text:
Do conference organizers make a good profit?
I was shocked to learn that the participation fee for a large annual European conference almost didn't change when the host country changed from one of the most expensive Western European countries to one of the most inexpensive Eastern European countries. I couldn't see any explanation other than the organizers making a huge profit, given that the number of participants was a few hundred and the participation fee was about 500 Euro per participant.
So, my question is: How common is it for conference organizers in academia (that is, the responsible institution and/or members of the local organizing committee) to derive a monetary profit by deliberately charging a too high participation fee and pocketing the difference between the collected participation fee and actual expenses and/or by getting a kickback from the venue or a hotel?
I'm asking about making an unduly good profit that is clearly not commensurate with the time and effort spent by the organizers - say, a profit at least a few times larger than what the time spent by the organizers is worth according to their paying rate at their institution.
To put it simply, do conference organizers in academia make good money?

Probably depends on a conference. The ones organized did not bring me a penny.

A friend of mine told me "yes". He claims the venue costs little/nothing (if you get a university to host it) and conference hotels are happy to give you big discounts. I'm not posting as an answer, however, because it's secondary information and I've never done it myself.

I'd also remove the word "fair compensation" from the question since what is "fair" is necessarily opinion-based and often quite controversial, e.g. Google for "what is fair compensation for a housewife?"

Definitely.  I used to have a colleague who started a conference to publish his own papers and fund his research.

@Allure I've edited the question to remove "fair compensation" and explain what kind of profit I am asking about

You assume they were going to make a small profit, and will now make a huge profit. Perhaps instead they were on-track to make a large loss (due to rising costs etc.) and after moving the venue to a cheaper location, are now on track to make only a small profit, even with similar fees. Perhaps this was the driving force behind the change.

How do you define most inexpensive?

@Allure OTOH the universities "conferences and venues service" or some similarly-named entity can absorb rather a lot of money.  In some cases more than paying commercial rates

@MoisheKohan Maybe even more so, this depends on field - in pure math I think it's very uncommon for organizers to get paid for organizational activities.  You may get a free trip/meals/per diem out of it, but often this is no different than what invited speakers receive.

Which organization is organizing the conference? Is it a for-profit organization, or not-for-profit? In the latter case, in principle the goal should not be to make a profit. (Of course, it may be the case that a not-for-profit organization in practice delegates the organization of the conference to a commercial company, which may well make a profit in that case.)

I don't know about these days, but I have an ex who worked for a company which organised conferences, and it sounded like the company made a lot of money out of it. They would try and convince speakers to give their talks for free, and try and drive down the cost of putting on the event, and then charge attendees as much as they possibly could. Easy money for the ones at the top. Not so much for the workers.

Some conferences move around every year (this is actually not uncommon). Was this a conference that was always in the same location? Or is it even possible it may make a slight loss when in more expensive places, but compensates when organised in eastern europe?

What's wrong with making good money? Some time ago I heard of a physicist in the UK who gave up his job to become a plumber - less work, less responsibility, more money. Do you want that kind of situation?

There are two questions here: who is involved in organizing academic conferences, and what do they get paid?

While there are certainly some people who organize conferences for profit, every reputable conference that I have ever dealt with (as either organizer or participant) has been run with the intent of keeping fees as low as possible while breaking even.
Large conferences have many costs beyond the venue:

Large conferences often have paid staff, whose salaries are a major expense.
If you are working with a society, there may be fees for publications, as well as fees to support society staff.
Hotels can be a gamble: they give you discounts, but it's often required to be linked to a block of pre-reserved rooms by a contract, and if attendees don't use all the rooms in the block, the conference will end up responsible for the cost of the rooms.
Finally, given the unpredictability of attendance, a yearly conference often banks money in more profitable years to avoid bankruptcy in years where it takes a loss (this is one of the services that societies provide as well).

Corruption such as you describe (organizers taking kickbacks or lining their own pockets) is certainly possible of course, and I am sure it happens in some cases. I would expect, however, that it is relatively rare, particularly given that conference finances are usually run through a larger organization (whether society or university) with accounting processes designed to prevent corruption   rather than via the personal finances of a poorly supervised group of organizers.

To add to this answer: What can also happen is that with the conference in a western country, the organizers can attract more (company) sponsors, which also helps to reduce the fee to the attendees.

"Large conferences often have paid staff"... or just students of some of the organizers

In your field, do academic researchers get paid for organizing conferences?  In pure math, I think this almost never happens (at least not in a direct way).

@Kimball It really depends on the scale. For most of the conferences that I deal with, it's all volunteer. But the sort that's big enough to need a convention center (rather than a hotel or university) is usually run by people who are paid to do so as part of their job.

To clarify on scale: dozens to hundreds = volunteers, multiple thousands = at least some paid staff (though there are also often volunteers / people being paid via free registration)

While I don't personally like it... I think calling maximising profit "corruption" is a bit of a stretch...

@ScottishTapWater What I'm referring to as corruption is not profit, but the unethical redirections of said profit that the OP referred to like "getting a kickback" or "pocketing the difference."

@jakebeal - Somehow I'd totally missed that when I read it... Sorry

This is a really good answer, one other reason could well be that as the conference moves around any increase in price would be seen negatively, people rarely think about the fact that the price fell when it was hosted in a lower COL area.
So keeping pricing consistant year to year may well lead to higher satisfaction than lowering it one year and raising it again the next!

@user4052054: There are often student helpers at conferences, but they are paid, too.

@sisee +1, and not uncommonly precisely by waiving their conference registration fee, as well

I organized several big conferences and my answer is no.
You would be shocked to hear the prices for a conference venue, even if the conference takes place in a university. (OK, then the university gets the money, but not the organizing group.) Venues outside a university are even more expensive.
A second important point is the catering. Assume, for example, the catering costs only 20 Euros per participant per day (which is realistic for a Western European country - not for real meals, only sandwiches, coffee, soft drinks) and there are 500 participants. Then you have 10.000 Euros per day, 30.000 euros for a three-day conference, only for a little bit of catering that people hardly notice.
Then you need a lot of helpers. The usual university staff are not enough to handle this. You need additional help, external staff you have to be paid per hour and conference days are long, let alone the days and weeks before.
In Western Europe, the invited speakers often get their travel costs reimbursed, i.e. the conference organizers must pay their flights and hotel  bills. Of course you don't want to spend a fortune on this, but if you want them to come back one day, you won't choose the cheapest hotel either ...
And last but not least, there are more costs you would not think of in the first place, e.g. for promoting the conference or the information material for the participants.
No, conference organizers do not make a fortune with a conference. Perhaps they have moved to Eastern Europe because they could not afford Western Europe any more, due to the current rise in prices.

A lot of conferences are put out by nonprofit organizations that release financial statements, so you can check yourself by looking at the numbers.
The Society for Neuroscience is the principal neuroscience professional organization. They have an annual meeting with about 30,000 attendees.
Here's their 2022 financial statement: https://www.sfn.org/-/media/SfN/Documents/NEW-SfN/About/Annual-Report/Consolidated-Financial-Statements/SFN-Consolidated-2022-FS.pdf
They report annual income related to the meeting of around $7.7 million, compared to expenses of $5.1 million. There was additionally over $4 million in membership dues, and it's likely many members sign up specifically for the meeting each year (the cost of membership is less than the difference in meeting cost for members vs nonmembers). You can see in 2021 the meeting attendence was much lower and membership was as well.
However, as a non-profit, the proceeds go to fund the society's other programs. This particular organization is also run by professional nonprofit organizers, who it should be noted likely care little about the goals of the organization and instead want their numbers to reflect good fiscal management so they can build a resume and get their next job on the field.
My assumption is that these big conferences are not the norm. Much smaller conferences take in very little revenue, are organized by volunteers rather than professionals, and likely use nearly all of their funds for conference expenses. If there are leftover funds they are likely used to fund the next meeting.

