Year in Review: Biggest Tech Scandals in 2016

Relax, everyone: 2016 is almost over.

It’s been quite a year in tech, one that saw exploding smartphones, several lawsuits, and some really juicy scandals. Startups have crumbled and been reborn, many millions of dollars have been lost and gained, and quite a few of us had to change our passwords.

It’s doubtful that 2017 can beat it.

What follows are the biggest scandals in the tech industry over the course of the last year. Grab some popcorn, maybe.

February: The CEO of high-flying HR startup Zenefits suddenly resigns after the company missed its revenue projections and ran into trouble with the law.

February: The CEO of high-flying HR startup Zenefits suddenly resigns after the company missed its revenue projections and ran into trouble with the law.


In February, Zenefits hit a breaking point. Its cofounder and CEO, Parker Conrad, suddenly resigned amid reports that the company had grown too fast and spiraled out of control.

The HR company, which makes cloud-based software to manage employees, was allegedly selling insurance without a license in several states, including Arizona, Delaware, Minnesota, New Jersey, South Carolina, Tennessee. Just a few weeks prior, it came to light that the startup wouldn’t be able to meet its internal target of $100 million in revenue under contract by the end of January.

The company had another problem: staffers frequently partied at the office to the point that cigarettes, plastic cups full of beer, and used condoms were found in a stairwell.

Zenefits replaced Conrad with David Sacks, who aimed to clean up the company and introduce more transparency. He fired 17% of the workforce and launched a new product, Z2, this year. In November, Sacks announced that he was leaving Zenefits after 10 months at the company.

February: A Yelp employee is fired after publicly complaining that the company didn’t pay her enough to make ends meet.

February: A Yelp employee is fired after publicly complaining that the company didn't pay her enough to make ends meet.
In February, a Yelp customer service employee named Talia Jane published an open letter on Medium to Jeremy Stoppelman, Yelp’s CEO. She wrote in the letter that the company didn’t pay enough to live in San Francisco, forcing her fellow employees to take side jobs or live at home because they couldn’t pay rent or afford groceries.

Two hours after posting the letter, Talia Jane was fired from Yelp. While Stoppelman later wrote on Twitter that she was not fired for her essay, Talia Jane said at the time that she was fired for speaking out.

March: Hulk Hogan wins in the sex-tape fight against Gawker.

March: Hulk Hogan wins in the sex-tape fight against Gawker.
Hulk Hogan came out on top in a legal battle with Gawker Media.

The wrestler — whose real name is Terry Bollea — had sued Gawker for publishing a tape of him having sex with the wife of a friend in 2012. Though Gawker claimed there was news value in publishing the tape, a court ordered Gawker to pay Bollea $115 million in compensatory damages.

Tech billionaire Peter Thiel funded Bollea’s lawsuit.

By June, Gawker filed for bankruptcy and put itself up for auction, ultimately selling itself to Univision for $135 million in August. In November, Gawker settled the lawsuit with Bollea for $31 million.

March: Microsoft hires schoolgirl dancers for its Game Developers Conference after-party.

March: Microsoft hires schoolgirl dancers for its Game Developers Conference after-party.

In March, Microsoft made a move that angered some of its employees and others in the tech community: The company hired scantily clad “schoolgirl” dancers for its Game Developers Conference after-party.

Microsoft employees, particularly female employees, were outraged at the event, which seemed to reinforce stereotypes in the gaming world and the tech world as a whole.

To its credit, Microsoft immediately apologized, saying that hiring the dancers for the event was “unequivocally wrong and will not be tolerated.”

April: Trouble continues for blood-testing startup Theranos.

April: Trouble continues for blood-testing startup Theranos.

Though Theranos’ troubles began in late 2015, this was not a banner year for the blood-testing startup.

In April, the SEC opened an investigation into company regarding allegations that it had misled investors. By the summer, Theranos had lost its president and COO, Sunny Balwani, and CEO Elizabeth Holmes’ net worth went to zero, according to Forbes.

