Um... what? So you are suggesting that google move offshore to say, Tuvalu, and set up shop there? Aside from the fact that they'd have to import American culture there, they'd still be subject to laws around the world (just as EBay and Yahoo have issues in France with Nazi paraphanelia).
Or is this one of those "I'm only joking" posts?
Perhaps they could relocate into low earth orbit.
If I were Google and got subpoena'd before Congress, I'd just want to slam my shoe on the table and scream "At least we're trying not to be evil!"
No, I'm serious. Is there something obviously wrong with this idea? Yeah, they'd still be subject to the laws of various countries in which they operate, but not in the same way: China and France can't subpoena Google's search records if Google is incorporated in the Bahamas.
Ogged, I don't think it's so much being worried about getting subpoena'd by China, I think Google is more worried about getting blocked by China's servers (a la Tiananmen Square). After all, there are a lot of consumers in China who might click on Google's ads.
Well, it works for some banks and internet gambling has reportedly done this a lot. And a lot of computer programming work has gone to Ireland and India due to lower wages and salaries.
However, seems to me, Google depends having the the highest tier of talent, and that demands staying in the 1st world and paying for it not only in higher rent and payroll costs, but also exposure to the higher regulatory burdens.
I would guess that if Google moved to the Bahamas, it would loose too much of the talent that distinguishes it, and gives it its value.
I'm a little creeped out by the link in 5; it seems like they're one of those Huge Corporations That Run Our Lives but they're still trying to get funny points.
Google is a company. Companies are made of people and coffee makers and hand soap. Hand soap is not food! Abandoned oil rigs are not food. God bless America.
Eff that! I don't get hand soap where I work. We have to buy our own.
Matt, zoom in really far on the link in 4.
11 basically sums up how I feel about Google overall.
It's really the US that Google worries about.
1. Talent is not that easy to attract. There are lots and lots of long-standing theories about why Silicon Valley is Silicon Valley. Some argue that they key is cross-pollination; Google can get good people because there are feeder companies from whom they can steal. (This is sometime expressed as the idea that in Sillicon Valley you can change jobs without changing parking lots.)
2. I'm pretty sure that if you do business in the US, you are, to varying degrees, subject to US law. In fact, I'm pretty sure that you have to make yourself available, through registered agents, for things like subpoenas. At a minimum, you get paid in US dollars, which sit in US banks, and at which the govt. can definitely get.
In my market research days, I came across a company that was incorporated in the Cayman Islands (surprisingly, it was a vitamin supplement company that operated through multi-level marketing). Thing is, even though they were incorporated elsewhere, I was still legally entitled to read the 10-K they were legally required to file with the SEC.
So I second the idea that foreign companies have to comply with US law.
Wouldn't it be far cheaper to simply buy a controlling interest in the US Congress? That's what big companies usually do.
I'm trying to find a case or the applicable Federal Rule of Civil Procedure to cite for this, but there is (1) no reason that non-parties can't have discovery requests (such as depositions or document productions) made of them, and (2) no reason in general (that I can think of right now) that a subpoena can't be requested if the non-party refuses, and (3) what a move to another country would do is increase the burden upon the person of whom the discovery request is made, and undue burden is one way to defeat a discovery request.
Ok, FRCP 26(c)(1)-(8), isn't exactly what I was looking for, but it helps somewhat.
12: My workplace doesn't have a goddamn coffee maker. Cheap bastards.
14: I quibble with the color, but that is funny.
SCMT, that's true.
1. I'm not really sure it's the US as a governmental entity that google worries about. I think it's money and information. The US government can subpoena google all it wants and ask for as much information as it wants, but google only has to comply as far as the law tells it to (and it's not as though google has a derth of lawyers).
2. As for the job pool, it's not that they are just located in Silicon Valley. They don't need to be, but it definitely helps. What matters is their country/state of incorporation. I can't be as clear as I want to here because it's too frickin late.
Aren't 75% of corporations incorporated in Delaware?
17: They have to file with the SEC if they are listed on American stock exchanges. I think they have to publish some statements, but not the 10-K, etc., if they are foreign companies doing business in the US.
24: For tax and interest rate purposes (credit card companies can charge the maximum allowed interest rate of the state of incorporation).
