The Most Shocking Tech Company Scandals in History
The tech industry has experienced a meteoric rise over the past couple of decades. But the ascent of companies such as Apple, Facebook, and Google has not occurred without a fair share of headline-grabbing scandal along the way.
From exploding mobile phones to the mega-fraud of Theranos to the megalomania that brought down WeWork, here are some of the biggest tech scandals in history—theft, corporate cover-ups, and sometimes even murder included.
Samsung’s Smartphones Explode
Key players: Samsung, cellphone customers, the airline industry
The scandal: Samsung expected their Note 7 to be a hot new release, but the phone went up in flames—literally.
In 2016, Samsung was leading the smartphone market and its new Galaxy Note 7 was poised to be the next big thing. Instead, the smartphones caught fire.
One device torched a family’s car; another caused a flight to be evacuated. Samsung offered an apology and explained that the culprit was “battery cell issues,” but its Notes were banned on airplanes and over 2 million phones were recalled—the largest smartphone recall in history.
The company lost over $5 billion and the Note 7 was written off for good. Unfortunately for Samsung, consumers also started dismissing the company altogether as a reliable smartphone maker.
Theranos Doesn’t Tell the Truth
Key players: Elizabeth Holmes, the company’s founder and CEO; John Carreyrou, Wall Street Journal reporter
The scandal: Theranos’s dodgy claims about blood-testing technology cause an uproar.
Theranos was launched in 2003 by Elizabeth Holmes, a 19-year old who’d left Stanford to revolutionize health care with a painless blood-testing device that could produce accurate results with a single drop of blood. Her promise attracted major investors and Theranos’ value skyrocketed to over $9 billion, while Holmes achieved worldwide fame.
Then, in 2015, Wall Street Journal reporter John Carreyrou exposed Theranos as a massive fraud based on shoddy technology and deceitful claims.
In 2018, Theranos was dissolved and Holmes was brought up on criminal charges. The trial has been delayed several times due to the pandemic, but she could get up to 20 years in prison.
Meanwhile, her compelling story has been documented in podcasts, books, and documentaries, and there are plans in the works for a Theranos movie starring Jennifer Lawrence.
Key players: Adam Neumann, WeWork CEO; Masayoshi Son, chairman & CEO of SoftBank Group Corp
The scandal: An eccentric CEO drives a highly valued company into the ground.
In August 2019, WeWork, a flexible office-space solution, filed for its first initial public offering (IPO). The company was valued at $47 billion and CEO Adam Neumann’s star was on the rise. But then things took a turn.
WeWork came under scrutiny for its deceptive finances and Neumann’s eccentric behavior, including allegedly favoring family members for prime positions, forcing employees to do tequila shots, and being paid $5.9 million by WeWork itself to use the word "we."
Neumann stepped down in late September, followed by major layoffs and a staff revolution. Softbank, WeWork’s biggest investor, bailed the company out. In May 2020, WeWork reached a new low—a valuation of $2.9 billion.
Key players: All of us
The scandal: In the midst of the coronavirus pandemic, people turn to Zoom to stay in touch—and get overtaken by internet trolls.
For many, 2020 was the year we learned to Zoom. But as the videoconferencing service's popularity surged, it became the go-to place for just about everyone—including unwanted guests.
Soon enough, Zoom bombs became a regular thing, with trolls entering online birthday parties and private meetings and broadcasting offensive and NSFW content. In addition, reports surfaced that the company inadvertently exposed user information.
Security concerns caused several schools and companies to ban the app, but Zoom restored its reputation (mostly) by adding encryption, passcodes, and other features to help secure its squares.
Self-Driving Technology Plagues Google and Uber
Key players: Google, Uber, Waymo, Anthony Levandowski
The scandal: In the self-driving industry, a former Google employee is accused of racing off with the company’s secrets to benefit the competition.
A pioneer in self-driving technology, engineer Anthony Levandowski was a Silicon Valley golden boy. He was wooed by Google, where he worked in the division that would become Waymo, the company’s self-driving-car arm. After seven years, he left to start his own company, Otto, which was bought by Uber.
