this post was submitted on 17 Jun 2024
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Privacy
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Seems solid.
It doesn't change a ton, but the point was basically them putting their money where their mouth is and saying "now we can't sell out like everything else."
If you liked them before, this is great. It means google or whoever literally can't buy them out, it's not about the money. If you were iffy already because they're not FOSS or whatever other reason, this doesn't change that, either, for better or worse
What is this buying out talked about something not escapable if not some legal reorganization is made? It has been being talked about other companies, too, and it sounds like if you have a form of a company, you can't legally refuse monetary offers from someone to buy your company.
Is there such a legal mechanism that forces an owner to sell out if an offer is made, or is this more about proofing a company against CEO/shareholder personal sell out decision?
A company with a public offering basically cannot refuse a large enough buyout because with a public offering comes a financial responsibility to the shareholders. Public stock is a contract saying give me money and I'll do my best to make you money back, and it's very legally binding.
You can avoid this by never going public, but that also means you basically don't get big investors for expanding what you can offer. A public offering involves losing some of your rights as owner for cash.
When the legal goal becomes "money above all else", it is hard to justify NOT selling all the data and violating the trust of your customers for money, customer loyalty has to be monetizable and also worth more.
Proton has given a majority share to a nonprofit with a legal requirement to uphold the current values, not make money. This means that the remaining ownership can be sold to whoever, the only way anything gets done is if this foundation agrees. It prevents everything associated with a legal financial responsibility to make money, but still allows the business to do business things and make money, which seems to be proton's founder's belief, that the software should be sold to be sustainable.
Thanks for the detailed explanation about publicly traded companies, but what I wonder is the privately owned ones being forced to sell out, if there is such a thing.
For example, lets say Proton is owned by a few shareholders or just one, and it is not openly traded unless the shareholders make personal agreements to sell out or anything like that. If Google came with a truckload of cash and told these shareholders to sell their shares to Google, can they simply refuse the offer no matter how big is the pile of cash or the benefits of the offer, or do they have to find a legal reason to keep their shares? I mean, even the question sounds stupid and the answer should be "yeah you can just keep your share and run the company however you like, as long as you don't go public listing", but with all the concerns about the buyouts talked all around this last few years, the premise looks like it is hard to hold out.
There are different types. The "financial duty" of corporations is generally overblown, however that is more or less what happened with Twitter. Elon made such a dumb offer that they had to put it to their shareholders. There's some mechanism where shareholders can vote as a whole to sell, and if the vote passes then you don't get a choice.
But generally corporations absolutely aren't required to do whatever makes the most money. They're allowed to put other values above pure profit, as long as they can justify it being in the shareholders' interests. The shareholders may disagree and vote them out because of it, but as long as it was plausible, it's legal. For instance, I believe the board of an Oil company could decide to shut down their wells and fully pivot to renewables, and I don't think the courts would hold them accountable. Preventing climate change is easily arguable as in the shareholders' interest, even at the cost of significant money. However that board would likely quickly be voted out. (And it's unlikely they would have gotten there if they didn't love oil money.)
If you own 51% of shares, public or not, you can't be forced to sell afaik. And if you're private, you'd have to do some pretty big illegal defamation or something to be forced to sell your property. Or you could die and your descendents could decide to sell.
One issue is that we've set up our tax system to encourage cashing out asap. For the most part in the US, you're going to be taxed at 37% whether you sell now or whether you have the company pay you out for the next twenty years. So why not get out while the gettin' is good? In the past, with a 90% top marginal rate at a higher income, it was often better to keep your money in the company and in the reputation, and just have it pay you out at a medium tax bracket for the next fifty years. All you really need to do as your job is make sure the company stays stable anyway. You can do that while spending four days on the golf course.
Thanks a lot, this makes a whole lot more contextual awareness for the situation.
great explanation, thanks!
Excellent explanation. Thank you
Having shareholders (people who contribute no labour but steal funds from an org) should be illegal
I think a publicly traded company works that way as they have a fiduciary duty to the shareholders to make money, but the non-profit (controlling) part of proton has no such duty as their primary directive is their mission. They said I’m mostly talking out of my ass so I certainly could be wrong
Maybe the founders can't sell out anymore, but looking at what Raspberrypi just did the company can still end up partially on the stock market.
It's a bit different because of the stated values though.
Raspberry pi's foundation is focused on making computers available broadly, while this new organization is focused on making privacy widely accessible.
While both can be commercialized, the pi's foundation has no fundamental problems with selling out privacy or focusing on money to achieve those goals. Proton would have a much harder time arguing that profiting from sale.of private data supports privacy.
This is relevant because it means even if the remaining shares end up on the stock market, the foundation can use its majority ownership to veto any privacy concerns.
Time will tell. I could also have missed something
Wait, what happened with Raspberry Pi?