In my experience, much smaller conferences are also cheaper.  With 50 participants, the university may host directly, keeping costs down (and hidden).  With 25000 or even 1000 participants, not so much.

@gerrit Cheaper on both ends, though: I'd say the smallest form of conference I've attended have been assembled mostly out of local speakers, hosted in university classroom facilities, with a couple invited speakers, and no fee to attend. The costs are limited to travel reimbursements for the speakers and perhaps a small honorarium, but there's also no income so it's a net loss.

It's only a net loss if the knowledge exchange and networking has no value...

@gerrit Sure, I'm not arguing that those conferences don't have value, but OP is asking about it in a fiscal sense. Small conferences are typically going to cost money so whoever is putting them on must feel that's money worth spending.

@Trunk in my experience there's a discernible difference between (a) principally-academic conferences, where most of the attendees are also speakers and bidirectional information interchange is the order of the day, and (b) professional or trade conferences, where it's more of a broadcast medium and most of the attendees are there to hear the limited number of (usually high-profile) speakers.  Both have their merits (and their limitations) but the ratio of the weight of the proceedings to the number of attendees differs significantly between the two.

It depends on the conference.

participation fee for a large annual European conference almost didn't change when the host country changed from one of the most expensive Western European countries to one of the most inexpensive Eastern European countries

This isn't that unusual.  First, you need to realize that the registration fee is rarely the most significant expense of attending a conference: once you've paid for accommodation, travel and food, the registration fee is not necessarily that large, and is rarely a deciding factor in participating.
In Eastern Europe, some labs or institutes organize conferences specifically to make a profit.  "Everybody" knows this and people still go there because noblesse oblige, i.e. people recognize that some are more fortunate than others and they know the leftover profits will be used to support legitimate activities of the lab or the institute.
Nevertheless, organizing a conference (especially a large conference) actually costs a lot more than people think.  In particular, beyond the organizing committee, there might be administrative support needed to collect registration, deal with invitations, visas etc.  This staff does not necessarily work for free, especially in countries with fewer resources.
In my experience the big society conferences are the most outrageously priced as registration pays to support the expenses of the society officers, and I have no sympathy for this kind of racket.
On the other hand, what I learned from my organizing conferences and in discussion with friends who have organized conferences, is that it can difficult to understand the constraints faced by the organizers.  The overwhelming majority of organizers are doing their best, and the organizers - especially in developing or emerging countries - are more worried about loosing their reputation than loosing or making money: if the product is disappointing, it is the last time someone will show up at an event organized there.

The opportunity for achieving excessive profit is limited by market forces.
A large annual European conference is organized in the name of a specific global or European society, by an organization that's local to the venue.
The society is thus negotiating with a different local partner every year and they cannot afford the risk of damaging their brand by partnering with an incompetent or borderline corrupt organization who won't deliver on the expectations every now and then.  The society looks at more than one target country, more than one potential partner for every annual conference that's less than 3 and more than 1 years ahead (assuming that it's desirable if they can eventually announce the next year's venue to the participants of the current year's conference).
The society will have some general, rather stable requirements, both technical and economic (non-paying participants, maximum participation fees, maximum student fees, venue characteristics), based on which all interested partners eventually prepare a formal proposal, the key part of which is the budget. The society then applies selection criteria which might not be formulated in advance, but they invariably include the proposed participation fee (lower is better).  One candidate partner might offer a modern venue in an attractive city, another might be able to present a budget which appears both lean and not terribly cheap (perhaps because their university management or another local party appears to be effectively subsidizing the event, such as by charging less than the usual rate for the venue, as an investment into their own "brand" by hosting a large and prestigious conference).  Everybody wants to be invited at a discount!
Market forces:

The society has a monopoly over their own brand, but other credible parties can establish annual conferences independent of the society.
The local organizers provide only limited accountability to the society and any profit or loss (intended or unintended) is theirs, but other credible parties may get in touch with the society and start competing for organizing the conference 2 or 3 years from now (and eventually prepare their own proposals), if they know how to do so more efficiently.
The participants have the most freedom of all as they (or their sponsors) are ultimately paying the bill and there are so many conferences to choose between.

I'll conclude with two opinions for which I have no data.

Where the profits are eventually modest, the potential for any corruption (of which the local organizer, or the society, would be the victims) is also modest.

For academics who organize conferences, the career/fame/connection  benefits probably way exceed any potential monetary benefits - especially if the conference is a prestigious one.

I'd emphasize a bit more that for scientific conferences most attendees do not pay out of their own pocket but rather their funding agencies do. This level of indirection potentially reduces the corresponding pressure towards low price by the customers = attendees. As a side note, I don't have that many relevant conferences to choose from, and the choices don't have much granularity (i.e., there typically aren't 2 conferences of equal relevance but with, say, 100 EUR difference in price from which I can choose to "announce" to the organizers my preferences)

And we typically cannot book a "100 EUR less and supermarket cookies instead of nice catering" option.

@cbeleitesunhappywithSX - That's all true.  I did mention funding agencies.  But it's still a free market - there are numerous credible parties who can (and do) organize a conference according to their liking if they so choose.

It's like any other service -- they charge what people are willing to pay for the service they provide.  If the fee they charge is too high, not many conferences would use their services, and if the fee were too low, they wouldn't be able to stay in business because they wouldn't make money.  The fact that conference planners exist means that there is a happy medium.
Will they become wealthy?  I don' think so.  Conference planning is hard work, and if they managed to become wealthy, they're probably ready to retire.
That said, there are some perks to being a well reputed conference planner that might make it an attractive lifestyle for some people. For example, if you like to travel, it's probably a big plus.  While it's still work, many hotels and resorts plugged into the conference circuit will provide conference planners with free visits to come evaluate their facility.  Flights are a business expense, which can also support the desire to travel.


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Is it ethical to make an anonymous referee realize we know who he is?
A year ago we submitted a manuscript to a high-profile journal. I was a co-author. The review process for this journal is single-blind—that is, the authors do not know who the referees are, while the referees know who the authors are—and we got two referee reports, one positive and one negative. The latter seemed to have been written by someone who hadn't had time or energy to do the job properly. Using some arguments that we found rather shallow, he argued that our research findings were not significant enough to warrant publication in that journal.
Reading the negative report carefully, I noticed there a few non-standard expressions, typed them into Google, and found two of them in articles by one and the same guy, including a single-authored article, and nowhere else on the entire Internet. The guy is a prominent scientist in our field of research.
Knowing he would never want to alienate our research group, we submitted a rebuttal letter abounding in references to his articles so as to make him realize we knew who he is. To strengthen the effect, the list of references added to the revised manuscript consisted almost exclusively of papers authored or co-authored by that guy and was explicitly provided in the rebuttal letter.
We wrote our rebuttal letter politely and respectfully in order to make it look like we wanted to pay respect to him and his research achievements by citing his articles. We addressed all his criticisms in a friendly and factual way.
Our idea was that he would think, "The authors seem to know who I am, and they as a large research group are going to referee papers by my group in the future, so it's a good idea to be friendly and reasonable towards them just in case."
His second report was very short and said we had fully dispelled his concerns and properly revised the manuscript. It got accepted and published.
As time goes on, I wonder more and more about the ethical aspect of what we did. On the one hand, we used open source information to figure out who the referee is. No one told us his identity. On the other hand, we were not supposed to know.
How ethical is what we did?

P.S. I don't know whether I deserve harsh comments, but I was an undergraduate student at that time and have posted my question here in order to learn what is ethical and what isn't. I don't want to do anything unethical in the future.

I think you are vastly overestimating the fine grain of your "communication" to the reviewer.  It's just as likely that the blizzard of references to his own work flattered him, and he was happy to see all these new cites go into the revised paper.