The problem? In 2017, Google/Waymo accused Levandowski of using their top-secret info (that he’d illegally downloaded) to serve Uber. The ride-share company denied knowing about Levandowski’s underhanded deeds but paid out nearly $245 million in damages.
Levandowski fared even worse. In 2019, he was brought on federal charges for trade theft, sentenced to 18 months in prison, and ordered to pay $179 million back to Google.
Not surprisingly, Uber also dumped him.
A Sexual Harassment Claim Ends a CEO
Key players: Mark Hurd, CEO of Hewlett Packard; Jodie Fisher
The scandal: A sexual harassment claim against a top CEO uncovers other misdeeds.
As CEO of Hewlett Packard, Mark Hurd was hailed for his success in managing operations and sales. He was particularly infamous for cost-cutting, which benefited HP and its stock price while irking employees.
Then came the scandals.
In 2006, morale took a nose dive when HP was accused of leaking personal information to the media, which led to the company paying $14.5 million in a settlement. After that, Hurd was accused of sexual harassment by a former contractor (and adult film actress) named Jodie Fisher, whose public letter detailing Hurd’s unwanted sexual advances provided public embarrassment.
Hurd and Fisher settled out of court and it actually looked like the CEO would retain his job—but then details of the letter prompted an HP review board to review his expense reports. The board determined he’d falsified information and, finally, Hurd was forced to resign.
Despite this string of controversies, Hurd went on to become the co-CEO of Oracle. He died in 2019.
Apple’s Battery Gate Causes an Uproar
Key players: Apple, angry iPhone users
The scandal: When older iPhone models experienced slowdowns after a software update, Apple reckoned with the truth.
Millions of iPhone users lambasted Apple when, in 2017, they began to experience slowdowns with older devices after updating their phone’s operating software. What began as a complaint on Reddit quickly spurred national headlines and a public relations nightmare for the tech giant.
Worse yet? Apple eventually confessed that they knew about the slowdowns. The company offered a rare apology and battery replacement discount, but consumers weren’t satisfied. A class-action lawsuit was ultimately brought against the company, which ended up shelling out $500 million to angry users.
Google's Rep Takes a Hit
Years: 2017, 2018
Key players: Google, James Damore, Andy Rubin, employees who took a stand
The scandal: A bizarre manifesto and harassment cover-ups expose issues in Google’s workplace culture.
For a long time, Google maintained a sterling reputation in Silicon Valley, known for its “Don’t be evil” mantra and employees-first ethos. But in 2017-2018, the company’s standing took a serious hit.
In 2017, employees were left aghast after engineer James Damore posted a 10-page manifesto called “Google’s Ideological Echo Chamber” that criticized the company’s attempts at expanding gender and racial diversity. Statements like “we need to stop assuming that gender gaps imply sexism” sparked internal anger and public outrage. Damore was eventually fired, but his memo spotlighted growing concerns about Google’s work culture.
Less than a year later, a New York Times story revealed that Andy Rubin, creator of Android and a former Google employee (who was let go after an investigation of sexual misconduct) was given a $90 million exit package. The report also featured Google acknowledging that it had fired 48 people for sexual harassment over a two-year period. In response, Google employees around the world left their desks in what was called the “Google Walkout For Real Change.” Outside of offices, they chanted and held signs like “Don’t be evil” that were featured all over social media.
The company promised change, but the backlash tarnished the company’s once golden reputation.
Yahoo Experiences a Massive Data Breach
Key players: Yahoo CEO Marissa Mayer; Russian hackers
The scandal: An epic data breach and hacking incidents affect over 3 billion users.
The years between 2013 and 2017 were some of Yahoo’s worst. In 2013, the company experienced a major data breach followed by a smaller (but still significant) hacking in 2014. Two years later, Yahoo announced that names, email addresses, and passwords of 500 million accounts had been compromised. However, as it turned out, the breach affected every account—a whopping 3 billion.
