the value of the gain, then you need to go off of the profit made (bit trickier with staff working multiple projects but hard disks aren’t 100% profit)
- intvocoder 4y ago
  If the fine does not exceed the value of the gain, is there any incentive to comply with the law?
  - tough 4y ago
    Welcome to our globally connected modern world and it's silly rules
  - madsbuch 4y ago
    The amount might very well exceed the value of the gain. My presumption is that the harddisk industry is a margin business. I would be surprised if they have profits of more than 5-10% of the 1.1b.
  - rtpg 4y ago
    My point is that revenue is not gain? Like if I’m a retail store reselling at 10% profit $100 of revenue only represents $10 of gain.

nivenkos 4y ago

Gotta love that good old American "Free Trade"... as long as it benefits them.

atlasunshrugged 4y ago
Every country limits trade, in general, but especially to countries that are aggressively working against their interest and trying to become a peer competitor when it comes to technology.
- paganel 4y ago
  How does China “aggressively work” against the US? And what’s wrong with becoming a “peer competitor” when it comes to technology? Wasn’t that the essence of a free market?
  - tough 4y ago
    Just replace technology with militar capcity, and at the end of the day, the projection of global power. It's not really about tech, but about what such tech enables. Look at AI / LLMs, think how adversaries having those and you not having them might affect any future disinformation wars, etc
MSFT_Edging 4y ago
Free trade == good when it undercuts local industries and forces dependency on foreign industry. Free trade == bad whenever we're getting beat at our own game.
Alupis 4y ago
It's only free trade so long as all parties play by the same rulebook.

boredumb 4y ago

There is no reason to go into the comments of every post that shows a price of the fee a company paid in order to express why you think a company that is fined should be crippled because of it, the point is to deter people not to lay nuclear landmines for companies to be destroyed over. 99% of these comments are just maliciously lashing out about 'corporations' and no consideration that chomping into 5% of net profits has an effect greater than some bonus packages of the management teams (less cigars to chomp!)

jgeada 4y ago
Shouldn't the same logic then apply to people? Yeah, figured as much. If you can ruin a person's entire life over a "mistake", you can definitely do the same to a company, or even better, to the decision makers at that company. Doing anything else just encourages continued bad behavior. No speculation, we have decades of observational data showing that companies and executives will do pretty much anything for a buck, legal or not.
- some_random 4y ago
  Yeah I think many here would be fine applying the same logic to people.
- marginalia_nu 4y ago
  How about not doing either?
- chimpanzee 4y ago
  It comes down to self-interest and the balance of power, not morals or human rights or any form of idealism that acts as a soft control of the masses. Corporations are a faceless entity with tremendous power, both to harm and to benefit. The average individual lacking comparative capital or influence has no weapon with which to fight and no gift which which to bribe. Government, the monopolist of violence, wields its power accordingly. Why would it extinguish a benefactor when it can simply crack the whip to keep them in line and remind them of whose hand is on the whip in the first place? Whereas, the larger set of powerless individuals are handled brutally, not because it’s best but simply because it’s expedient and without consequence to the power-holder. A secondary benefit, intentionally achieved by the most insidious of governments, is that the extinguishment of minor troublemakers removes the seeds from which a population might grow to realize their own latent power via cooperative “trouble-making”.

lofaszvanitt 4y ago

So there will be chinese hard drives soon on the market.

buran77 4y ago

A lot of big companies (like BigTech) usually get away with blatant violations of law or regulations for years, the process of doing something to stop them drags on forever, if it even starts... Except if China is involved. Then 18 months later the whole thing is wrapped and justice is actually served.

sho_hn 4y ago
It's not just China. I'm in Germany, and you may have heard on the news that we have a lot of refugees/immigrants from places like Syria who we are trying to integrate into our society. A lot of them are very qualified. Some of them have since gotten advanced grad degrees from German universities. And then we may not be able to hire them or have to severely restrict them at work, e.g. when we use Qualcomm chips which are under US export restrictions. I don't have a very deep point to make, except to say that the human costs and the stings that come with the state of the world can go far indeed.
- ROTMetro 4y ago
  Rephrasing your statement, (current) Syrian nationals chose to go into a field (out of how many?) that they knew was greatly restricted without a change to their (current) nationality, and are then restricted. Nothing to due with punishing refugees/immigrants.
  - sho_hn 4y ago
    There are also Syrian nationals who worked in the field in Syria already, and this is what they know. Besides, if it was "consult the list of lucrative jobs Syrians can't work first", I don't think it would be any less frustrating for them. Do you like your job/field?
  - DiogenesKynikos 4y ago
    The issue is that their qualifications are not recognized in Germany, so they are not allowed to pursue their profession. These people did not just willy nilly decide to move to Germany. They had to leave their home country because of a civil war. At least they're safe, but they're being held back by illogical bureaucratic hurdles.

sdfghswe 4y ago

[flagged]

einpoklum 4y ago

US sanctions are funny: The prime aggressors and occupiers of this planet punishing those who are not sufficiently subservient to them. I don't know how the guy delivering the notice to Seagate of this fine could keep a straight face.

enigma1929 4y ago

https://www.nytimes.com/2014/03/23/world/asia/nsa-breached-chinese-servers-seen-as-spy-peril.html https://www.nytimes.com/2014/03/23/world/asia/nsa-breached-c... "even as the United States made a public case about the dangers of buying from Huawei, classified documents show that the National Security Agency was creating its own back doors — directly into Huawei’s networks." So where is the smoking gun about huawei? We hacked their servers in 2014 so where is the public evidence they're evil / in bed with the CCP?

scrubs 4y ago

Seagate - in this article is skank on parade. I don't think lou gerstner or Berkshire Hathaway guys ever had to go around giving themselves props for honestly. At at the same time: why in the heck didn't the the prosecutors demand all $300 million upfront? Why take installments? Hell, if Seagate can't pay put them into chapter 11/13 and get a judgement to strip assets or cash or stock until paid. Good lord! The US' (I'm American) biggest suckers have got to be shareholders. The amount of checks that moron ceo's write on shareholder profit without being fired or facing criminal consequences while defending themselves with more shareholder cash for corporate lawyers is insane. Folks this is why we got rid of royalty. Seagate isn't the only one. There's bigger but we've got to start somewhere. Corporations are out of hand. It's the little things too. Wells Fargo "helped me" by sending out my new CC number (Cc was not working) to all known corps so they could charge me. Nah, they helped themselves and certainly never got my permission.