12/31/2017
Though stock markets were deceptively calm in 2017, there was no shortage of bad actors and public relations snafus.
Bribery charges hit Samsung, sexual harassment allegations chased Weinstein Co., and bloodied passengers have plagued United over the past 12 months — even as others skated through the year with little noise.
United Drags a Bloodied Passenger Off a Flight
Oscar Munoz, Chief Executive Officer, United Airlines, speaks during the 2017 Aviation Summit hosted by the U.S. Chamber Of Commerce in Washington, D.C., on March 2, 2017. Photo By Kristoffer Tripplaar (Sipa via AP Images)
Kristoffer Tripplaar — Sipa USA via AP
United Airlines felt the fallout worldwide when two security officers forcibly removed a bloodied passenger off an overbooked United flight in April — and none too gently at that. Video footage of the incident shows 69-year-old David Dao’s head smacking against an arm rest during the altercation, then his sweater hitching up to his chest to reveal his stomach and glasses askew as security dragged him supine down the aisle and off the flight.
Consumers worldwide reacted with horror and quickly called for a boycott. Making matters worse: United CEO Oscar Munoz apologized for the incident in rather sanitized corporate speak, saying “this is an upsetting event to all of us here at United†— underestimating just how viscerally disturbing the video had been, and how dissatisfied fliers were with the airline industry. Adding salt to the open wound, media reports revealed that Munoz had called Dao “disruptive and belligerent†in a letter to employees.
While the incident wasn’t expected to hurt profits, the debacle struck a chord among consumers who have dealt with years of flagging service standards aboard flights.
Even after Dao and United settled out of court, the frustrationsunleashed upon airlines would not stop, with complaints against airlines up 13% in the six months following the incident, according to data from the U.S. Department of Transportation.
21st Century Fox and Bill O'Reilly
Host Bill O'Reilly appears on "The O'Reilly Factor" on The FOX News Channel at FOX Studios on March 17, 2015 in New York City.
Photograph by Rob Kim—Getty Images
Sexual harassment allegations plagued many companies in 2017, including entertainment giant 21st Century Fox.
Fox’s woes started in 2016, with former anchor Gretchen Carlson filing a lawsuit against Fox News Channel’s news chief Roger Ailes, alleging sexual harassment. But it didn’t stop there. In April, it was reported that star commentator Bill O’Reilly had paid five women millions to keep allegations of sexual harassment in the dark. Upon hearing the news, advertisers hastily suspended their segments during the O’Reilly Factor. By April, O’Reilly was out.
Still, the news was upsetting to shareholders who considered the multiple allegations a sign of a company culture that allowed for sexual harassment. Adding fuel to the fire: Fox reportedly knew of the claims against O’Reilly when it decided to give him a new contract in January.
Thus in November, Fox agreed to pay $90 million to settle shareholder claims related to the O’Reilly and Ailes scandal, and create a council focused on creating a proper workplace environment.
O’Reilly has denied any wrongdoing, and Fox has not admitted wrongdoing.
Alphabet and Facebook
Senate Judiciary Committee members Sen. John Kennedy (R-LA) (C) and Sen. Ben Sasse (R-NE) (R) listen to witnesses from Google, Facebook and Twitter during a Crime and Terrorism Subcommittee hearing in the Hart Senate Office Building on Capitol Hill October 31, 2017 in Washington, DC.
Chip Somodevilla/Getty Images
The year following the presidential election became one for Congress — and internet titans — to rethink their role in the democratic process.
Amid speculation that fake news spread on social media may have influenced the 2016 elections, giants such as Facebook and Google appeared to dismiss the possibility.
But that changed in 2017, with Facebook and Google — which derive a major chunk of their revenue from ad placements — both saying that they had found accounts tied to the Russian government. Facebook reported some 3,000 Kremlin-linked ads aimed at dividing the country that had been bought on its platform. Google, meanwhile, found tens of thousands of ads bought by Russia-linked entities on YouTube and Gmail. Twitter also revealed that a news outlet paid for by the Russian government, Russia Today, had spent $274,000 in ads on the platform in 2016.
