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Suppose a government does something to annoy a company, what would stop the company from protesting the action by stopping the sales/providing their services?

For example a hardware company such as Intel or AMD could stop CPU production completely or say that their sales are only for non-government use only.

For a software company such as Google, they could disable their free search and maps services.

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    Self preservation – K Dog Jul 19 '18 at 2:22
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    I am guessing the context of your question is today's EU fine of $5B against Google. You may want to work that into the question. Or if you want to keep it general, maybe clarify that you are wondering what a company may do if a country imposes terms which make operating there questionable from the profitability perspective. – grovkin Jul 19 '18 at 5:58
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    Publicly-traded company or privately-held? Makes a BIG difference to what the chief exec can do autonomously. – T.J. Crowder Jul 19 '18 at 11:13
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    This has happened in South Africa before. Government didn't pay or keep their end of an agreement and service providers shut down services rendered. Sometimes services were restored based on new agreements, sometimes not. Very seldom did the companies choice have an impact on its value especially by the "man in the street" or ordinary consumer. Income of the company may have been affected, but if government wasn't paying then why keep trying to service them?! – BossRoss Jul 19 '18 at 14:27
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    There are things that would stop some companies. Other companies have shut down completely rather than acquiesce to government demands. – erickson Jul 19 '18 at 23:50

11 Answers 11

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Note that those free services have some way for the company to make money. This can be by way of advertising or gathering data which they can sell or otherwise use to make money (for example provide some other service which does make money).

Having said that, a company boycotting a country would generally result in fewer users which in turn leads to less revenue. Even if a company (its management) wants to boycott a country, their shareholders may disagree because they want to keep maximising profit. Those shareholders could oust the management and replace them with those who do what the shareholders want.

Obviously, this answer relies on the company making profit (possibly in the future) based on its services in that country. If the company (or its shareholders) think they cannot make money in that country (not now, nor in future) they are very likely to suspend services in that country.

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    tl;dr: "Boycotting is costly". For workers, they won't receive wages -- for firms, they don't make profits. – FooBar Jul 19 '18 at 13:58
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    It's also not really a "boycott" when it comes to companies. They'll shut down support for a market if regulatory compliance costs more than the income they make from that market. Several companies have shut down Eurpean support due to GDPR, as a recent example. – Tacroy Jul 19 '18 at 16:07
  • @Tacroy if the company suspends services due to some regulatory measures then I agree with you. They could, however, boycott a country for its policy unrelated to its operations. For example, a company could put up a notice instead of the real service in hopes customers will contact their politicians to reverse some policy. – JJJ Jul 19 '18 at 16:17
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  • Re: free services have a way to make money. You are so right. There's a quote along the lines of "if you don't see the product you are the product." – user21424 Sep 13 '18 at 16:50
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Doing something like that on a large scale would not be in the interest of the company except in specific circumstances. The company will want to maximize profits and/or shareholder value, so taking themselves off the market unilaterally is just giving their competitors a huge advantage. For example, a removal of Coke from the market will just mean more people will drink Pepsi. If competition isn't a problem, then they are instead a monopoly with a product that can't be easily substituted and has highly inelastic demand. This means that their actions of "protest" just proved that they should be regulated/nationalized from the perspective of that government. An example here would be something like Lockheed Martin refusing to associate with the US government anymore (to the extent legally possible given current contracts, NDAs, security clearances and whatnot), and stating that they will in the future start working for Russia or China. I highly doubt that that US government will be pleased with such a move and just leave things as is.

A timeline of regulation -> "protest" -> repeal of regulation is also highly unlikely not just because of disincentives against "protest" on the side of the company. A government's legitimacy is at least partially based on its power, caving in a negotiation against a company will highly damage its legitimacy. This is a huge disincentive on the part of the government against doing what the company wants. If the balance of power is closer (a very large company and small local governments for example), there is no need for the company to protest since the governments would actively appeal to the company instead, like with Amazon's 2nd headquarter. On a national level with extremely powerful industries, we would see instance of regulatory capture; individuals involved in policy would be from or return to the industries those policies effect. For example, I highly doubt Halliburton would have found any government policy they particularly wanted to protested throughout most of the 2000s. In any case, the level of conflict required for a company to pull their product wouldn't happen, and any problems they have with the government will be addressed in other less drastic ways.

Despite all this there are rare circumstances where "protest" is logical on the part of the company, though the incentive is probably not going to be something like expecting the government to respond positively and repeal the regulation. An example here would be Google in China. In 2010, Google was not performing well in the Chinese market and due to the regulations required to enter the Chinese market a lot of its intellectual property was stolen. It "protested" by removing state mandated censorship on its searches (the great firewall is largely maintained by self censorship on the part of service providers), and this resulted in Google getting booted out and being restricted to operating only in Hong Kong. However, the "protest" was only incidental in this case; it serves as a public relations stunt for those outside China, but Google knew they could no longer access the market and had no expectation of the PRC changing its policy. Google had already decided to exit the market because the theft of intellectual property was hurting it more than its poor performance in the Chinese market was worth. It had learned that the government wanted to cultivate domestic companies, was antagonistic towards foreign companies, and had no expectations of a change in policy. An exit from the market was the logical move, the "protest" was just their attempt to salvage some benefit from the situation.

