The discourse on this is interesting to me. I first heard it in reference to truly small fines, like less than a million dollars for a big company. Then over time it gets repeated for literally any fine, no matter how large. Now we are talking about a month’s worth of profits (Zoom’s profit last quarter was $227M), which is really quite a lot. It’s a similar magnitude event to a global company losing all its UK customers. Hundreds of people would be laid off for a screwup this big, whole business units shut down.
Yeah, but I don't think you're seeing the big picture.
Entire companies are created and grown based on these dark patterns, which, because the law moves slowly, are not yet fully illegal in a open and shut kind of way.
The punishment doesn't deter enough, because Zoom has been making a ton more money off this and will continue to do so.
It's a bit like Ford's: "Don't ask me how I made my first million", that first million being the hardest part (once you have 999 million, getting to 1 billion is trivial).
And it sets a damaging precedent that deters honest participants. Companies like Uber that "growth hack" by ignoring the law wherever they expand (and react to the consequences with an army of lawyers and lobbyists) mean that anyone not willing to do the same can't compete.
If breaking the law is a net benefit for companies, then the only companies you'll be left with in a competitive space are the ones that break the law. So the fines have to be _huge_ to make any meaningful difference.
OTOH the laws that Uber ignores (and then later forces to change) are often a cause of stagnation, and no company would work to get them changed _before_ setting up shop, because even if they succeed then they've just paid the price of admission for all their competitors, too. So I guess I don't have a real solution to offer.
It’s one off write off during earnings call. It’s really not a big deal at all, it can even cause stock price to pop, as it shows that company is big enough, that lying is cheap and gives you amazing ROI. E2EE was a big feature that helped to fuel the growth. One month of profits, once you’ve experienced extreme growth and tons of money infusion, is a great deal.
> Then over time it gets repeated for literally any fine, no matter how large.
I mean, I think it's worthwhile to compare and see how you'd think about this, right? $3k fine seems high in the abstract to me. Then again, if it's viewed as a kind of tax for going from $25k/year in annual income to $100k/year – eh, doesn't sound like much. What do you think?
> Hundreds of people would be laid off for a screwup this big, whole business units shut down.
I am actually curious to see if that's the case – are there any reports of such shutdowns/layoffs?
Zoom's quarterly revenue is nearly a billion dollars. And given that this is a one-time payment, it seems hyperbolic to compare it to losing customers. Really, this fine was a cost of acquiring customers that they were able to defer for years.
I don't think Zoom is profiting from breeching privacy; I think they profit from providing video-meeting software. I think penalizing undesirable behavior that doesn't produce profit will motivate Zoom to take that undesirable behavior very seriously.
Is that $3,300 the reason why I have a $100K job instead of a $50K job? If so, I wouldn't even flinch at paying that.
Many moons ago, lawyers used to crash the carpool lanes in Washington, DC for about that price given the time they would save and the amount they could bill. The firms just started paying the fines. It wasn't until the penalty started having points and could cost you your drivers license that the behavior stopped.
Yeah usually a $3,300.00 ticket comes with some form of demerits so even if you pay the fine you lose your license if you do it to much. Can't think of a job where you'd benefit by speeding but losing your license would be fine.
That's a substantial fee for a human making $100k per year (plus taxes), but I don't think we should be comparing what's a reasonable fine for a person vs a business.
I understand that a person and a business are different, but it's worth contrasting if numbers are roughly in the same ballpark, right? A lot of businesses do start out as just one person.
In a year with like 300% revenue growth, I feel like Zoom can probably just treat this fine as cost of doing business. I mean, I pay a lot more than $3k in taxes per year!
Taking 3.3% of someone's income is substantial, whereas for a business, this is a cha-ching deal for potentially getting a business edge by not focusing on privacy rules when momentum mattered.
Most businesses are structured such that failing isn't disastrous (creditors cannot chase after the owners), whereas a human experiencing financial failure is an extreme life setback.
Not to mention the compounding effects of getting that business advantage earlier than others in the same space. If you can lie and say you have e2e encryption to scoop up market share before anyone else, even if the bare-faced lie gets revealed like it did here, not all of the clients who signed up are going to leave you, and you already have market inertia as a big player that will help you keep growing.
One of the best things about the GDPR isn't that the maximum fine is _only_ 4% of the yearly revenue, it's that it's AS MUCH AS 4% of the yearly revenue.
So when the court is considering fines, they don't go and look at a 3 million dollar fine and go "that's a good fine", they look at the revenue instead and go "the fine can be as much as 400M"
$86m/$2.6 billion = 0.033. If I earn $100k per year, that's like a fine of $3300.