Huge Government Fines are Just the Cost of Business
It’s cheaper to get caught than to do things legally in the first place.
Amazon has been accused of more corporate chicanery, this time for using shady practices to enroll people in Prime and making it difficult to cancel it. This is on the back of recent court decisions to the tune of $31 million for two separate privacy violations.
The thing is, a $31 million fine is a rounding error compared to the $127.4 billion in revenue for the first quarter of 2023. Their net income was $3.2 billion that quarter, which puts three months of their profits at literal orders of magnitude higher than that fine.
This is typical these days — it feels like we can’t go more than a week or two without hearing about some big company or another getting fined millions of dollars for horrible and illegal practices. Whether they’re engaging in monopolistic or monopsonist practices, cheating customers, or just committing various other crimes, huge corporations seem to lie, cheat, and steal constantly.
They get caught a lot, of course — there is only so much that one can get away with in a world where the internet exists and anyone can email anything to anyone else. As such, whistleblowers abound and a lot of big corporations are made to pay fines to the government and restitution to their customers. We’re talking eight- and nine-digit fines here.
The thing is, companies like Amazon have revenue in the billions and market caps in the trillions, which makes a measly eight-digit fine mean essentially nothing. Yeah, Amazon may face a fine of hundreds of millions of dollars for this nonsense, but that’s nothing compared to the money they made using deceptive practices.
Seriously, in that quarterly report I linked above, they made nearly $10 billion in subscription fees in Q12023. That’s three months of Prime fees and other Amazon subscription services such as Kindle Unlimited. A $100 million fine for that would be 1% of their revenue from just Prime for one quarter.
Prime launched in 2005, 18 years ago at this point, and if they’ve been using these practices for even half that time, how many hundreds of billions of dollars have they made using these deceptive practices? Compared to the money they potentially made in even just a few years, a $1 billion fine is a rounding error.
Companies like Amazon look at these fines as just “the cost of doing business.” Don’t believe me? They literally had a name for this set of practices: Iliad, a reference to the Trojan Horse. The executives at Amazon knew that these practices were deceptive — that was literally the point.
This is just a version of “ask forgiveness, not permission,” but for capitalism. For many companies, the cost of doing things legally and above board is more expensive than just cutting corners and paying a fine when they’re caught. It’s literally cheaper to break the law than it is to follow it.
Some people will say “Well, why bother with all these regulations at all? They’re just going to break those laws anyway, why even have them?” Generally, this argument is followed by something about the profitability of big companies, how a rising tide lifts all boats, and how higher profits mean higher wages for workers.
First off, the premise of profits being passed onto the workers is the modern-day version of the Peanuts trope of Lucy with the football, an empty promise constantly dangled and pulled away. Trickle-down economics (or supply-side economics, or whatever they call it these days) has never worked for most of us and has always been a trick of the wealthy to keep the poor hungry and fighting each other.
Second off, and more importantly, regulations that “prevent companies from being more profitable” are not arbitrary or pointless. They are written in the blood of very real people who had to die for those regulations to be put into place.
Lead used to be in everything and now it’s not in much of anything because people were injured and died because of its toxic properties. A hole was punched in the ozone layer because of the widespread use of dangerous chemicals, and now it’s on track to be repaired by 2040 thanks to regulations.
Hell, children used to be put to work doing a bunch of dangerous labor that led to many being maimed or killed, all of which led to child labor laws being implemented. That still hasn’t stopped many from trying to repeal those laws because of the “labor shortage” caused by abusive capitalistic practices.
Some of the arguments in favor of repealing child labor laws include teaching kids work ethic and allowing them to make and save money. Arguments against this include the fact that these are literal children, often as young as 12 and often doing hazardous jobs when they should be in school, sleeping, or other things critical to their development.
Loosening restrictions on things like dumping chemicals often leads to predictable and preventable disasters. Reducing regulations for companies that do things like, I don’t know, operate massive trains carrying dangerous chemicals, can result in huge accidents that have the potential to cause irreparable damage to surrounding communities.
And still, even in the face of regulations, fines, and punishments, corporations have a duty to be profitable for their shareholders above all other things, including the safety of the general public. This generally results in companies doing things like illegally harvesting your data, illegally dumping chemicals, illegally stealing their workers’ wages, and just generally flaunting the laws of the land.
Committing these many various crimes, some of which are literally damaging to the health of American citizens and the planet in general, is simply the cost of business for them. Why dispose of waste properly when it’s cheaper to dump it and pay a meager fine if they’re caught? Why protect consumer data when they can harvest it, analyze it for their own purposes, and sell it to anyone and everyone who wants it including bad actors and scammers?
And, when you’re a company like Amazon, why bother respecting the laws and your customers when it’s making you billions of dollars a year?
“Profits over people” is the only law these companies and their defenders respect. That needs to change. Until they face consequences that are commensurate with their crimes, they’ll continue committing those crimes against the American public with reckless abandon.
They’ll probably write off the various fines and settlements on their taxes, too, which just sort of feels like adding insult to injury.
Be well out there.
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