Following an iPhone tracking privacy scandal earlier this year, Google will have to pay the biggest Federal Trade Commissions fine ever given to a single company, which for a huge corporation like Google doesn't add up to all that much, showing how little impact even the largest fines have. The total comes out to $22.5 million, which, according to The Wall Street Journal's Julia Angwin's calculations, represents about five hours of Google's revenues, which amounted to $10.65 billion in the first quarter of this year. $22.5 million isn't even a slap on the wrist, it's more like an wink and a nudge. Yet, the government often uses these monetary penalties as a mode of punishment, and the big numbers (to mere mortals) attract big headlines, but looking back at some federally enforced pay-ups, even huge fines look infinitesimal next to these giants' profits.
Fine: $500 million. Today's FTC fine isn't the first time Google has had to pay-up to the government for some unlawful behavior. Last year Google agreed to a $500 million forfeiture to settle a Department of Justice investigation into the illegal sales of prescription drugs using Google's AdWords. But even then, the penalty amounted to, according to the Justice Department release, "the gross revenue received by Google as a result of Canadian pharmacies advertising through Google’s AdWords program, plus gross revenue made by Canadian pharmacies from their sales to U.S. consumers." Google's business is much, much bigger than selling Canadian pills.
How much it didn't hurt: Well, a half billion dollars is a whole lot more than $22.5 million. But, it still represents a fraction of Google's revenues. "It’s not clear that extracting $500 million from Google’s rather full coffers is going to do much to stop the business of online pharmacies," wrote Wired's Ryan Singel at the time. "The penalty, while large, would cause little financial strain on the company," added Los Angeles Times's Shan Li and Tiffany Hsu, speaking with analysts.
Fines: $285 million and $158 million. To pay-up for defrauded the U.S. government in dealings with home loan insurance, CitiGroup got stuck with this $158 million to the Federal Housing Association. It also got fined $285 million by the Securities and Exchange Commission for selling securities backed by mortgages that it also bet against.
How much it didn't hurt: Again, for a company that reported almost $20 billion in revenues, these numbers aren't that huge. Especially that $158 million number, which Slate's Agnes T. Cran called "hardly crippling." She suggests, instead, shutting off the bank from federal mortgage insurance programs. "A temporary ban on doing business with the Fair Housing Adminitration, on the other hand, would deliver more punch and show others in the industry that Washington won’t tolerate abuses of its largess," she wrote.
Fines: $550 million. Also for crimes it committed during the housing crisis, Goldman paid more than half a billion to settle charges related to structuring a housing-backed investment went wrong.
How much it didn't hurt: Though a record fine for the SEC, it represented what The New York Times called a "small financial dent," noting the company reported $13.39 billion in profit a year earlier. ABC News wondered if it was just a "slap on wrist," calling it a drop in the bucket. In fact, the fine might have helped: The very news caused Goldman's stock to surge 5 percent, making more money than the settlement amount.
Our walk down fine history lane shows that these numbers, though record breakers for these government organizations, don't hurt these companies financially. It looks like more than anything these penalties serve to teach companies a lesson while simultaneously tarnishing their reputation. But, we're not sure that happens either. Will Google stop violating user privacy now that it had to empty its change purse out to the FTC? It may have stopped the iPhone browser tracking, but other moves show Google has no intention of leaving our privacy alone.