I'm having difficulties to follow the logic here: if the reviewer is a prominent scientist, why would he be afraid to stand by his recommendation to reject of the paper, even if he was aware that the authors knew his identity?

Comments are not for extended discussion (nor for answers); this conversation has been moved to chat.

People are tending to continue to use comments here to provide their opinions on the situation, or state their view perhaps without realizing it's already been repeated in maybe 10 or 12 of the existing 13 answers. Please don't do this; you can use the chat or otherwise just upvote the answers you find useful.

Given your description it sounds like your group actively tried to intimidate the referee with veiled threats of retribution.
If this is indeed the case, then, yes, this is extremely unethical behavior.

And also - even if one's intent isn't intimidation - excessively citing works by the not-so-secret reviewer (just so that one's paper is reviewed positively through the second round) is tantamount to bribery.

Based on the way the OP worded their 'explanation' (e.g. "you know that we as a large group are going to referee many papers from your group in the future" & "Knowing he would never want to alienate our research group against him...", you know, because in science we should only give positive reviews so we don't alienate people), it's frankly clear that they explicitly intended their response as 'we would hate to see something bad happen to your little research team if you didn't see our paper in the positive light we do. That would be a real shame...".  I can't see how it's not intimidation.

"If this is indeed the case, then, yes, this is extremely unethical behavior." - that part is, and so is the (apparently intended) decision to base future reviews of the reviewer's manuscripts at least in part on the goal of retribution rather than the merits of the manuscripts themselves.

Since in a comment you state

the message we wanted to send him with such a rebuttal letter was
like, "Hey, we know who you are, and you know that we as a large group
are going to referee many papers from your group in the future. Let's
be friendly and reasonable towards each other."

I second the answer from @TimRias, you and your group have been extremely unethical. Implicitly threatening someone by suggesting "we know who you are" is reminiscent of criminal gang behavior rather than scientific collaboration.
Though you are not solely personally responsible in this case because you're acting as part of a group, you can still change your thinking in the future.
Though this behavior may make you short term gains, it may make others unwilling to collaborate with you if they perceive your behavior as "dirty" or unethical.

I've tried to preserve the very strong admonition in this answer while redirecting some of the language towards the behavior rather than the person/group.

@Bryan thanks, got it

@BryanKrause : Thanks, great job in editing both this answer and my original post. I further edited my post to better explain the situation

I didn't look at the previous versions, but in its present state it seems like this answer adds very little to the one of @TimRias.

@FedericoPoloni comments get deleted. Here is a bookmark to understand OP's group rationale behind their behavior

@BryanKrause - why would you do that? It's the people who acted in an unethical manner, it's not some corporate process that failed. This was a conscious decision to act in a certain way, and your edit becaislly destroys the original answer and the seriousness with which it paints the OP and their group.

@Davor OP was just an undergraduate student in the group, not the group leader. Blaming the OP personally for what the group chose to do is thus likely unwarranted.

"this behavior may make you short term gains, it may make others unwilling to collaborate with you if they perceive your behavior as "dirty" or unethical." the real issue is the short term gains are present, this behavior is not perceived as "dirty" or unethical (see OP's question, an entire group not realizing that) => there are long term gains to be obtained.
I stand by my original wording, if such a behavior (threatening a lesser powerful reviewer) is not perceived as unethical, it shows a total lack of empathy towards a peer and therefore a trait defining psycopathic behavior.

@Davor The original was flagged by several people as against SE's Code of Conduct. It's possible to admonish without insulting, and I would argue far more productive that way. If you want to actually encourage someone to alter their behavior I wouldn't start with insults - that might be more popular with a third party but it doesn't get the message through to the target audience.

@BryanKrause please remember the goal of SE is to provide a general answer, not an answer to specific cases. I used strong wording because of that: the target audience is someone not perceiving how much unethical is such a behavior (but I am fine with the edit and apologize again, unfortunately I cannot address the topic in a serene way because the disrespect towards peers due to an idiotic competition towards positions and funding is exactly the core problem of academia... I mean, even in the for-profit world people are, median&3-sigma speaking, more human!).

"reminiscent of criminal gang behavior".  100%.  "Nice research papers ya' got here.  Be a shame if anything happened to them."

Reviewing based on criteria other than an attempt at objectivity isn't good for the field overall, either.  Delaying publication of good science because of a grudge against the author would go against the scientific method.

@PeterCordes absolutely agree. The underlying thinking "the reviewer is doing an unfair review, let's correct his wrongdoing by showing them the possible retaliatory wrongdoing" is the standard entry point for the self-righteous people, correcting wrongdoings with other wrongdoing (although I think the group leader had no intentions of correcting wrongdoings, they just wanted the paper published with the least effort possible).

Even though you state that the cited papers were not irrelevant to the contents of your paper, citing them just to let a reviewer know you found out their identity (and implicitly nudging them towards voting "accept" by doing so) is the unethical thing here. Not the fact that you made them aware that you know their identity.
You should only cite papers that are relevant to your publication, and the only reason for chosing papers to cite should be that they are as relevant as possible and never who the author is.

I think some of the responses here missed the fact that it was only their rebuttal to the review that cited the sources. I don't think those sources were then added to the actual submitted paper, unless I am reading the OP's post incorrectly.

@Aurelius "To strengthen the effect, the list of references added to the revised manuscript... " doesn't seem like the references were (only) added to the letter to me.

I thought that some answers were very harsh, until I read one of your comments about the rationale for the form of your rebuttal: to tell between the lines to the reviewer

Hey, we know who you are, and you know that we as a large group are going to referee many papers from your group in the future. Let's be friendly and reasonable towards each other.

This looks very much like the beginning of a cartel and it is not pretty.

Yes, I am a bit disturbed to read comments like this.

Should the reviewer expect to receive a horse's head?

@DawoodibnKareem - that's pretty much what already happened, is it not?

It is always better to keep up the pretence that you do not know who the referee is and argue strictly on the basis of sound arguments and objective facts, as best you can.
The "we are a large group and you will need us as friends in the future" argument, can be regarded as a veiled threat. Gangsters tend to say this sort of thing, too. As a reviewer, and when dealing with this sort of author group, I always leave a few breadcrumbs(*) that identify me as... someone else!
And sure enough, these someone else's subsequently received overt threats from the authors, justifying my camouflage.
(*) Turns of phrase, references to previous work, etc.

Ah, well, maybe not so good to leave false trails that are clear. A "clear" trail that leads nowhere would be better.

"And sure enough, these someone else's subsequently received overt threats from the authors, justifying my camouflage." Well, it was justified if you ignore the effect on those "someone else's".

Our group leader says that referees usually don't drop criticisms of [the "research findings were not significant enough" kind] like that.

Speaking from experience (having seen hundreds of reviewer reports before), this is actually not that uncommon. Yes, sometimes the reviewer will maintain that the paper is not significant enough, but quite a few reviewers change their mind. It's possible your response was convincing, or it was simply a peer pressure effect (they saw that the second reviewer was happy with the paper, in which case they felt they shouldn't hold it up). You cite a third possibility, which is that the reviewer saw that your paper now cites lots of their articles so they are happy to accept it. It's possible, but from the outside, there's no way to tell.
I think the more important questions are: was the reviewer's criticism correct (viewed another way, they are saying that you did not link your work to the literature at large adequately)? Can you truthfully say you addressed that concern? Would you have cited the reviewer's articles if you had been aware of them, to address this concern? If you can answer all these questions with 'yes', then I don't think there's an ethical issue. After all, the reviewer is always going to be most familiar with their own work, and if their work can have an impact on yours, it's normal to ask you to look at their work - and that will necessarily involve citing their papers.

Edit:  A moderator changed the question.

Reading our rebuttal letter, the referee must have realized we knew who he is.