By July, Holmes was banned from the blood-testing industry for two years and the company lost a lucrative partnership deal with Walgreens, which then filed a $140 million lawsuitagainst the startup. In October, Theranos shut down all its remaining lab operations and wellness centers.

April: Snapchat launches a controversial filter in honor of Bob Marley.

April: Snapchat launches a controversial filter in honor of Bob Marley.

While trying to honor singer Bob Marley last April, Snapchat made what many people considered a tasteless error: launching a filter that gave users a darkened skin tone and a head full of dreadlocks.

In honor of April 20 — something of a special holiday for marijuana enthusiasts — the company launched a Bob Marley filter. While the company said it had worked with Marley’s estate to launch the filter in honor of his legacy and music career, fans and Snapchatters alike thought the filter was a 21st century version of blackface and reduced Marley to nothing other than a stoner icon.

May: A Tesla car is involved in a fatal crash while in Autopilot mode.

May: A Tesla car is involved in a fatal crash while in Autopilot mode.

While driving his Tesla Model S in Autopilot mode, a Florida driver was killed after a semi-truck made a left turn in front of the vehicle.

The crash was the first known self-driving car death and occurred when the Autopilot system failed to notice the white side of the tractor trailer against a bright sky. The Tesla drove under the trailer, which cut off its roof, then crashed into two fences and a pole. The car’s airbags did not deploy.

The accident is under investigation by the Florida Highway Patrol, and Autopilot’s performance is being evaluated by the National Highway Traffic Safety Administration (NHTSA).

July: Hyperloop One becomes embroiled in messy lawsuits.

July: Hyperloop One becomes embroiled in messy lawsuits.

Brogan BamBrogan, cofounder and former CTO of Hyperloop One.Thomson Reuters

Hyperloop One, the startup founded on the premise of high-speed transportation originally conceived by Elon Musk, has had a messy couple of months.

In July, cofounder and CTO Brogan BamBrogan very publicly left the company and filed a lawsuit against investor and chairman Shervin Pishevar, his brother Afshin, CEO Robert Lloyd, and vice-chairman Joseph Lonsdale. In his suit, BamBrogan claimed the Hyperloop One executives had misused funds, breached their fiduciary duty, violated California labor code, and even assaulted BamBrogan by allegedly placing a noose on his desk. Afshin Pishevar has also since left the company.

In a countersuit, Hyperloop One alleged that BamBrogan was part of a “Gang of Four” who attempted to manufacture and incite conflict “in a transparent attempt to seize control of the company.”

In November, Hyperloop One settled with the former employees, including BamBrogan, for an undisclosed amount. At the time, the employees told Business Insider that they now plan to build their own take on the Hyperloop.

August: Hampton Creek hires people to buy jars of its eggless mayo from stores.

August: Hampton Creek hires people to buy jars of its eggless mayo from stores.

It came to light in August that Hampton Creek, creator of an eggless mayo product called “Just Mayo,” tasked employees with buying jars of its product at grocery stores throughout 2014 and 2015.

The “undercover project” cost the startup $77,000 and was intended to inspect quality control and to simulate what it’s like buying the product at a grocery store.

Soon after, the US Justice Department launched a criminal investigation to determine whether Hampton Creek broke any laws with the buyback.

August: The European Union orders Apple to pay $14.5 billion in back taxes.

August: The European Union orders Apple to pay $14.5 billion in back taxes.

In August, the EU hit Apple with its largest tax penalty ever, ordering Ireland to collect $14.5 billion in taxes from Apple.

The European Commission found that Ireland granted an illegal tax benefit to Apple over the years, enabling it to pay less in taxes than other businesses — down to 0.005% in 2014.

In December, Apple decided to go to war with the EU, planning for formally launch a legal challenge in the coming days.

August: Reports surface of Samsung Galaxy Note 7 phones exploding.

August: Reports surface of Samsung Galaxy Note 7 phones exploding.

In August, scattered reports of exploding Galaxy Note 7 phones began surfacing on the internet. Soon after, Samsung delayed shipment of the phones for “quality testing.”