There’s no indication that the questions will stop any time soon. Twitter, Facebook, and Google are still investigating how much Russian activity there had been on their platforms. Adding to big tech’s big problems: Congress appears to be taking a harder stance against the sector, with some on Capitol Hill questioning the way they are getting users to keep coming back.
Uber, Uber, and More Uber
Travis Kalanick, co-founder and chief executive officer of Uber Technologies Inc., speaks during th TiE Global Entrepeneurs Summit in New Delhi, India, on Friday, Dec. 16, 2016.
Bloomberg Bloomberg via Getty Images
If Uber’s past run-ins with the law were speed bumps, then 2017 hit the ride-hailing company like a 10-car pileup, with sexual harassment allegations, questions about founder Travis Kalanick’s leadership, and criminal probes. In February, former Uber employee Susan Fowler came forward alleging a culture of sexual harassment in the Silicon Valley giant. In May, the Justice Department revealed a criminal probe into Uber’s alleged use of a software dubbed “Greyball†to avoid regulators in geographic regions where it was operating illegally. That all helped lead to the ouster of Kalanick in June, giving then-Expedia CEO Dara Khosrowshahi the unenviable task of reforming the firm.
What made it seem like even more of a Sisyphean ordeal: Shortly after Khosrowshahi took the reins, London banned Uber from the U.K. capital, and in November, it was revealed that Uber had been hacked, putting the data of some57 million users in danger.
Unlike in the case of United Airlines, Uber’s users have chosen alternatives to the black cars. Due to its ongoing woes, Uber has ceded part of its market share to Lyft, now controlling 74% of the U.S. market against 84% last year.
Uber once had a valuation of about $68 billion. Japanese banking firm SoftBank meanwhile bought a stake in the company valuing it at $48 billion.
Harvey Weinstein's Multiple Sexual Assault Accusations
US film producer Harvey Weinstein poses during a photocall as he arrives to attend the De Grisogono Party on the sidelines of the 70th Cannes Film Festival, at the Cap-Eden-Roc hotel in Antibes, near Cannes, southeastern France, on May 23, 2017. YANN COATSALIOU/AFP/Getty Images
YANN COATSALIOU AFP/Getty Images
Weinstein’s story is one that can’t be concocted in even the most twisted of Hollywood films.
Starting in October, more than 100 actresses came forward with accusations of sexual misconduct against the Hollywood kingpin dating back for decades. Weinstein apologized — but it wasn’t enough to save the producer of Oscar-winning films from termination from Weinstein Co. Nor did it calm the public’s growing outrage over how Weinstein had managed to maintain his position for so long.
In his attempts to silence those accusations, Weinstein allegedly hired ex-Mossad agents to tail the accusers in question. But as turns out, it wasn’t just Weinstein’s reported spies and threats that kept him in power, but also a following of billionaire friends that kept him safe within Weinstein Co., despite signs that Weinstein was using company funds for personal projects in 2015. Weinstein later agreed to repay more than $7 million to the company.
But perhaps the most significant sea change: It sparked a wave of once silent men and women to speak out about their experiences with sexual harassment.
Weinstein has categorically denied taking part in any non-consensual sex.
Equifax's Data Breaches
Former Equifax CEO Richard Smith testifies during a Senate Banking Committee hearing in Washington, D.C. on Wednesday, Oct. 4, 2017.
Photograph by Andrew Harre—/Bloomberg via Getty Images
Credit rating firm Equifax makes its profits from selling personal, often sensitive information to financial institutions and lenders.
But in September, it revealed that it had been at the center of one of the worst data breaches in history, with the information of some 145 million people, about half of the U.S. population, compromised.
In the aftermath, CEO Richard Smith stepped down, as well as its chief information officer and chief security officer, amid revelations that Equifax was aware of the system flaw that the hackers took advantage of since March. Then, when the hack did happen, the firm waited a full two months before disclosing it.
Meanwhile, the Justice Department is reportedly looking into whether top Equifax excutives committed insider trading when selling some $1.8 billion in shares just before the breach was disclosed.