I am skeptical that you know who the reviewer is, but if you do, it is not a problem to know it or to inform the referee that you know.
It is a problem if you incentivize the reviewer to write a positive review, either explicitly or implicitly. For example, do not cite irrelevant papers written by the reviewer.

Just clarifying, there is no doubt that the referee was that person. No one else on Earth uses those expressions. Given all the evidence (coinciding expressions, writing style, level of expertise, raised issues, etc.), we were absolute sure there couldn't be a mistake.

The papers we cited were not irrelevant, but we deliberately chose his papers to cite. By doing so, we wanted to make it very clear to him we knew it was him.

@Mitsuko Why did you want to make clear to him you knew it was him?

@BryanKrause : We had found some of his original comments rather unreasonable or shallow, and the message we wanted to send him with such a rebuttal letter was like, "Hey, we know who you are, and you know that we as a large group are going to referee many papers from your group in the future. Let's be friendly and reasonable towards each other."

@Mitsuko "The papers we cited were not irrelevant, but we deliberately chose his papers to cite. By doing so, we wanted to make it very clear to him we knew it was him." Frankly, this sounds like a bizarre goal and a strange and ineffective means to achieve that goal. At least looking at the situation from the outside, a much more plausible explanation for this behavior is that your colleagues wanted to increase their chances of getting the paper accepted by flattering/bribing the (presumed) referee with many references to their work.

@Mitsuko Do not incentivize the reviewer.  That includes reminding them that you might review their papers.

Why is "Edit: A moderator changed the question." necessary? Seems like noise to me.

@BryanKrause You substantially changed the meaning of the question so that my answer was less relevant.  Notice the asker has partially reverted those changes.  I am not willing to update answers in response to repeated question editing.  I also do not enjoy comments from people who do not realize the question changed.

Your edit was excessive, assuming the asker did not request it, but I do not care.  Moderators should do less.

@AnonymousPhysicist Excuse me? I edited in OP's own comment text. Other changes were merely circumstantial to make those sentences flow with the existing question. This is pretty standard editing behavior and OP commented that they were happy with it.

@BryanKrause If you edited one of my comments into one of my answers, I would consider that inappropriate.  I use comments for a reason.  I did not see the OPs thoughts on the question edit.

@AnonymousPhysicist Then you are using the site wrong, though to be fair, many others use comments wrong according to site design, too, including myself. Questions and Answers aren't yours alone, they're meant to be edited by others; Comments are meant to be temporary and not meant to indefinitely contain useful information pertinent to the question or answer. If someone comments to request clarification, the correct response is to edit that information into the post. If someone responds in a comment, instead, it's fine for anyone to edit that information in; this happens regularly.

Note that there is not a special role for moderators in this, all users with the edit privilege can participate in editing questions and answers. Moderators typically only need to step in with moderator authority when "edit wars" develop. See also https://meta.stackexchange.com/questions/120576/why-can-any-user-edit-any-other-users-question-or-answer and https://meta.stackexchange.com/questions/21788/how-does-editing-work

@BryanKrause I knew all that; you seem to be repeatedly, intentionally misinterpreting what I posted in an effort to start an argument.  A moderator should know better.  A moderator needs to use restraint.

I agree with the edit in the question here. It's OP's own words, and the edit wasn't excessive. The first line in this answer about "A moderator changed the question" is unnecessarily hostile.

Let's put this in another context:
My daughter was failing a high school math class. I found out that the teacher's son is going to my university, majoring in a department I co-chair so I made numerous references to his son so that he knew if looked out for my daughter, I would look out for his son. Was this unethical?
YES. Yes, it is unethical to subvert the anonymous ref system and do exactly what it was designed to prevent.

You submitted your manuscript to a journal with single-blind reviews. This means that the reviewer is ensured by the journal that their review will remain anonymous, even if they know who the authors of the manuscript are. While this creates an imbalance of anonymity between authors and reviewers, this is the mode of operation that the editors have decided to be in the best interest for the journal. By submitting to this journal, you accept these terms.
You (=the OP) tried to learn the identity of the reviewer by googling for revealing passages. This means that you didn't accept the terms that the journal editors set for journal submissions, i.e. that authors of a submission will not know who the reviewers were. It's unethical to violate the terms of a journal as an author without good reason and without informing the editor.
If you only googled for the revealing passages to satiate your curiosity, I'd consider this a rather minor violation after all. It's not unheard of that authors have a good idea who the reviewers are in single-blind reviews, and it's not unheard of that reviewers may suspect the author's identity in a double-blind review. Sometimes, the group of people working on a specific topic is just small. For as long as this doesn't affect the process (i.e. for as long as the review is not biased because the reviewer suspects that they know who the authors are, and for as long as the authors don't react differently to the comments because they know who the reviewers are), I don't think it's a huge deal.
But your (=the group of authors) reaction to the reviewer comments did change based on the breach of anonymity that you (=the OP) deliberately committed. Not only did you tailor your response based on the information that you obtained about the identity of the reviewer so that they would be satisfied by your response, you also constructed your response in order to manipulate the reviewer's response in a certain way. This manipulation not only affected the handling of your manuscript, you intended your manipulation to be understood to have a potential effect that extends into the future, as it may impact future manuscripts submitted by the reviewer.
It's somewhat unethical to break the anonymity of the reviewer. It's even more unethical to use the this information to increase the chance of having your manuscript accepted. And it's immensely unethical to use the this information as a threat to future submissions by the reviewer.

Sorry, but this definitely isn't what the word "doxx" means. It means to publicly reveal identifying information about the actual identity of some internet persona. No-one publicly revealed anything here.

@AdamPřenosil: I thought for a moment whether I should use "doxx". And given that the OP revealed the identifying information about the reviewer to the other authors, I decided to be fine with that. YMMV.

I'd support the use of "doxx" (sp.?) here, although it's not as immediately dangerous as getting the SWAT team called. It has the same (inappropriate) function.

@AdamPřenosil: The high number of upvotes that your comment received shows that there are several readers who didn't like my choice of words here. I've changed the last paragraph accordingly.

@paul garrett I think you're confusing doxxing with swatting. The latter is not a subset of the former.

The answer is good, regardless of whether we call it doxxing or not. The point is intentional circumventing the rules of blind review.

First of all I commend your desire to learn from your mistakes. That takes courage and shows the right attitude. I agree with others that the behavior you described on your part was highly unethical regardless of whether it was ultimately the reason your paper was accepted. A good test for this sort of question is to put yourself in the reviewer’s place: how would you have felt if you had been trying to give an honest review, confident in the fact that you had the freedom to be honest because your review was anonymous, only to receive a rebuttal that passive-aggressively outed you in a way bordering on creepy, appearing to send a very strong “you’d better accept this if you know what’s good for you” message? I’m guessing you would feel wronged. I’m not saying this to beat you up, just to suggest a helpful tool to use in situations like this, preferably before taking the action. The tool only applies in one direction of course—just because you’d be ok with someone doing something unethical to you doesn’t make it ok for you to do it, but it can help you see the negative impact of your own actions on someone else and better understand that it is wrong.

Making any effort to find out the identity of a referee is unethical.  Sometimes you may already have a good guess or know who a referee is without doing anything; this is unavoidable.  Otherwise, you should avoid knowing who the referee is.
Typing non-standard expressions from the report into Google was already unethical.  There is no way to recover from that.

As pointed out in the other answers, what happened was unethical. Whenever you feel that sticking to the rules would put you at an unfair disadvantage because the referee is not sticking to the rules, you should address this problem to the editor instead of trying to get even by violating rules yourself.
Your response to the referee report is sent to the editor, there is room there to make comments that will not be sent to the referees. If you instead act in a way that amounts to manipulating the referee process, the editor may see what is going on and then intervene by rejecting your article. The referee may also contact the editor to attend the editor about what is going on.

