Wednesday Morning Rant

There is no more sure-fire way to never face meaningful punishment than to be a major, well-connected American corporation. Even politicians sometimes go down for Party defense purposes, but the powerful corporation never does. Even "landmark" punishments are mere slaps on the wrist, and they laugh all the way to the bank. There is a prime example of this in the news now, courtesy of everyone's favorite big tech hypercorp: Alphabet.

Alphabet - which Google renamed itself when that company decided its original name wasn't quite sinister enough - has settled a class-action lawsuit for recording people's conversations and using them for advertising. The thing everyone assumed Alphabet was doing, and that Alphabet insisted up and down it was not doing, turned out to be something Alphabet was doing. Shocker of the century there. Alphabet is settling its privacy case and paying a penalty.

The issue is simple. Alphabet would - they claim by accident - record information picked up by its "assistant" system (the "Hey Google ..." thing) even when it wasn't activated or was ostensibly in standby. That was then recorded and used for advertising purposes. This is a fatal flaw in all voice-activated systems - it can't hear you if it isn't listening - but Alphabet and the rest all uniformly claim that there is no recording unless activated. That turned out, against all odds, to be untrue.

This is on the heels of a prior settlement for the same thing from Apple last year. Apple would illegitimately record information through its "Siri" assistant. Unlike Alphabet, Apple claims they never sold the data or used it for marketing, but who knows. Nothing is off limits for Big Tech. I am just waiting for Amazon's turn.

So what was the punishment? Nothing. Alphabet is settling for $68 million. Apple settled for $95 million a year ago. How much a penalty is that? Well, let's see.

In the first quarter of 2025, Alphabet racked up $66.885 billion in advertising revenue - not counting YouTube. The overall company net profit that quarter was $34.54 billion. So they spied on their customers - and lied about it - for almost a decade and the penalty amounts to 0.2% of the company's first-quarter profits last year. By comparison, Apple got positively screwed. In the quarter before its settlement, it earned a paltry $36.33 billion in net profit, so its settlement was a staggering 2.6% of the quarterly profit!

It's nothing new. Remember in 2009 when Pfizer paid record-setting penalties for lying about drugs, paying kickbacks and various other frauds for years? That one was a big penalty. It was record-setting at the time, at $2.3 billion including criminal penalties. That amounted to just over a quarter of its 2009 profits. For years and years of misbehavior. That will dent the margins, but isn't much more than a shrug in the grand scheme of things. These aren't punishments, these are merely the "cost of doing business." Do whatever you want, commit whatever crimes you please, lie about it for years, and settle it for a couple of points off one quarter's profits unless you're really unlucky. In that worst-case scenario, the penalty might be an entire quarter's profits.

Lie. Cheat. Steal. Spy. Bribe. Kill. Abuse your customers. Buy politicians. Whatever. Just be a well-connected mega-corp and you'll get the corporate equivalent of a night in the drunk tank. Must be nice.

posted by Joe Mannix at 11:00 AM

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