But by September, things had escalated. Samsung recalled all phones sold before September 15, 2016, affecting about 1 million phones. But replacement phones were no better — at least five cases of those phones also exploding were reported at the time. In October, the company announced it would end production of the Note 7 and halt all global sales. It also became illegal to take the phone on airplanes.

Jeep fire Samsung Note 7

As of December, Samsung says it is issuing a software update to any remaining Galaxy Note 7 phones, which will cause the devices to stop working.

August: VC firm Rothenberg Ventures unravels after its founder goes overboard with frivolous spending.

August: VC firm Rothenberg Ventures unravels after its founder goes overboard with frivolous spending.

In August, it came to light that Silicon Valley venture capitalist Mike Rothenberg had reportedly spent so much money that his firm began falling apart at the seams.

Reports at the time stated that several top execs left the firm, citing Rothenberg’s excessive spending on items like tickets to the Golden Globes, a birthday party for actor Chace Crawford, executive producing a video for Coldplay, a suite at the Super Bowl, and a $2,000-a-month membership with a private-jet service.

Soon after, the firm’s former chief of staff filed a proposed class-action lawsuit against the firm, alleging that the company failed to provide employees with their final paychecks.

September: Apple says “courage” led it to remove the headphone jack from its newest iPhone model.

September: Apple says "courage" led it to remove the headphone jack from its newest iPhone model.

Apple unveiled its newest iPhone model in September, and the very first iPhone to lack a traditional headphone jack.

Instead, Apple created a dongle to connect traditional headphones through the charging port, and unveiled Bluetooth wireless headphones called AirPods. It also offered an official explanation for why it removed the headphone jack from the iPhone: “Courage.”

The logic was widely mocked at the time, and there was plenty of outrage and confusion among customers, but it turns out Apple has used that reasoning before: When former CEO Steve Jobs defended his decision that the iPhone wouldn’t run Adobe Flash, he said the move was courageous.

September: A prominent venture capitalist suggests women in tech would be better off by hiding their identities online.

September: A prominent venture capitalist suggests women in tech would be better off by hiding their identities online.

John Greathouse, a partner at Rincon Venture Partners, drew the ire of the internet after writing an op-ed that suggested women in tech would be better off if only they weren’t women.

Greathouse outlined his ideas in a Wall Street Journal op-ed about how women might further their careers in the industry. His suggestion? “Women in today’s tech world should create an online presence that obscures their gender.”

After receiving blowback from the tech world on what many viewed as antiquated views on women, Greathouse issued an apology for the story via his Twitter account.

September: Yahoo confirms the hacking of at least 500 million user accounts.

September: Yahoo confirms the hacking of at least 500 million user accounts.

In September, Yahoo confirmed that more than 500 million user account credentials had been stolen from the company’s network.

In what was at the time reported as one of the largest hacks of all time — although the company has since announced a second hack that resulted in the theft of 1 billion accounts — names, email addresses, phone numbers, birthdays, hashed passwords, and some security questions and answers were stolen. Yahoo said at the time that it believed no payment card or bank account information was stolen in the hack.

The company said the hack occurred in 2014 by what it believed was “a state-sponsored actor.”

October: Soylent’s meal replacement bars make people violently ill.

October: Soylent's meal replacement bars make people violently ill.

Soylent branched out from its powdered and liquid meal replacements this year with Food Bars, a solid bar meant to replace small meals or act as a snack.

But soon after launching, reports surfaced that the bars were making people extremely ill. Several people on the Soylent subreddit and message boards complained that the bars caused hours of vomiting and diarrhea. The company recalled every batch of the bars and urged people to throw away the ones they had.

October: Reports keep piling up of “touch disease,” a screen issue affecting iPhones.

October: Reports keep piling up of "touch disease," a screen issue affecting iPhones.

By October, reports continued to mount of iPhone 6 and iPhone 6 Plus models freezing up and becoming unresponsive to touch, an issue that earned an ominous-sounding name: touch disease.