To reiterate other good answers, for clarity:
NO
N O
Don't do this kind of thing. Whether or not you mean to make a threat, it can easily be interpreted as a threat.
What you say is certainly true, that other people need to cultivate your good-will, or at least be confident that you will behave reasonably toward them... that is more to the point. But, wait, shouldn't you behave ethically regardless of how others behave?
Although I am indeed aware of a degree of gangsterism in academe, I'd not recommend people allowing themselves to be sucked into thinking in those terms. Even if there is much visible evidence of gangsterism, if one thinks in those terms, and makes choices based on that, it'll be bad.

Your answer is as right as it gets, but are you sure that compromising with gangsterism within academe can always be avoided? Would you rule out that, in certain realms of scientific research, murky arguments and selective data-processing have become foundational, so that's practically impossible to have a a career without compromising one's scientific integrity?

@AndreaAlciato, I've mostly been surprised ... over and over ... that some things are even more corrupt than I'd already thought. Dunno... sigh...

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text:
Is there anything wrong with letting people know I am anonymously refereeing their paper?
I've been assigned as an anonymous referee to review a paper submitted to a prestigious journal by coworkers of a friend of mine and have told him about it without mentioning the authors' names. My friend's reaction was "wow," and he is now pushing me to reveal to him whose paper I am refereeing. The department at which he works is large, so he can't really make a good guess on his own. He says that he knows all his coworkers at the department personally and would really love to use this unique opportunity to help establish a connection between me and them.
Of course, I'd love to chat with them about their research and expand my connections, especially as one of the authors is a well-known professor, but I'm unsure whether it's okay to let the authors know, through my friend, that I am a referee of their paper. I've seen no policy against this, but I'm afraid it might be just not okay.
As an early-career researcher I'd really appreciate any input from users of this SE as to how to navigate this situation.

Additional info: While I like the paper, it is clearly not acceptable to this high-profile journal, and I have to write that in my review. The first author is a young postdoc, and he obviously just tried his luck with this journal. So, there is no way that the relationship with my friend or any possible contact with the authors can affect my recommendation regarding this paper.

Update 2: The answers strongly suggest that revealing my identity as a reviewer is a terrible idea. What about doing this after the editor makes a final decision about the paper? Would it be okay at that point?

Update 3: After reading the answers and the comments, I told my friend I can't reveal any further information or get engaged in any contact with the authors in the context of refereeing the paper. Thanks everyone for helping me choose the right thing to do.

Related, you might be interested: https://academia.stackexchange.com/questions/122461/reviewer-signs-name-on-review-should-the-editor-censor

Interestingly you asked a somewhat related question a while ago about "letting an anonymous referee know we know who they are". The answers there might have guided you: https://academia.stackexchange.com/questions/186660/is-it-ethical-to-make-an-anonymous-referee-realize-we-know-who-he-is

Please don't use edits to add additional questions.  Instead, ask a new question (using the 'Ask Question' button) for any follow-up questions that might arise.  We request that you ask only one question per post.

Your questions need a bit of background, which country are you in? the perception of peer review ethics is too different from the median of Aca:SE to be so only by chance in your group.

@EarlGrey My country of origin is Japan but I am currently in Europe

You should absolutely not do this. It is a violation of the confidential peer review process.
Wait until after the paper is published to contact them. I would suggest not revealing your role as a reviewer.
See also:

Are the referees of a journal allowed to reveal the title of the papers they review after the review process?
May I discuss a paper I have only seen as a referee?

Also, carefully consider if you have a real or apparent conflict of interest as a reviewer? Is your relationship with your friend clouding your judgement with regards to the paper? Ask yourself the tough questions. It's not too late to tell the editor that you have a conflict.

Agreed. Don't reveal yourself except after the reviews are finished and only through the editor. Otherwise your review is questioned for its validity.

I don't think there's any conflict of interest. While I like the paper, it is clearly not suitable for this high-profile journal, and I have to write that in my review. The first author is a young postdoc, and he obviously just tried his luck with this journal :)

@Mitsuko With the proliferation of pre-prints, if there is one, after the current submission is adjudicated, you could contact them using that as an excuse. But again, I would recommend not revealing your identity as a reviewer.

@Ian Unfortunately the authors have not posted any preprint

I never thought about this before, but why would it be bad to reveal after the review that you were the reviewer? If anything one could argue that that information should be public, because then the impartiality of the reviewers could be checked and judged. Only reason for not sharing that is that a culture could develop where reviewers would socially get 'rewarded' for accepting papers (although that would get balanced out by the judgement of other peers).

@DavidMulder Because some people are unreasonable to say the least, and unhinged to say the most. Maybe not now, but what about later? Do you really want to put your name to some perceived "slight" (again: some people are unreasonable). Just a big no-no. There is plenty enough pressure in academia that whatever you may think you know about a person now may not apply anymore a decade or two later.

@Kubahasn'tforgottenMonica Just to be clear, the 'should' in my comment was referring exclusively to the case of a successful publication, although with 21 hours of more thinking about the topic I realize that would also deanonymize any comments requesting specific improvements, so that would indeed be problematic. Still leaves the case where a reviewer would want to disclose it themselves if they felt the article was amazing~

@DavidMulder: if the paper is amazing, it will be published. The reviewer can then wait until it is out, and contact the authors about the amazing online-first paper they just read. No need to violate reviewer anonymity at all.

(+1) but I'd have worded the "do not reveal even after publication" more strongly. It is not a suggestion, but (at least for the journals I'm familiar with) a requirement. The "non-dislosure-agreement" one agrees to at the start of the reviewing process does not end with publication (or final rejection).

@cbeleitesunhappywithSX Point was why that would be a bad thing in that specific case. "Reviewer anonymity" isn't some sacred rule. It's a thing that serves a specific purpose.

@cbeleitesunhappywithSX What NDA? I've never had to sign anything when refereeing. I mean, what possible NDA terms could be binding on your unpaid work for a journal? What could be their punishment? You don't get to do any more unpaid work for them? Why would anyone sign an NDA for the exciting opportunity to work for free?

@DavidA.Craven: the journals I've been reviewing for had me accept terms (possibly called reviewer guidelines), among them to not disclose confidential information, including not to reveal my identity as reviewer to the authors, and to keep the manuscript and reviews confidential. I never had to sign as in snail-mail a signature on paper, but I've certainly clicked "I agree" buttons.

@DavidMulder: sure it's a tool. However, IMHO the possible culture you mention is an important point - I rubbed your back - you rub my back is a mechanism that is well recognized e.g. in corruption.

So, there is no way that the relationship with my friend or any possible contact with the authors can affect my recommendation regarding this paper.

In academic ethics, we frequently talk about conflicts of interest. If you dissect that phrase a bit, it means exactly what it literally states: interests that conflict. It is not necessary for the other interest to affect your decision for there to be a conflict. Said another way, we don't typically let people decide for themselves that their conflicted interests don't matter: even appearance of impropriety is damaging to the trust in the system. Here you have a conflict between your interest as an impartial reviewer of peer research and your interest as a friend and someone trying to network.
By revealing your identity as a reviewer you may create an even more problematic situation for everyone else involved as well. The authors might think that they need to do you (or your friend) favors to get their paper accepted, and revealing your identity is a hint that they should do this. When their paper is rejected, they may think that they didn't do enough favors. Is that a position you want to put them in? Is that a way you want to be perceived in your community?
I'll add that while it's not clear what exactly you said about this paper to your friend, if you've divulged any of its content you have also already breached the ethics of confidentiality; for the friend to be "wowed" by it I'm assuming that you did. I would expect these authors to be very offended (even if they would not say so to you directly) that you shared their submission and broke that confidentiality.

I didn't tell my friend what the paper is about. Otherwise he would have already figured out who the authors are. I only told him that I got a paper by his coworkers from his department to referee for that particular journal.