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The answer will depend a lot of the locale (laws) and, above all, what sectors are affectd by the boycott.

Discriminating between government and non-government entities could easily go against local trade laws. And of course, even if it is legal, often it will be easily circumvented by using private strawmen.

A second issue is that such a boycott could be illegal if the service/good is needed for essential/strategic services, which are way more protected. For example maybe Oracle could stop supporting the databases used for pet registration, but would not be allowed to stop supporting the databases used for emergency centers/police/public hospitals. And in case the law does not directly address it, emergency legislation would probably be issued1.

And then there is the possible issue of breach of contract, as any sane IT organization will try to protect its operation by ensuring that its suppliers are bound by a contract to ensure that the service is provided in the conditions needed.


1And before anyone asks "Why doesn't the government just protect the pet registration system the same way?", there are usually Supreme Courts and Parliament that can review (even if at a later date) the emergency legislation and object to the abuse of the formula.

  • In reality it would be very hard for a government to punish a company for totally pulling out of a country, removing all assets and winding up there. However that would also be very damaging for the company. – Vality Jul 19 '18 at 16:35
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Harassing a company until they leave the market is often a primary goal of the harassing behavior. It works on the same logic as protectionist tariffs. When a dominant company outcompetes your favored competitors, you put a finger on the scale until the competitors are able to compete. Refusing to do business in that market would simply allow the harasser to immediately achieve this goal.

In addition, Google has several times attempted just what you suggest, pulling out of China in 2010 and denying access to Google News in Spain in 2014. Despite harming users in those locations, these protest actions did not accomplish the goal of making the governments back down.

The only force capable of fighting back against government harassment is another government or international free-trade organization, since these organizations have the power of law behind them.

  • On the subject of Google, I'd add that they killed Street View in Germany and Austria in response to the law requiring them to black out home fronts on owner's requests. This also did not change the government's attitudes. google.com/maps/place/Germany, click on the yellow boy--conspicuously white areas in the blue sea. – kkm Jul 21 '18 at 4:14
  • @Xerxes You are right with Spain and "not making the governments back down". But the Spanish newspapers suffer under massive reader shrinkage and loss of online clicks. In addition: If you try to use Google News somewhere in the area of Spain you can not even reach english (or any other language) Google news, because Google News is not available at all. – PeterCo Sep 12 '18 at 13:06
  • Most people in China, if they care, have a VPN that allows them to bypass The Great Firewall. They can get Google etc. There is a very small risk that some govt authority will officially notice, but the most likely outcome is simply that a particular VPN stops working. And occasionally there will be a sweep of all current VPNs, which lasts a few months. Inconvenient mostly. The biggest result is usually nervousness. – user21424 Sep 13 '18 at 16:53
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Privately-owned businesses could definitely shut down or refuse to serve a customer as a form of protest, except in cases where that might violate some sort of anti-discrimination law. The problem for "big tech" companies is that these are almost all publicly-owned. The executives are not the (only) owners. In fact, the executives have a fiduciary duty to manage the company in the best interests of its owners -- in most cases defined narrowly as maximizing shareholder profits. If these executives were to deliberately pull a stunt that costs the shareholders money, simply to express their own political preferences, they could certainly be fired, could probably be sued, and in some jurisdictions may even be prosecuted. IMHO that's the biggest obstacle to a big public company carrying out a "political" action.

That said, there are certainly cases of big, public companies engaging in political action and even protests. I seem to recall Apple threatening to cancel a new facility in the state of Arizona if a certain controversial law were passed. At any rate, for the executives to keep their jobs, any political tactics would have to be justifiable in terms of benefits to PR, or marketing/pandering to a particular customer segment, or a negotiating tactic to get more favorable terms in the future or in other markets.

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Some US based newspaper groups (and some other websites) have blocked access to their websites to EU-based users. This is in reaction to the data protection requirements of the General Data Protection Regulation (GDPR), the successor to European Data Protection Directive.

The GDPR requires, amongst many other things, that users can reject the tracking cookies that web adverts use. The GDPR is binding to EU-based companies providing services to anywhere on Earth, but is also binding on companies anywhere on Earth that provide services to users in the EU.

Most large news companies outside the EU now prompt EU-based users for their cookie preferences. However, some have decided that this is too complex, or would affect their advertising revenue too much, and thus have blocked EU-based users.