To draw an analogy (which might be inapt because of special treaties limiting the liability of airlines in international travel), let's say I'm in a plane crash on a Lufthansa flight, and I survive. In my negligence suit I allege that the procedures used by the maitenance crew are unreasonable for the purposes of keeping the plane from falling apart because they don't spot check the tightness of enough of the nuts and bolts, and for support of this I note the difference between their practices and those of American airlines (American is not naming, but modifying, in this sentence). In defense they say that Germans just do things differently, because Germans are wacky like that. I'm pretty damn sure I can make deposition requests of other German airlines (who are subject to U.S.jurisdiction because of their business contacts with us) to describe their bolt checking practices, and if they refuse the requests, I can get subpoenas, or at least that the thing preventing me from getting a subpoena wouldn't be that the company is located outside the United States.
Who serves the subpoena? What happens if it's ignored? (I guess we could just invade over every subpoena. I'd be for that.)
24, 26: Yeah, a while back Delaware essentially got rid of their usury laws in a bid to attract credit card companies. Worked rather well. Up until then, it was illegal to charge interest rates of over 7 or 8 persent, or something.
They have to file with the SEC if they are listed on American stock exchanges. ...
My recollection is that they have to file with the SEC if their stock is offered for sale in the US. There are a few exceptions (private offerings, offerings made and approved only in a single state) but the key is offering. Listing on the NYSE is irrelevant, if I recall - and if the law hasn't changed since 1934
MHS, that's what I meant by not the 10-K. If they are foreign companies, they have to submit their 20-Fs and 6-Ks. I also don't think they are subject to the other stringent requirements of SEC investigations, which are more, well, interesting.
Any person over 18 not a party can serve a subpeona, IIRC.
The key is in personam jurisdiction, which is acquired by service of process within the geographic jurisdiction of the court. A corporation is considered present if it is doing business in that area. see International Shoe
Okay, my memory and knowledge don't stretch all the way to 20-F's. I was just thinking that it wasn't the listing on the exchange that was the key. I can buy lots of unlisted stocks, I think, and they all have to meet the SEC filing requirements.
Deleware also has some of the most loophole-ridden tax laws of any states. It's full of crap like "companies of this exact size, in this one exact little industry, that are on this specific block in this town, that have the letter 'Q' in their name are exempted from the above tax". More so than most other states.
And since International Shoe, despite it's name, involves a domestic corporation, see Asahi Metal Industry Co. v. Superior Court
Shit, I took a whole class on information technology and the law. One of the stickiest problems is jurisdiction, as MHS states. But I'm pretty sure he's right, and it depends on how much effort they take to remove themselves from a market if they wish to not be involved in a dispute (a credit card number, IIRC (and I may not, IANAL), is a sufficient check of whether the user is a minor). This was two years ago, though, so I might be wrong.
Wasn't Fight Club supposed to be set in Delaware, but they (in the movie, I don't know the book) were never cleared to use actual place names?
If a subpoena is ignored, you usually get either a motion to compel (for a party) or a motion to show cause why they shouldn't be held in contempt (for a non-party). That's my recollection, anyway. For a corporation, the sanction would usually be a fine for failure to comply, which could be collected by seizing and selling corporate assets, if such were found within the jurisdiction of the court.
But my legal education was decades ago, so don't take my word for it.
I had assumed that Google would want to remain a publicly traded company, even after moving most of their operations to Niger.
I was totally about to make a comment on Asahi. But damn, w/d, your civil procedure is so much better than mine.
Thank you. I hadn't read Asahi
It does seem to reaffirm the test from International Shoe as applied to international commerce:
... "minimum contacts" between the defendant and the forum State such that the exercise of jurisdiction "does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) ...
I don't know whether simply meeting SEC filing requirements are sufficient minimum contacts. Some court has probably made that decision, but I don't know. Of course, if Google incorporated in Small Island, but still had offices and employees and such in the US, it could be reached with a US subpoena
I think continuing to solicit advertising from a lot of American companies (which it would surely have to continue doing) in full knowledge of the fact that a great deal of their traffic and business comes from the United States would be sufficient to satisfy the "minimum contacts" test. If I remember correctly, it's all about what you know, and what you expect. Surely Google wouldn't expect to stop suddenly being relevant in the US just because they were located somewhere else.
But the fact that they run a business (selling ads) in the US (even if they were in small island). So that's sufficient minimum contact.
I agree with both of you. It's unanimous. Let's issue an opinion en banc Or do we have a dissent from w/d?
No dissent here, who gets to write for the court? And the accolade slightly up-thread makes me think that my decision to comment here right now, instead of doing my Evidence reading, was a good idea.
Oh no. Some of you are in law school? I knew I had no business going down this dark alley.
Ok, assuming you guys are right (which I have no reason to doubt), that's just the kind of answer I was looking for. Thanks, all.
Hey, I'm taking Evidence now, too. I love it.