An internal issue within the iPhone causes the display on the phone to flicker and show a gray bar at the top. The phone’s screen would also become unresponsive to touch.

While Apple didn’t officially acknowledge the problem at the time, independent iPhone repair vendors and Apple Store technicians said it is easily one of the most common issues that people needed fixed. And in August and September, customers in California and Canada filed proposed class-action lawsuits over the issue.

But by November, Apple announced it would fix the issue on the iPhone 6 Plus for $149.

October: A massive cyberattack knocks out major websites across the internet.

October: A massive cyberattack knocks out major websites across the internet.

For one day, a massive cyberattack continuously knocked out access to major websites in the US and abroad.

On the morning of October 21, domain name server host Dyn suffered a DDoS attack — or distributed denial of service attack — that took out sites like Amazon, Spotify, Netflix, and Twitter. The attack continued in three waves throughout the day, taking down sites intermittently by overwhelming Dyn’s servers with useless data and repeated load requests. The attack prevented useful data like an IP address from getting through.

No group has taken responsibility for the attack.

October: Mysterious startup Magic Leap became the subject of dueling lawsuits over trade secrets and wrongful termination.

October: Mysterious startup Magic Leap became the subject of dueling lawsuits over trade secrets and wrongful termination.

Multibillion-dollar startup Magic Leap, the mysterious augmented reality company that has yet to ship its first product, became embroiled in a lawsuit in October.

Two former employees and VPs at the company, Adrian Kaehler and Gary Bradski, sued Magic Leap for wrongful termination, saying that the company had robbed them of shares in Magic Leap and had broken their employment contracts.

In turn, Magic Leap filed a countersuit, claiming that the pair had tried to steal trade secrets and wanted to rip off Magic Leap technology in order to start a new company.

The suit revealed drama and turmoil within the company and a lack of communication between the company’s Florida office and it’s offices in San Francisco.

November: Facebook is accused of proliferating fake news that could have swung the US presidential election.

November: Facebook is accused of proliferating fake news that could have swung the US presidential election.

After Donald Trump’s surprising victory in the presidential election, people were quick to blame so-called “fake news” on the internet for misinforming voters. Specifically, they blamed Facebook.

While CEO Mark Zuckerberg initially dismissed the claims as “pretty crazy,” the issue took a serious turn when a man opened fire in a Washington, D.C., pizza restaurant. A fake news story had claimed the restaurant was a home base for a child sex trafficking ring run by Hillary Clinton and her campaign chair, John Podesta.

Zuckerberg has since vowed to fight fake news, but will “focus on fighting spam, not flagging opinions.”

Google also had an issue with the spread of fake news after its autocomplete option pulled up false information and its “In the news” section on desktop search pulled up incorrect and inaccurate stories

November: Reddit's CEO edits posts by Trump supporters on the site.

After shutting down the r/Pizzagate subreddit that was proliferating conspiracy theories, Reddit CEO Steve Huffman became the subject of abuse at the hands of Donald Trump supporters.

Members of r/The_Donald, the most popular Reddit community for Trump supporters, began tagging Huffman in comments like “f*** u” and other abusive posts — Huffman later said he was being called a pedophile by users on that subreddit.

But those users began noticing that their comments had been altered, and it quickly came to light that it was Huffman himself had changed them — a sin on a website that traffics in being something of a free-speech forum for all users.

“As the CEO, I shouldn’t play such games, and it’s all fixed now. Our community team is pretty pissed at me, so I most assuredly won’t do this again,” Huffman wrote at the time.

November: An Amazon employee attempts suicide after being placed on an employee improvement plan.

November: An Amazon employee attempts suicide after being placed on an employee improvement plan.

An Amazon employee was injured after jumping off a 12-story building at Amazon’s headquarters in Seattle, shortly after being placed on an employee improvement plan — something that can lead to termination.

The employee survived the fall, but it brought up questions of Amazon’s working conditions. The subject that has been discussed frequently over the last several years, especially after a 2015 New York Times report described it as a “bruising workplace.”

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