Your favorite tech company might be lying to you – and getting away with it

Should there be larger repercussions when companies get caught falsely advertising?

False advertising goes beyond being just an annoyance — it’s a sign of a rotten company with no integrity. It has real-world repercussions, and tech companies often seem to be among the worst false advertisers. Is it time to move beyond a slap on the wrist and start to consider serious legal ramifications when companies clearly break the law?

The problem of false advertising in tech

From the Pixel 4 to Samsung’s fake moon Zoom, big tech is addicted to untrue ads

Do you remember when Samsung showed off the amazing zoom capabilities of the camera on the Galaxy S23 Ultra? The company presented an amazingly detailed photo of the moon, complete with clear-as-day craters and the various lunar seas. The 100x zoom on the phone took this photo, the company told us.

Turns out it was not entirely true. Samsung used software and something akin to on-device photoshop to create the image. The company was called out by the tech community and the media for blatant false advertising. But nothing much happened after that; Samsung got away with lying to everyone.

Google isn’t innocent either; it recently settled a lawsuit with the FTC over false advertising after it was caught paying radio DJs to pretend they used the Pixel 4. Most of them hadn’t even seen one, let alone touched one.

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Following an FTC settlement on the same issue, the company reached a separate settlement with Texas

Let’s not pretend these were isolated incidents. Tech companies seem to be increasingly comfortable making bold promises that their products can’t keep. Volkswagen made a big deal about its “clean diesel” cars, which it claimed were carbon-neutral and surpassed EPA requirements thanks to innovative technology. What Volkswagen was actually doing was using a device to manipulate emissions data and trick the people testing their emissions. The FTC sued VW for $10 billion.

Volkswagen went beyond a bit of misrepresentation. What they did was a full-on conspiracy to trick consumers and regulators with a negative impact on the environment. Yet, it was the shareholders who suffered. The executives who spawned the plot continued on with their lives.

The impact beyond consumers

False advertising distorts fair competition and can even hurt people

Small companies that invest in genuine features do so at great risk. A company can spend tens of millions developing new technology, yet a bigger company can come along and claim they have the same technology, only better. They know they don’t have it. Their only goal is to strangle the small startup.

This has a frightening effect on the industry, as it hampers real technological innovation. Why start up a new company with that great new tech you thought of when it will just get squashed by a behemoth who can get away with lying?

The majority of technology is already concentrated in the hands of a few giants, innovation stagnates, and the false advertising keeps getting bolder. Sound familiar?

These false claims can even hurt people. Theranos was the tech startup darling of the mid-2010s, which claimed to help discover diseases through at-home blood tests. The technology didn’t actually discover anything, and founder Elizabeth Holmes is now sitting in a prison cell.

Existing penalties aren’t working

Small fines mean nothing to trillion-dollar companies

Let’s be clear: there are laws on the books concerning false advertising. Every developed country in the world has legislation dealing with the problem. But when a company is caught flagrantly disregarding these laws, the usual process looks like this:

  • Regulators open an investigation.
  • Media reports on the investigation.
  • Violating company spins a friendly-sounding press release.
  • Regulators charge the company.
  • Company fights the charge.
  • Courts impose a tiny fine or the company settles out of court.
  • Everyone forgets about it.

The fines for violations of these laws can be laughably small. $10 million might bankrupt a small startup, but it’s chump change to a titan such as Apple or Samsung.

Regulators are notoriously slow when it comes to updating the laws. As the saying goes, “Politics are downstream of culture.” The same could be said about regulators and technology. They’re often nearing the end of their careers and are woefully out of touch about what’s really going on.

This creates a lack of regulatory frameworks which savvy tech companies are only too happy to exploit. Don’t think for a moment these false advertising cases were one-off mistakes.

The case for tougher penalties

Europe is leading the charge but needs to strike a balance

There are a few ways we, as a society, can curtail big tech false advertising. For instance, we could follow the European Union’s lead and hit these companies with massive penalties. The newest EU law would impose large fines on companies that make false advertisements related to green technology. These are the kinds of fines that hurt.

But there should also be a balance. We don’t want regulation to stifle innovation. That’s why we would like to see the following models used to combat false advertising in big tech:

  • Harsher fines scaled to the size of the company.
  • Temporary bans on selling products involved in false advertising scandals.
  • Criminal charges and personal liabilities for executives caught conspiring to deliberately mislead the public and get around regulations.
  • New proactive monitoring tools for regulatory bodies.

Finally, we would love to see an industry-wide standard for testing specs and features that can be verified by independent third-party organizations. This could create a level playing field for competition and drive real innovation. Best of all, it could help consumers make practical and informed choices.

No more excuses

It’s time to demand honesty from big tech

Deceptive advertising degrades the integrity of the entire industry. It stifles competition and innovation, undermines trust, and can even hurt people. Sometimes, the offenses are seemingly stupid, like Samsung’s moon zoom fiasco. Other times, it’s ridiculous, like Google’s radio DJ scandal. And occasionally, it’s downright villainous, like the Volkswagen conspiracy to trick regulators.

In all cases, these companies should be hit with penalties large enough to keep them licking their wounds for years. Volkswagen’s executives should have gone to jail. The question, then, isn’t whether companies should be held accountable or not; it’s when are we going to start punishing them for real.

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Nathan Drescher