Though Yahoo asserted that personal financial information was not stolen, Yahoo and its CEO, Marissa Mayer, paid the price. Mayer, who was largely blamed for failing to disclose the breaches to the public, lost millions in bonus money and later left the company. Verizon went on to buy Yahoo for $350 million less than their original offer.
Suicides at Foxconn Raise Alarm
Key players: Factory workers, Foxconn, Apple, Steve Jobs
The scandal: Harsh working conditions in Chinese factories cause workers to take their own lives.
Taiwan-based Foxconn manufactures products for companies such as Apple, Dell, and Hewlett Packard, employing over 800,000 people in Chinese factories. Sadly, these individuals were subject to an abysmal work environment and forced to work extreme overtime. The mental stress and physical exhaustion took a toll and 14 workers committed suicide.
In response, Foxconn asked workers to sign a “no-suicide pledge” and installed safety nets, but the deaths and harsh conditions caused a public outcry. In addition to Foxconn, people lashed out at Apple for allowing such harsh conditions.
Steve Jobs, CEO at the time, made things worse when he defended the factories as being “pretty nice.” But Apple eventually pressed Foxconn to improve conditions. Despite minor progress, the company remains under scrutiny for other serious incidents, including thousand-person fights and unsafe equipment.
Facebook’s Security Fail Draws Headlines
Key players: Facebook, Cambridge Analytica
The scandal: A Facebook security loophole allows Cambridge Analytica to access the personal information of 87 million unsuspecting users.
In 2014, a researcher from Cambridge University launched a Facebook quiz used by over 300,000 people, who divulged their personal data. When that app was sold to Cambridge Analytica, Facebook security loopholes allowed the company to also collect data from users’ friends, including information that wasn’t intended to be publicly shared. In the end, 87 million people had their information tapped.
From there, it got worse. In 2016, Cambridge Analytica used the information they’d acquired to create user profiles and influence the 2016 election.
The damage was enormous for Facebook; a furious public, including celebrities like Cher, deleted their accounts and launched the hashtag #DeleteFacebook. CEO Mark Zuckerberg was called in to Congress, where he apologized and vowed to revamp the company’s security, but the Federal Trade Commission still fined Facebook $5 billion—the largest amount ever imposed for this kind of consumer privacy violation.
Edward Snowden Tells All
Key players: Edward Snowden, Google, Yahoo, the NSA, millions of Americans
The scandal: A whistleblower tells Americans their Google and Yahoo accounts are being watched by the NSA.
“Scandal” may be an understatement to describe the story of Edward Snowden, whose whistle-blowing allegations against the National Security Agency (NSA) shocked America.
In 2013, The former government contractor leaked that the NSA was spying on Google and Yahoo accounts, recording text, audio, and video without users’ knowledge. Both tech companies said they were surprised by the NSA’s actions and had not granted them permission for such activity, causing further public outcry and drawing comparisons to George Orwell’s dystopian novel, 1984.
Snowden was brought up on criminal charges in violation of the Espionage Act but has been granted permanent residency in Russia.
A Murdering “Geek” Makes a Strange Defense
Key players: Hans Reiser, Nina Reiser
The scandal: A software developer and entrepreneur is accused of murdering his wife and the defense’s dubious argument grabs headlines.
What’s a list of scandals without some murder mixed in? Hans Reiser was a successful software developer who worked at prestigious companies such as IBM before starting his own company, Namesys, a pioneer in computing filing systems. But Hans’ career was cut short in 2006 when his wife went missing and he became the prime suspect.
In one of the most bizarre murder trials in history, Hans’ attorney infamously used a “geek defense.” So what if his neighbors saw him remove seats from his car or hose down the inside—geeks have all kinds of quirks and do weird things, right?
Yeah, the jury didn’t buy it, either.