The Tronc group (Chicago Tribune and Los Angeles Times) is probably the most prominent company, but Lee Enterprises have also made this decision (source).

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    What prevents US based newspapers from simply ignoring GDPR in this instance? – lijat Jul 20 '18 at 8:59
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    1. Effort to do risk analysis 2. Possible liabilities Why take a risk, when there is nothing to gain? – ksiimson Jul 20 '18 at 9:50
  • The US based newspapers decided not to implement the GDPR, thus their only legal course of action is to block european visitors. This does not constitute any form of protest, it is simply obeying the law. The Wikipedia Blackout would be an example of protest. – Dohn Joe Jul 20 '18 at 15:25
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    To state the obvious: The company that is looking at you here and now has welcomed the GDPR regulations as a good thing :):):) – TaW Jul 20 '18 at 19:26
  • @Lijat, the reasons for the extraterritoriality of the GDPR are too complex for this comment box, and are infact, worthy of a question in itself. Law.SE might be the correct location for such a question. However, a DuckDuckGo search for "why is the GDPR binding on non-EU companies" yielded [this question on Quora](quora.com/… ) – CSM Jul 21 '18 at 10:08
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Nothing would stop them other than the desire to not lose business. Some companies aren't willing to take that kind of loss, but some have principles they hold more important than revenue.

For a fairly recent example, consider encrypted email providers Lavabit and Silent Mail. Both companies chose to permanently close their doors in protest of the US government's domestic spying programs that leverage service providers to turn over user data. VPN provider Cryptostorm has drafted a Privacy Seppuku Pledge stating that signatories pledge to similarly shut down in protest instead of being complicit in what they feel are unethical spying behaviors.

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For companies like Google it would be difficult to shut down their "main" services in certain countries. They suppress all competition because they have a virtual unassailable lead (mainly: technology and knowledge about the users).

Should they abandon certain areas they would offer a reserved zone for other companies to learn, grow, improve and earn money. Perhaps one day their competitors would get strengthened so much that they will become a real danger in their main market.

Bottom line: They do not want a "beginners save zone" for their competitors.

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I don't know if it's the scenario you have in mind, but in cases where the company is actually supplying essential infrastructure to the government, there may well be contracts in place that prevent the company pulling out. I'm aware of contracts where an IT company has a contractual commitment to support (rather old!) software products for 20 years into the future.

The contracts don't help, of course, if the company goes bust, but in that scenario there are probably escrow provisions that allow the government to take over control and appoint another supplier.

Depending on exactly what the government did to annoy the company, the company could of course try to argue that the government's actions nullify the contract.

As for refusing to sell to the government while continuing to sell to other customers, the law is complex and varies from one country to another. Generally you are free to choose whom you do business with, unless your reasons fall under anti-trust or anti-discrimination rules.

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Legal obligations

If there is no legal requirement for a company to do business in country X, then there is nothing to prevent said company to end its activities. If the company determines the benefit outweights the lost business, it is free to shut down.

However, if a global company is opposed to the laws passed by a specific country it is unlikely to shut down completely. It is more likely that the company will find a work-around, e.g. facebook moving its non-EU users from Ireland to the US to prevent the application of the GDPR to non-EU facebook users.

However, a company could also restrict its services for a while, e.g. as in the Wikipedia Blackout.

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You ask "what would stop the company from protesting the action by stopping the sales/providing their services?"

On the real example in Germany, where they tried to force Google News to pay for the newspaper headline snippets, it resulted in a "Deal". Eventually the newspapers agreed that Google News can show the newspaper title snippets gratis (without paying for).

Some sources say that the loss of clicks was that significant for the newspaper , that they loose more money without Google News.

Therefore actually everything is legal and Google News can show the results.

Just for the record: Google acclaims to not gain revenue from Google News. At least in my country there is absolutely no advertising on the News result page.

  • Do you have more information about that deal? As I read your answer it seems more like the newspapers just gave in rather than that they also got something in return. – JJJ Sep 12 '18 at 13:10
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    @jjj It's a little bit difficult to explain in my own words. Quote: "Rather than risk paying licensing fees for using snippets of Axel Springer's stories, Google removed everything except the headlines from their results. After that, Axel Springer's web traffic fell off a cliff: visitors from web search fell 40 percent; from Google News, they fell 80 percent. The company's chief executive said they would have "shot ourselves out of the market" if they'd continued with the policy – PeterCo Sep 12 '18 at 13:35
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    News: Today, the EU lawmakers agreed on a common position on copyright reforms. The debate has centered around two points, one of which could force Google, Microsoft and others to pay publishers for displaying news snippets. The other is mandatory upload filtering, which would require online platforms such as YouTube, GitHub, and Instagram to install filters to prevent users from uploading copyrighted materials or seek licences to display content. – PeterCo Sep 12 '18 at 14:20

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