The Ineffectiveness of Fines: Is it Time for Drastic Action Against Tech Companies?

The Ineffectiveness of Fines: Is it Time for Drastic Action Against Tech Companies?

Big tech companies seem to have a recurring issue: getting fined for various infractions, including price fixing, unfair competition, and data misuse. However, what is even more concerning is the fact that these fines often go unpaid for years. In September of last year, Meta was slapped with a hefty two billion euros ($2.2 billion) in fines, and still, not a single penny has been paid. TikTok is also in the same boat, owing hundreds of millions in fines. Even Amazon, which was fined 746 million euros in 2021, is still in the process of appealing the decision. Google, for its part, is disputing EU fines totaling over eight billion euros, while Apple has been fighting against a 1.1 billion euro fine and a 13 billion euro tax order. It is not just the big four that engage in this behavior; it is a pervasive issue that affects tech companies of all sizes. Just recently, Australia confirmed that X (formerly Twitter) has yet to pay a fine for its failure to address content depicting child sexual abuse. The Tech industry’s nonchalance towards fines raises questions about the effectiveness of such penalties in curbing their misconduct.

Critics argue that imposing fines on tech companies does little to deter their wrongdoing and suggest that more stringent measures are needed. Margarida Silva, a researcher at the Centre for Research on Multinationals, points out that tech firms have always enjoyed their reputation for causing “disruption.” She suggests that not paying fines is consistent with their established pattern of challenging any enforcement against them. Even if these companies eventually lose their cases, they have succeeded in dragging out the legal process for years, draining the resources of regulatory bodies. Silva contrasts their behavior with industries like finance, where paying fines is seen as a way to rebuild trust with the public and investors. However, Romain Rard, a lawyer at Gide Loyrette Nouel in Paris, emphasizes that challenging hefty penalties is a logical step for any company. He dismisses the notion that tech companies can merely ignore the fines and hope for the best. According to Rard, appealing is a standard approach to dealing with significant penalties.

While some tech companies successfully appeal their fines, there is an underlying issue with Europe’s system compared to jurisdictions like China or the United States. In these countries, fines are often the result of lengthy processes and are announced as settlements. For instance, Facebook paid a record $5 billion fine to the Federal Trade Commission in 2019 over the Cambridge Analytica scandal. E-commerce giant Alibaba promptly paid an almost $3 billion fine to Chinese regulators in 2021. Activists argue that these penalties have limited impact on tech companies due to their overwhelming wealth. Max Schrems, an Austrian lawyer and data rights advocate, believes the problem is further exacerbated by the inconsistent application of rules. He criticizes the Irish Data Protection Commission for granting leniency in the appeals process and assessing fines that are far too small. Graham Doyle, the deputy data protection commissioner of Ireland, defends his office’s record and stresses that fines are just one facet of their enforcement. While fines generate the most attention, corrective measures are also imposed. Doyle cites a case involving Instagram’s mishandling of children’s data, where a 405 million euro fine is currently under appeal. He asserts that the platform has already addressed the initial problem.

A Call for Drastic Measures

Considering the ineffectiveness of fines, activists argue that they should only constitute a part of the solution. Margarida Silva suggests that competition regulators should take a more proactive approach to address the misconduct of tech companies. She calls for a halt to future mergers and acquisitions in the sector and proposes undoing the damage caused by past consolidations, potentially leading to the breakup of these companies. Silva asserts that Meta’s problems would be fundamentally different if it had not been allowed to acquire Instagram and WhatsApp. It is evident that relying solely on financial penalties is insufficient to correct the behavior of tech giants and protect the interests of consumers and competitors alike.

The habit of big tech companies evading fines reflects the current inadequacy of penalties as a means of addressing their misconduct. The failure to pay these penalties not only undermines the purpose of fines but also exposes a systemic issue within the tech industry. The time has come for competition regulators to take more decisive action, putting a stop to mergers and acquisitions and dismantling the power structures that enable tech companies to act with impunity. It is imperative to explore alternative strategies that will hold these companies accountable and restore balance to the tech industry.


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