Hans was convicted of first-degree murder, but when he finally fessed up to knowing where the body was buried, his sentence was reduced to 15 years. In 2012, Hans was ordered to pay $60 million to his children for the wrongful death of their mother. In another odd twist, he acted as his own attorney and claimed he’d killed her to protect them.
Facebook's Blamed for Inciting Genocide
Key players: Facebook, Myanmar military personnel, Rohingya Muslims
The scandal: Hate speech spread on Facebook is a catalyst for unspeakable acts.
In another dark Facebook moment, the social media site was blamed for helping to cause the genocide of Rohingya Muslims in Myanmar. In hate-filled posts, Myanmar military personnel posed as everyday people and shared lies about the Muslim culture and its people. The goal was to take advantage of Facebook’s expansive reach in Myanmar, where many users take what they see at face value, and it worked: The anti-Rohingya propaganda was blamed for inciting rape, murder, and the largest forced human migration in recent history.
While Facebook would eventually apologize and disable accounts, the incident sparked international human rights concerns—and with the current state of affairs in Myanmar after the recent coup, people are worried history will continue to repeat itself.
The Biggest Fraud in a Generation Rocks Wall Street
Key players: Bernie Ebbers, Worldcom
The scandal: A top long-distance phone company is called out for committing fraud.
In 2000, WorldCom was the second-largest U.S. long-distance phone company. (You know, back when people actually used landlines.) Then, in 2002, the company filed for bankruptcy. The reason? Company executives had practiced some shady accounting, inflating assets by an astounding $11 billion.
Their actions constituted one of the most shocking cases of fraud to hit Wall Street in a generation. Hundreds of thousands of jobs were lost and retirement savings disappeared.
In the pre-Bernie Madoff era, it was a very big deal. In this case, another Bernie (Ebbers) was convicted of conspiracy and securities fraud and sentenced to 25 years in prison.
Apple is Ordered to Pay Back Taxes
Key players: Apple Ireland, European Commission
The scandal: Apple’s tax breaks in Ireland are ruled illegal—until they’re not.
Another Apple incident occurred in 2016 when the European Union ordered the company to pay back over $14.5 billion to Ireland. For decades, Apple used Ireland as its European home base, thanks in part to the substanstial tax breaks the country offered. However, a large-scale investigation by the European Commission concluded that Apple was getting special treatment and needed to return the money.
Apple fired back, claiming to “rethink” operations in Europe. Meanwhile, Ireland was caught in the middle, wanting to side with the Americans but worried about upsetting its European neighbors.
Apple appealed the decision and The General Court in Luxembourg (Europe’s second-highest court) ruled in favor of the California company, mostly due to a lack of evidence.
The saga still isn’t over, though, as appeals to the case remain tied up in the courts. This one may win the prize for the most drawn-out tech scandal in modern history.
Microsoft is Robbed of Millions in Digital Currency
Key players: Volodymyr Kvashuk, Microsoft
The scandal: A software engineer helps himself to $10 million of Microsoft’s money.
Since Apple and Google have been so prominently featured, it’s only right that we give Microsoft its due.
In February 2020, a Microsoft software engineer was convicted of stealing $10 million worth of digital currency from the company. In his two years at the company, Volodymyr Kvashuk swiped items like online gift cards, then resold them for bitcoin. He reportedly bought a Tesla and fancy lakefront house for $1.6 million with his illicit earnings.
Alas, the gig was soon up: Kvashuk was ultimately caught and sentenced to nine years in prison.
Twitter Gets Hacked
Key players: Twitter, A-list personalities, a teenage hacker
The scandal: A bitcoin scam takes the Twitter elite by storm.
In July of 2020, top-tier tweeters like Elon Musk, Bill Gates, and Barack Obama were targeted in Twitter’s biggest cyberattack to date. Over 100 accounts were hacked in conjunction with a bitcoin scam.
The news caused widespread panic for the company and its users, as doubts about the platform’s security took center stage. But here’s the twist: What experts suspected was the work of an experienced cyber mastermind was actually chalked up to a 17-year-old boy from Florida. He was later convicted of three years in prison.