@Mitsuko That's good. It still seems like you may have outed yourself; even though the department is large, if anyone has recently submitted a paper to that specific journal then they could be easily guessed; your area of expertise probably narrows it down a bit already. You should not talk so much about the papers you are reviewing.

I think it's better to never reveal that you were a reviewer, regardless of the benefits that do exist.
Namely, if/when people start expecting reviewers to contact them (even if only through the editor), this starts skewing the review process, in the sense that reviewers may start feeling some pressure to review in a way that will be happier to present semi-publicly later. That kind of thing.
Wait till you see a preprint, at least, to communicate with the authors.
I know, this may seem strained, but it's one of these "(potential) unexpected consequences" situations.

Suppose A submits a paper and B is referee.
If B reveals that they are the referee, it is possible that A feels they must "reciprocate".  (I said possible, not definite.)  That is:
If B's review is negative, then A may want to "retaliate" in the future, giving a negative review to a paper of B.
If B's review is positive, then A may--out of "gratitude"--want to give B a positive review in the future.
Remaining anonymous helps minimize such improper influence.

The answers are: no, no, no and no. Very bad idea. Basically, in the ideal world, a paper you review does not exist, except in the knowledge of the authors and in the Platonic heaven of the abstract "editor" and "reviewer".
I agree with most responses which elucidate the practical consequences, but my response is almost abstract: the peer review process, in its purest form, should be about the authors submitting their paper to a maximally competent, impartial, disinterested judgement.
The world of your reviews should ideally be completely separate from the netherworlds of real interests. This is, of course, hard to achieve, but you should nevertheless try.
In this view, the reviewer-OP is a separate person from OP in normal life. In the ideal world, reviewer-OP will never reveal anything to anybody (except the people involved in the review process) about the review and never let anything external (except their expertise) influence the review process.
If arguing via such an abstract obligation does not convince you, many other responses make clear why violating it is bad idea, even in the real world.

Being a reviewer put you in some kind of power position, so it is not anymore a balanced relationship. It is not as imbalanced as a professor getting in love with a student they have to judge at their exam, but it is going in that direction.
There are various conflicts of interest, and the emotional conflict of interest is one of them. On one hand, you are now under psychological pressure, you put yourself in this weird situation and you do not know what to do, even going to ask random strangers on the internet about "what is best".
On the other hand, would you like to have people from your department reviewing your paper? Would you like people from your department rejecting your paper after 2 round of reviews, when you see them going out enjoiyng beers with your friends while you are spending time reviewing the n-th time that paper?

Of course, I'd love to chat with them about their research and expand
my connections,

On one hand, this is a good thing to be do done, independently of you being a reviewer of the paper.
If, on the other hand, you would love to chat with them about their research because you are reading a paper under review, I suggest you to spend more time reading papers and blogs and going to as much conferences and workshops as possible: this way you can read peer-reviewed papers (so at least the macroscopic errors should have been filtered out) and talk with other people and expand your connections.
My 2 cents: contact the editor, make clear that you are unfortunately unavailable to review this paper. By saying that the issue you have is conflict of interest is the reason, that you did not fully notice it before is a good way to save your face and be kept in the reviewer lists of this editor/prestigious journal.
If you want to know another efficient and interesting way to expand your connections, this another way is applying for fundings and being the responsible person of writing the proposals.

Others have pointed out already that the point of anonymous reviews is to get independent opinions on the manuscript. Independent meaning no conflict of interest.
I find it helpful to see this as (or like) an anti-corruption strategy:

It is necessary to be objective and unbiased. But that alone is not sufficient: in addition, others must trust in your objectivity.  Thus, you need to avoid anything that may be perceived by others as endangering your objectivity.

Revealing your identity as reviewer even after the paper is published* has the potential to still create a conflict of interest since it may help to create an atmosphere where "gifts" are exchanged (e.g. they may reciprocate with a nice review of your paper, and so on) with everyone knowing but noone necessarily speaking about this. That is a classic working scheme of corruption.
* if the paper was rejected, or your review was perceived as a bad one (e.g. not constructively criticizing), you may suffer retaliation. Knowing this creates a conflict of interest for your, and one that referee anonymity is meant to protect you from.
For comparison, where I am, e.g. the rules for public officials not accepting gifts nor doing anything that could be perceived as being open to receive gifts spell out that this still holds not only till after an administrative decision/the interaction in question is finished (e.g. final exam taken for school/university examiners) but even after they leave that job/are pensioned. It would be too easy to create an expectation that thank-you gifts will be delivered in accordance to any legally imposed "waiting period".

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text:
Who should write my "Teaching Focused" recommendation letter?
In grad school, I taught a couple classes and got good student evals. But no faculty member was really involved in overseeing my instruction.
Now I'm applying to faculty jobs, and I see a few of them ask for recommendation letters where one of the letters should focus on my teaching ability. But I'm not sure how anyone could evaluate this. Who should I ask? The graduate director, who gave me the teaching assignments? My thesis advisor, who doesn't know anything about how I teach but maybe would be kind enough to say something nice anyways?

I would ask the graduate director, department chair for academics, or whoever oversees the classes you taught. They can put context around your evaluations. “This class is always hard to teach because of Y, but Madden didn’t have these types of complaints, and in fact students said Z in their evals.” You don’t want your main advisor to do this, as they will need to focus on your research in their letter.
In the future, you should have someone observe one class per course you teach to write these types of letters. If you are teaching anything this fall, get an observer in there and then have the letter written by them.
When you ask the letter writer, make sure they have access to all your relevant evals, course materials, and course website if still available.


text:
Can an undergraduate attend a conference without a supervisor?
I am an undergraduate student graduating next month. I have submitted my paper (my own paper) to a conference and it has been accepted. Is it okay to attend the conference and present without any supervisor since it is my own result?

Please explain what you mean by "follow".

I mean, come to conference and giving presentation about my work.

What's stopping you from being there on your own expense?

Nothing. I just asked "is it okay for an undergraduate to be there without any supervisor"? @scaaahu

I thought you have funding issue or something.

The answer is "yes", in that I'm not aware of any conferences that have any rules prohibiting unaccompanied undergraduates (or, indeed, recent graduates - congratulations!).
With that said, depending on the conference in question you might get more out of it by talking to somebody from your university who is going and spending some time in their company. They might be able to introduce you to interesting people, you might learn by being in conversations with them, and they might be willing to provide context for what you hear. (but do remember that they are there primarily for their own reasons, not for your benefit!)


text:
An instructor is being added to co-teach a course for questionable reasons, against the course author's wishes—what can be done?
A friend of mine teaches an elective course at a university. She developed the course herself and has been teaching it for several years. Depending on enrollment in this elective course, one or two groups are formed each year to take it. When two groups are created, my friend receives double pay according to her teaching load.
Last year, her department head changed, and just yesterday, the new boss informed her that, while two groups will be formed this year, she will only be teaching one. The other group will be taught by a different instructor. The boss also asked my friend to share her teaching materials with the new instructor, assist in any way needed, and still handle all paperwork for the course.
The justification given in the boss's email was "university policy restrictions related to finances," making it sound like she would have preferred to give my friend both groups but was unable to.
Skeptical, my friend emailed the university's finance officer to ask if any financial restrictions were indeed preventing her from teaching both groups. She cc'd the new boss.
Within an hour, the boss responded by email, seemingly irritated, asking my friend to simply accept the decision and saying that "having a second instructor makes the teaching process more reliable and flexible."
The instructor being added to the course is a close friend of one of the boss's close friends, leading my friend to believe that the real reason is that the boss wants to help her protégé become familiar with the course, with the intention of giving the course entirely to the protégé next academic year, excluding my friend.
What can my friend do to retain her job?
Factors to consider:

The decision about who teaches the course is entirely at the boss’s
discretion.

