A Foreign Way of Doing Business?

Are business practices universal?

There are countries with bureaucracies so corrupt that it’s said to be impossible to license a car or pull a building permit without the greasing of many palms.

American companies seeking to do business in these countries — in any country in fact — are under the jurisdiction of the Foreign Corrupt Practices Act (FCPA) of 1977, which applies American law, and perhaps even American morality, to overseas commerce. In a nutshell, the law states that Americans can be prosecuted at home for bribery abroad.

On its face the FCPA seems righteous, responsible and correct. It promotes honesty and fair practice, even in nations that can’t or won’t promote these things for themselves. And it ensures that American businesses represent our country and our way of life in the best light possible.

But couldn’t it be that the FCPA is hamstringing American commerce, especially when we’re competing against economic powers operating under no such strictures? If there are truly places where business is impossible without graft, aren’t we effectively closing those territories to American businesses by holding them to the FCPA?

You might recall the recent Walmart controversy, wherein the retailer was accused of FCPA violations while operating in Mexico. This case might seem cut and dry, but the question begs: could Walmart have operated at all in Mexico, without those bribes?

We like to think morality is absolute. It would be nice if that were so. But ideals of fair business practice are clearly not universal, or at least they’re not universally enforced. We have to wonder if our moral high ground, as enshrined in the FCPA, isn’t ultimately self-defeating.

The C4:

1. The FCPA was enacted in 1977 to prevent American businesses from engaging in corrupt practices abroad.
2. Walmart has recently been accused of FCPA violations for bribing Mexican officials.  
3. We wonder if adherence to the FCPA doesn’t put American companies at a disadvantage, when competing against companies and nations who obey no such laws.
4. This is a distressingly gray area and we’d love to hear your opinion: should morality be absolute, or should we afford our businesses the leeway necessary to compete?

The Six Billion Dollar Email

Just 11 words in a mountain of data may ultimately be the smoking gun.

If there’s a moral to this cautionary tale, it’s this: know what’s inside those boxes you’re handing over.

The background is a multi-billion-dollar lawsuit between Oracle and Google (go ahead and call it the Battle of Silicon Valley), in which Oracle alleges the illicit use of its Java programming platform in Google’s Android operating system.

It started off as one might expect; Google denied wrongdoing, while (reportedly) preparing to pay a token settlement of a few million dollars. Then sometime last year came the discovery phase, where Google responded to Oracle’s subpoenas with a good old fashioned data-dump: truckloads of documents meant to overwhelm and confuse the other side’s lawyers.

But somewhere within those truckloads was a single damning email. It was from a Google engineer to Andy Rubin, head of the Android division. It said (paraphrasing here), “You know, we really ought to buy a license for Java.”

So much for settlement. The trial is now underway; its conclusion is by no means foregone, but legal observers say Google isn’t looking so good. Damages were initially estimated at $6.1 billion, but might be negotiated down to around a billion. That’s still enough of a hit — even to Google’s deep pockets — to spell an end to Android OS as freeware, and higher consumer prices on Android phones and tablets.

For the want of a nail? More like for the want of reading your own email. Or, better still, the true root cause: if you’re using someone else’s software, pay for it. Because ultimately you will...one way or another.

The C4:

1. In August 2010, Oracle (owner of the Java programming platform) filed suit against Google for the unlicensed use of Java in the Android operating system.
2. Responding to Oracle’s subpoena, Google inadvertently supplied an email which apparently acknowledges the use of Java, and the need to pay licensing fees.
3. The trial is ongoing. It could result in a billion-dollar judgment against Google that would inevitably impact the cost of Android devices.
4. Learn from Google’s mistakes: data-dumps can be self-defeating, and it’s always best to simply pay for the products you use.