Here’s a list of 10 negotiation failures drawn from recent negotiations, including deals that were over before they started and those that proved disastrous after the ink had dried. These cautionary tales offer ample lessons to business negotiators.
- Plea negotiations in the college admissions scandal. In spring 2019, 33 parents were accused in a broader college admissions scandal of conspiring to have their children admitted fraudulently to top U.S. universities. Some parents, such as actress Felicity Huffman, pled guilty to mail fraud and got off with relatively light sentences. Others, including actress Lori Loughlin and her husband, fashion designer J. Mossimo Giannulli, bet on a court victory and ended up with more serious charges and longer sentences. When facing an uncertain BATNA, or best alternative to a negotiated agreement, negotiators tend to be overly optimistic that unlikely alternatives to the current deal will materialize, research shows.
- Apple’s price-fixing defeat. In 2007, unhappy with Amazon’s low, flat price of $9.99 for e-books, five major U.S. publishers negotiated a new business model for e-book pricing with Apple, which was preparing to launch the iPad. Under the new model, which allowed the publishers to set their own e-book prices in exchange for giving Apple a 30% sales commission, e-book prices rose across the industry. In July 2013, a U.S. district judge ruled that Apple and the publishers had engaged in a price-fixing conspiracy. The story reminds us of the importance of thinking about the impact of our negotiations on parties away from the table.
- Amazon’s HQ2 stunt. Amazon drummed up plenty of PR in fall 2017 when it enticed more than 200 North American cities and regions to compete to host its second headquarters, dubbed HQ2. But in November 2018, that PR turned negative when Amazon revealed it had decided to split HQ2 between New York City and Arlington, Va., where it already has a strong presence. Many called the auction a farce aimed at attracting privileged data from applicants, and the $2 billion in tax breaks New York and Virginia promised left local politicians and residents crying foul. Amazon called off the New York deal amid the uproar.
- The FTC-Facebook settlement. In July 2019, the U.S. Federal Trade Commission (FTC) voted to impose a roughly $5 billion fine on Facebook for mishandling its users’ personal data. Critics said the settlement didn’t go far enough to ensure that Facebook wouldn’t repeat its mistakes. The agreement highlights the difficulty of negotiating with a counterpart that has abundant financial resources—and suggests the importance of drawing on other sources of leverage, such as information about your counterpart’s BATNA.
- Renault and Fiat Chrysler fail to merge. For both French automaker Renault and Italian-American automaker Fiat Chrysler, the benefits of a merger appeared obvious in May 2019. The combined company would become the world’s third-largest auto manufacturer by volume, give Renault access to new international markets, and save both sides billions through shared cost savings. Yet despite such apparent synergies, the negotiations flamed out. Why? The parties failed to adequately account for the interests and concerns of others with a stake in the deal, namely the government of France and Japanese automaker Nissan. By year’s end, Fiat Chrysler had moved on to a merger with Peugeot.
- A quid pro quo? In August 2019, a whistleblower filed a complaint stating that then-president Donald Trump had asked Volodymyr Zelensky, recently elected president of Ukraine, to investigate Joe Biden (then the Democratic presidential candidate) and his son. News of the complaint led to the revelation that Trump withheld promised U.S. military aid from Ukraine while his lawyer, Rudy Giuliani, pressured the Ukraine government to support various conspiracy theories concerning U.S. politics. The scandal popularized the use of the legal term quid pro quo—“something for something”—to describe unethical attempts to trade favors.
- Elon Musk’s Twitter debacle. Most of 2022 was consumed with the question of whether Tesla CEO Elon Musk would buy Twitter. After he finally did, in October, the rest of the year was taken up with the question of whether Twitter would survive Musk. The leader’s disastrous postdeal moves—from laying off key personnel to crowdsourcing pivotal business decisions in Twitter polls—shine a spotlight on a common negotiation mistake: focusing more on closing a deal than on what will happen when it does.
- The chaotic quest for PPE. As Covid-19 descended on the United States in early 2020, state governors and Congress urged the White House to put the Federal Emergency Management Agency (FEMA) in charge of securing and distributing much-needed personal protective equipment (PPE), coronavirus tests, and ventilators. But President Donald Trump encouraged the states to try to buy and distribute supplies themselves instead. The quest for desperately needed supplies and equipment turned into a chaotic free-for-all—a deadly and devastating illustration of destructive competition in negotiation.
- As migration accelerates, negotiations fail. Migration swelled worldwide in 2021, exacerbated by the pandemic and climate change, but government negotiations to address the challenge have been half-hearted. In December, after the tragic deaths of at least 27 migrants in the English Channel, British prime minister Boris Johnson and French president Emmanuel Macron blamed each other rather than committing to working together on the issue. The same month, the Biden administration pulled out of negotiations to make financial restitution to about 5,500 migrant families harmed by a Trump-era policy that separated parents and children at the U.S. border with Mexico.
- Vaccine distribution failures. In 2020, negotiating Covid-19 vaccine purchases on behalf of the European Union, the European Commission spent precious time haggling with vaccine manufacturers for a good deal. The result was a slow vaccine rollout relative to that of the United States, Great Britain, and Israel. More broadly, these and other wealthy nations failed to jointly negotiate an orderly and comprehensive rollout of Covid-19 vaccines worldwide. A nationalist approach to vaccine dealmaking and distribution likely contributed to new Covid-19 variants springing up where vaccines were in short supply.
What other negotiation failure would you add to our list?
Originally published in 2014 and updated frequently.