If my friend refuses to share her teaching materials, the
new instructor could likely create her own, though it would be
time-consuming and difficult.

Losing this job wouldn’t have drastic
consequences for my friend, as a large portion of her income comes
from private tutoring, which she could easily expand if necessary.

Student evaluations of my friend's teaching have always been excellent, way above the average in the department.

My friend is technically a staff member employed by the university, but receives short-term contracts and also has to sign acts about her actual teaching hours/load to get paid. She is paid just for this teaching.

Options she is considering:

Meet with the new boss for a face-to-face discussion. My friend would stress that she developed the course and has been successfully teaching it for years. She would also ask directly about the course’s future, especially if only one group is formed next year, and express her desire to keep the course. The meeting could also help my friend ensure she fully understands the boss's true motives.

Send an email along these lines: "Thank you for the clarification. I understand this is your decision. My decision is to either teach both groups or none at all. Which will it be?" (Of course, not in these exact words, but conveying the same point.) This is highly confrontational but could be the only chance to keep the course if the boss truly intends to hand it over to her protégé in the future. Faced with such a tough choice, the boss might decide to let my friend keep both groups, as the new instructor may struggle due to her lack of experience with the course.

Start with option 1 and, if that fails, proceed with option 2.

Accept the decision without further escalation. There might be a chance that the new boss won’t take the job from my friend in the future. Escalating now might jeopardize that possibility.

What's the most reasonable strategy?

Thank you for the clarification. --- This doesn't seem like a clarification to me, but rather a complete change of reason. I don't know what to suggest (the entire situation seems too dependent on personal situations and local customs), but I find myself wondering what the response would be to something like: "Was your original reason of university finance policies not correct, perhaps being an inadvertent error on your part, or is the new reason an additional reason that you neglected to mention earlier?"

@DaveLRenfro I guess the boss would then simply respond with something like, "That's a decision within my area of responsibility, and I am not really obligated to justify my decision to you. Please mind the boundaries." At least, the boss's response to the email written by my friend to the financial officer contained a line to the following effect: "It's not appropriate to ask for written justifications and explanations as we are all very busy with work"

Of course, my comment was not something I'd advise anyone to say unless looking to cause trouble. That said, a boss who initially responds with an incorrect justification when not being obligated to justify would cause me to be unsure about most anything the boss told me in the future, and it would also seriously undermine my opinion of the boss's leadership ability since I would expect any competent boss to also know this. The boss could have said something related to avoiding too much concentration risk.

Is your friend an outside contractor, or is she technically a full staff member? And where does the copyright for the course lie—your friend, or the university? Those are also important factors for your friend to consider.

@isolatedmatrix Is your friend an outside contractor, or is she technically a full staff member? I think the closest Western term is casual staff. My friend is technically a staff member employed by the university, but receives short-term contracts and also has to sign acts as to how many hours she is undertaking to teach and how many hours she has actually taught

@isolatedmatrix And where does the copyright for the course lie—your friend, or the university? No idea about the copyright for the course, but my friend developed it while being technically employed by the university

“As we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours; and this we should do freely and generously.”: Benjamin Franklin

@Mitsuko some universities claim ownership of all materials developed while being employed,  others don't.  If your friend is employed by one that does claim ownership they could,  in extremis, be sued for the materials.

I'm assuming from the description your friend is an adjunct (paid just for this teaching) - is the second instructor also an adjunct or a full faculty member?  I can certainly imagine a situation where a course was taught by someone hired in as no-one in the dept had the time/expertise - then situation changes and dept wants to move (gradually) to having it taught in house.

@RachelC The other instructor currently has the same contract type and teaches another course at the university. We can't exclude that the boss intends to make her a full faculty member in the future.

One thing worth highlighting is the fact that the university is effectively halving her pay but not halving the workload (as they want her to keep doing all the paperwork). That would be where I would start my argument.

"Retain her job?" - do what the new boss says...

If there are to be two groups, what happens if they must be scheduled to be taught at the same time?

Your friend has some valid reasons to be upset, but is also looking at things slightly askew and behaving in ways that will not help her professional reputation.
The boss gets to decide who teaches what. Your friend gets to decide whether they want the job or not, under the terms offered. They can ask for things to be a certain way, but there are better and worse ways to ask. She could have politely expressed her desire to teach both sections, while acknowledging that it's the boss's decision, and asked for more clarity about the decision and/or what she can expect in the near future. This is your option 1, essentially, and it would normally be fine, but at this point (see the next paragraph) I would honestly skip it, and maybe pick the conversation back up in a semester or so.
Going over the boss's head to fact-check their explanation is throwing a nuclear bomb on the relationship. What was the goal there? There is no rule like "if I can prove you're lying about the reasons for your decision, then you have to change it." That's just not how jobs work. It pays to be smart about maintaining relationships, and that goes double for someone with a big influence on your work assignments (which this person has).
The key of this question is not really specific to academia, but for what it's worth: even tenured faculty are somewhat at the mercy of the person who decides the course schedule, and not everyone gets to teach their first choice of course every time. (I'm excluding hot-shots who have a lot of weight to throw around, which is a minority of faculty.) Having good evaluations doesn't change that, and neither does developing a course. That doesn't mean your friend has to agree with the boss's decision or not be upset--I'd be upset too. It's just, this is the boss's call to make, and there's a right and wrong way to advocate for things like this.

I kind of like the "if you're going to lie to me to my face, I'm going to call you on it and make sure others know" aspect of the profs actions.  Yes, it does throw a bomb into the situation, and it probably isn't the most politic, but the message sent is very clear.  It's a message that says "I expect your respect".
Being routinely lied to is not how jobs work.  No, the chair, at the outset, did not really owe the prof the details underlying the decision, but the chair should at least take responsibility for the decision, and not try to pass the buck.

University management does not get to dictate what is taught about a subject, at least not due to "finance-related policy restriction".

Let me just qualify the last comment for a bit -- I like the statement for the US and Europe, but I don't really know how well that sits on top of Japanese social norms.

@ScottSeidman while the prof's actions are emotionally satisfying, there are ways of sending that message in less politically-damaging ways.  Even in western business culture, CC'ing someone on an email that you're using to fact-check a statement of theirs is a clear indication of lack of respect and very damaging if the prof assumed wrongly. It would be a different situation, for example, if prof were to have asked the finance officer if there's an exception process to the (assumed) regulations, as this gives plausible deniability/implies trust in the boss's claim.

@apnorton, of course, you're correct.  I do think it's important to let the Chair know that Instructor 1 feels lied to and thus disrespected.  Taking things outside to start is probably ill-advised.

I would add that while it is possible the boss did this primarly as a favor to their friend (with the possible plan to move the course to the friend entirely by next term) but it could also be mostly harmless and seen as in the best interest of the department in general as it is generally good policy for a department to have more than one person being able to teach any specific course (bus-factor is the technical term here).

While I don't know the law in Japan, if that is where this happened, in most places the person has little recourse. Most university instructors are specifically paid to develop courses, not just deliver courses they personally "own". I suspect the university, therefore, has all rights to the material, having paid for its development. Most place will let the instructor carry the course elsewhere if they terminate enrollment, I suspect, treating this a a common good.
Imagine a researcher at IBM claiming that they personally own things they invented there while employed specifically for that purpose.
One reason that it is valuable to the university to have another instructor teach the same course is if your friend should leave. It would be an advantage to them to have the knowledge more widely spread in the faculty so that the course can continue without interruption.
It could also be valuable as a sort of training for the other person. Also, forcing them to redevelop the course could leave inconsistencies.
Personally, I don't find the actions of the head objectionable. I won't try to judge the first reason they gave, but asking for your friend to share materials is not objectionable. It would be different if they were an independent contractor paid to deliver the course.
I'll note that, even at research universities where the main task is research, there is usually an expectation of course development as well as delivery. At research universities (R1 in the US), a 30% (approximately) focus on teaching is expected, including development of new courses; perhaps especially including such development.
Having a talk with the head is fine. Threatening is not fine. Lots of bad things could happen. Even threatening to refuse to teach the course seems self defeating. And it seems inconsistent with the mission of a university.
Cooperating with colleagues also seems like a better career move than trying to shut them out.