Samsung's Bribery Charges
Jay Y. Lee, co-vice chairman of Samsung Electronics Co., center, is escorted by prison officers as he arrives at the Seoul Central District Court in Seoul, South Korea, on Friday, Aug. 25, 2017.
Chung Sung-Jun/Pool via Bloomberg
In 2016, Samsung dealt with exploding Note 7 batteries. In 2017, it was imploding corporate ranks.
Originally planning to put heir Lee Jae-yong at the head of the empire, the family-run Samsung conglomerate is now facing questions of succession after Lee was caught in a sprawling political scandal that took down former South Korean President Park Guen-hye.
Lee Jae-yong is now facing five years (and potentially 12) in jail for offering allegedly offering bribes to Park, embezzlement, and hiding assets overseas.
Samsung Electronics co-CEO Kwon Oh-hyun meanwhile also resigned in October, citing Samsung’s leadership woes.
“As we are confronted with unprecedented crisis inside out, I believe that time has now come for the company [to] start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry,†he said in a statement.
While Samsung’s long-term health is still on shaky ground, the company’s near-term outlook belies those worries. The company posted record-breaking profits in the third quarter of $12.8 billion, almost triple the number it posted a year earlier.
Kobe Steel, Mitsubishi Materials, and Japan's Corporate Governance Woes
Mitsubishi Materials president Akira Takeuchi (2nd R) speaks the words of apology with Mitsubishi Materials executive vice president Naoki Ono (2nd L), Mitsubishi Cable Industries president Hiroaki Murata (R), and Mitsubishi Shindoh president Kazumasa Hori (L) at the beginning of a press conference after the group admitted to falsifying product data in Tokyo on November 24, 2017. Shares in Mitsubishi Materials plunged more than eight percent on November 24 after it admitted to falsifying product data, the latest major Japanese firm to acknowledge problems with quality control. / AFP PHOTO / Kazuhiro NOGI (Photo credit should read KAZUHIRO NOGI/AFP/Getty Images)
KAZUHIRO NOGI AFP/Getty Images
Japan’s economy notched its longest GDP growth streak since 2001 in the third quarter of 2017. But underlying it’s steady recovery: A wave of quality-faking admissions from some of Japan’s biggest companies that’s has raised questions about the country’s standing as a manufacturing powerhouse.
In October, Kobe Steel revealed that it falsified information on some items sold to Boeing, Ford, Toyota, and others since 2007; Mitsubishi Materials, which said it faked data on auto and airplane parts affecting some 274 clients; and Toray, a manufacturing giant that revealed that it had fudged data for cords used to reinforce tires since 2008.
Carmakers Nissan and Subaru also recalled 1.2 million and 395,000 vehicles respectively in 2017, saying unqualified inspectors were allowed to vet their cars in the final checks for decades.
While the scandals haven’t revealed any major safety issues, they are negative for Japanese businesses. As lower cost alternatives from China and South Korea have proliferated through the market, Japan has competed mainly by pointing to the high quality of its products as a bulwark.
Analysts, though, say the series of scandals that have come out in recent months suggest that those Japanese quality standards may have been set too high.
Apple's Slowed Down iPhones
Apple CEO Tim Cook delivers the keynote address at the Apple 2012 World Wide Developers Conference (WWDC) at Moscone West on June 11, 2012 in San Francisco, California.
Justin Sullivan Getty Images
The tech giant’s year ended with a bang, after reports that Apple had purposely slowed down older iPhones to compensate for decaying batteries.
It appeared to feed into a long-time conspiracy theory among some Apple users: that the company had been purposely slowing down old models when a new version came out in a bid to force consumers to upgrade. Now, the company is facing lawsuits for allegedly slowing down the devices without first warning consumers.
In response, Apple has apologized for slowing down the iPhones, calling it a “misunderstanding,†and offered to sell battery replacements for $29 instead of the usual $79. Apple has said that once the battery is replaced, the iPhone’s speed will pick up again.
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