A fine based on the profitability of the crime weighted by the probability of getting caught. For example, if Alibaba profited 1 billion from this, and the probability of getting caught is 10%, then the compensatory damage would be 10 billion dollars, and the punitive damage would be 2-3x that amount (based on what the Supreme Court has ruled to be constitutional), for a total fine of 30-40 billion dollars. This would ensure no company even considers doing something like this while still keeping the law constitutional [1].
I understand that this fine is from the Chinese government against a Chinese company, so take my comment as what I consider to be a just fine for a U.S. company.
This is very accurate. I always describe fines as "bimodal" in how they're considered by companies
a) big enough that they could significantly damage a company's bottom line
b) small enough that they are considered to be "the cost of doing business" and factored into the risk of a decision just like supply chain issues, SLA violations, or delivery date violations (e.g. having to pay when one doesn't deliver a product on time)
Only fines in category a) actually work. I really wish countries would issue more of these types of fines
So interesting that people assume that companies will stay in punative enviroments. If there is a risk that a country is going to fine me 30b instead of 2b, I will just go to another country. Just like everyone does with taxes (Apple to Ireland, etc).
You could say, well, everyone should be issuing fines like this, but then all it takes is ONE country to NOT do this and they get all of the worlds corporate taxes.
Policy is not so simple. Just go through the downstream consequences of what you're saying.
That's the entire point. If you're running a company and can't comply with U.S. laws, then you simply shouldn't operate in the U.S. and will need to find another country that allows you to engage in your business practice.
It's not important whether other countries issue fines. Other countries are free to implement laws that suit their population. What's important is that companies operating within a respective country obey the laws of that country.
It's a relatively tiny fine compared to the upside of a monopolistic advantage for several years. People were speculating the ccp would lay down a 10bn+ fine. To give some perspective, alibaba did $80Bn in 2019 alone. We're talking about a monopolistic accusation since 2016. This is less than 1% of revenue earned from then to now.
anyone willing to put a static value on criminal activity misses the point.
the value of the fine should be greater than the payout for the activity. If it isn't the fine only represents a back-step in profits and doesn't really serve to drive away the activity in any meaningful way.
Someone makes this comment every time someone makes a comment about the size of the fine. I don't think the parent comment cares. They're just pointing out the expected outcome.