Glad to be of help, ogged. Not like I did anything.
Ha. Suckas! I'm not in law school, and everyone I've talked to who is now a lawyer has said "Run away!" when I asked them whether I should go to law school. So what say you?
My pleasure. I'm counting on LB to set us straight in the morning.
MHS, I think we're right. I mean, the law is logical, right?
Don't stop running, and don't look back. Personally, I refer to that unfortunate period as a youthful indiscretion.
The law, in its majesty, does not concern itself with logic. That's for philosophers, I'm told.
Tweedle, I've had that experience too, but basically come to the conclusion that a shocking number of lawyers really enjoy scaring law students, irrespective of the merits of their advice.
Also, a lot of law students really enjoy scaring prospective law students. I've seen many of my friends and acquaintances do just this.
I think it's just a not-very-veiled attempt to keep the market to themselves.
A friend of mine in law school gave me that same (run away!) advice this summer when I was talking about possible non-Ph.D routes to follow.
Some people are tempermentally suited for the practice, others aren't. I found it not fun, and never practiced. Your milage may vary. I find it interesting, as long as one stays away from clients, judges, and opposing counsel.
Law school, and the practice of law, are thought by many law students and lawyers to suck. I don't have the statistics at hand, but a pretty large percentage of lawyers suffer from depression. (As with practically everything else, Google can probably enlighten you on this.) Yes, I am a lawyer. No, I am saying this to scare off competition.
I find it interesting, as long as one stays away from clients, judges, and opposing counsel.
LOL. OK, if you can do that, it's probably great.
Woops, left a "not" out of the last sentence of 61.
If you think lawyers' prospects are bad, consider that law school is the practical option for English and history majors.
I haven't followed the discussion in detail, but I think that Ogged's original concern, if it was indeed a concern rather than idle speculation, was reasonable. Big corporations have a tremendous array of options for neutralizing government and evading all legal constraint -- going offshore is just one of them.
Back in the day, people were gloating about the eventual irrelevance of government and the nation state, but as we move closer to the actuality, the free-market utopia looks less attractive.
Google is subject to France's laws because it has offices in France. Being incorporated in the U.S. hasn't changed that. Incorporating off-shore helps with tax loopholes, but surely Google will want to have some offices in the U.S. and remain publicly traded here.
Incidentally, can someone explain to me why the fuss over subpoenaed Google records when there is comparably little fuss over subpoenaed telephone records? What am I missing?
I find it interesting, as long as one stays away from clients, judges, and opposing counsel.
Sounds like you might want to be a law professor. They're letting any old derelict do it these days.
Cala -- is it that telephone records just tell you who was called, while Google records include the content of the searches? So they're more like eavesdropping?
That's not going to land anyone in jail, though, is it? There's no crime for putting in a search term.
I'm not trying to be difficult here, really, but a lot of the hype has made this seem analogous to the recent NSA datamining project. It doesn't to me seem to be the same thing.
66: Because when the government asks for phone records, they usually have specific phone numbers in mind (e.g. yours and Matt Weiner's) whereas they were asking google, yahoo, and ask jeeves for all of their records, I think. But I have not RTFA.
Okay, that makes more sense. The way the slate article was talking, it was acting like we should be really surprised that an individual record should be subpoenaed (they can crosslist it with your IP! and your gmail!), and that doesn't seem terribly surprising.
to follow up on the discussion here: any company of Google's size is going to run up against the US- even if they incorporate offshore, and de-list from the US, if they want to issue any effective amount of debt, they have to register with the SEC to issue it in the US, the largest debt market in the world.
Ogged, you're assuming that the congressional hearings and DOJ subpoena are equally bad news for Google. Google may want the legal fight with DOJ and publicity for going to the mat every bit as much as the Bush Admin wants to establish a precedent even when it doesn't need the records.
Anyone else notice that submitting comments seems really slow, lately?
As far as I know, pretty much everything said is right -- you're subject to US laws and jurisdiction by operating in US markets, and incorporating someplace screwy isn't going to be significant shelter there.
52: I thought law school was lovely: entertaining, interesting, not all that pressured, considering -- a very pleasant way to spend ~100K. Practicing law? Less fun. I wouldn't go to law school without a career path marked out that I was very excited by. (Well, I did. I wouldn't do it again.)
this thread = worst study break ever.
stupid corporations reading. ruining lurking.
I remember slightly after teh meetup; somebody who doesn't comment often mentioned that they thought they went to school with me. Is your Corporations reading by any chance pages 81-97?
gravy, the internet is a small place. ogged is probably my roomate.