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Joined 3 years ago
Cake day: September 27th, 2023
  • ilinamorato@lemmy.worldtoTechnology@lemmy.world•Meta fined $567m in largest child safety ruling against social media giantEnglish
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    2 hours ago

    8 and 9 digit fines aren’t astronomical for them (which, I realize, is the point of your comment; I’m just saying this fine is even more a complete nothingburger). Even if you go into 10-figure fines, you’re still in the range where they make it back within the week.

    You’ve got to get into the 11-digit range before it starts to hurt, and the 12-digit range before it starts to send a message.

    But while I agree that we shouldn’t use profits, I’m not sure about revenue. That’s definitely better, but I think we should target the number they’re actively encouraged to pump as high as possible: market capitalization.

    That specifically affects how much they can pull in investment and lending, which can keep them going even if they have zeroes or net-negatives at the bottom of their balance sheet; and it’s the number they’re incentivized to make look as big and beefy as possible, so trying to wiggle out of a fine by making that number smaller might well hurt them more than just paying the fine.

    A lot of companies since Jack Welch oozed his way into executive roles have lived on market cap and vibes for years without turning a profit or making much in revenue at all. Sure, for younger companies, or newly-public ones, they might have a higher annual revenue than their market cap. Maybe we could say “revenue or capitalization, whichever is higher.”

    In the case of Meta, their market cap is $1.5T on $220B of annual revenue. Fining them 15% of their market cap would erase a whole year of revenue; that would send a message.

    For companies like this, punitive fines need to legitimately threaten to put the business under. Especially when it’s not their first offense. Fines totaling 15% of market cap, with the percentage doubling for each offense after the first, seem like they’d be effective in changing behavior; and if they don’t, then the company gets fined into nonexistence after two or three strikes. Problem solved either way.