"One reason that it is valuable to the university to have another instructor teach the same course is if your friend should leave." Indeed, for exactly this reason, my department has a rule that all courses must be co-taught.

It's not clear that Universities have ownership under work for hire statutes.  It remains a question.  https://heinonline.org/HOL/Page?handle=hein.journals/washlr88&div=48&g_sent=1&casa_token=&collection=journals

@ScottSeidman, true enough, hence my opening here. Laws vary. But many universities claim all IP of faculty by contract.

@IanSudbery that's a common thread all over industry as well as academia. In my finance job we have a "bus" rule - if one of us went under a bus on the way home tonight the exchange should still be able to run without us tomorrow.  I agree that the head's actions are not particularly objectionable and would add that it is a risk to the institution having a single person teaching this course!

@MD-Tech funnily enough this role is new,  and until last year,  I was the only person in a university of 3000 faculty capable of teaching what I taught.

@MD-Tech "bus factor" is the usual term

I think at the start of the story, it's at least as likely if not more likely that the department head was just trying to find a way to pay this other new person. That's one of the jobs of a department head: finding money to pay the people you want to have in a department. That includes giving them assignments that come with money.
I don't think that necessarily means they had any intention of "taking over" the other section of the course. Especially given:

Losing this job wouldn’t have drastic consequences for my friend, as a large portion of her income comes from private tutoring, which she could easily expand if necessary.

If the department head is aware of this, then their move is logical. Sometimes managing a department means taking money from where it's in excess and putting it where it's needed. If they know your friend is going to be okay with half the sections, then giving the second section to this other person might be seen by them as a net benefit. It's especially useful to guard against the possibility that your friend might at some point move on and take another job. This gives them two people with experience teaching this particular course which means next semester/next year it's far less likely that they end up with zero people with experience teaching this particular course.
However, after this:

Skeptical, my friend emailed the university's finance officer to ask if any financial restrictions were indeed preventing her from teaching both groups. She cc'd the new boss.

I'd kind of expect the new department head will want to force your friend out, eventually, after this. It will certainly color all future interactions with this person negatively. Your friend should have started with a face-to-face conversation with their boss about what's happening and also their own future goals; instead, they started an aggressive conflict with a person that has decision-making power over them. Not likely a winning strategy.
I still think it's possible to try to have that conversation, but I think the chances of anything going well are low at this point, and your friend should work on figuring out what's next outside this department.

Other thoughts:

Student evaluations of my friend's teaching have always been excellent, way above the average in the department.

Student evaluations are generally a poor way to evaluate teaching. The feedback they include can be very useful in adapting the class, but otherwise evaluations are highly correlated with assigned grades: give good grades, get good evaluations.

If my friend refuses to share her teaching materials, the new instructor could likely create her own, though it would be time-consuming and difficult.

As others have pointed out, your friend may not actually own her teaching materials; it's common that materials produced for an employer are owned by the employer. If some ownership is shared, it's far more likely that your friend can take those materials with her to use at some other institution than it is that she can actively block a new instructor from using them.

My friend is technically a staff member employed by the university, but receives short-term contracts and also has to sign acts about her actual teaching hours/load to get paid. She is paid just for this teaching.

Overall, this makes it sound like your friend has a very low-status, low-priority role in the university pecking order. A short-term, temporary employee is a relatively disposable/replaceable one. I think your friend should have seen their job as quite a fragile one from the start and acted accordingly, including pursuing more solid employment, long before this new department head came along.

The justification given in the boss's email was "university policy restrictions related to finances," making it sound like she would have preferred to give my friend both groups but was unable to.

I think this is not good behavior by the chair, but in a face-saving culture it's possible this sort of thing is seen as a acceptable "white lie" over a more honest reasoning. In any case, I think this was more likely a backfired attempt by the chair to not upset your friend rather than an underhanded way to move them out. The new explanation: "having a second instructor makes the teaching process more reliable and flexible" is quite a reasonable one.

I have never been a chair, and have no interest in ever becoming one, but I have served on various advisory roles, and your first comment about using teaching lines for salary/personnel retention is very likely the cause. The OPs "friend" has done nothing but establish themselves as a poor citizen of the department, a bad team player, an insubordinate employee (the chair is who sets teaching assignments anyway), a paranoid individual (after all of the OPs spin on conflict of interest theories), and someone who cannot be trusted and will try to manage upwards beyond the chair for everything.

@R1NaNo Yeah, the one thing that I think the chair did clearly wrong here was to make up some non-existent policy as the excuse for doing so. OP's friend is certainly not the only one in the wrong, but they haven't helped their own position.

agreed, but even so their statement of "university policy restrictions related to finances" can be spun in so many ways. Its very likely there was some restriction, somewhere, which meant this avenue was probably the easiest way to work the budget. Seems like a vague catch-all. Certainly could have been elaborated more, but then again I don't know the situation. Either way, going above your boss to "catch them" in a lie is throwing gasoline on a bridge you are getting ready to burn.

@R1NaNo Yeah, I've added some more thoughts on this to my answer. I think it's more likely that the chair meant to emphasize that this change should not be perceived as disciplinary or punitive to OP's friend and felt like appealing to some policy, existing or not, was a gentler way to explain. You're right about spinning different ways. Maybe the policy restriction is about priorities for who gets available teaching lines that required the chair to find funding for this other person, yet OP's friend asked for a rule that says they can't teach two classes.

As you correctly assess, teaching assignments are done by the chair/head/dean, and instructors don’t have much to say about this.  An instructor is not the “author” of a course: the course is part of a program, and it exists outside of the instructor, even though the expertise may be hard to duplicate and the course may be terminated if nobody else can reasonable teach the material.
On the other hand, an instructor could rightly be protective of the material they develop.  I’ve never heard of anyone forced to share their lecture notes or course contents.  I rarely share my material with other instructors not out of spite but because I want to leave other instructors with the freedom and flexibility to choose their own material.  Likewise, when I take over a class I am expected to produce my own material.  I don’t have an issue with not sharing notes, claiming copyright or intellectual property if I have to.
I don’t think it’s useful to see conspiracies to displace an instructor.  The best defence of your friend is to do an outstanding job.  From an academic point of view it’s easier to have a single instructor as it simplifies course continuity, so the argument about flexibility is BS, but you can’t fight BS with logic.
I don’t think confrontation is productive either.  In fact, I would not have collected information on this by email, and I would have certainly not cc’d the boos.  Nothing has been gained, and you now have an irritated boss.  I don’t think being faced with a lie will change the decision.
The reality is that there is a power imbalance in this situation, and your friend has the short end of the situation.  It’s very difficult to get people with power not to pursue their pet projects, unless they are foiled by higher ups; here, it’s difficult to see how a higher up could intervene since your friend is still teaching a section.
So in practice the only defence is to run an excellent class.  Students talk, and if your friend is doing a much better job than the other instructor, this will be known.

Is be careful with not sharing materials.  Part of my contract incudes a statement that the University owns any teaching materials I develop as part of my job for the university.

@IanSudbery Interesting comment.  My contract states that I own this material, and it can’t be reproduced or distributed without my permission.

this is definitely something that differs uni to uni

+1 for "the only defence is to run an excellent class" - this is so very true, in so many circumstances.

My friend has been running an excellent class for years. Student evaluations of her teaching have always been excellent, way above the department average. And despite that, the new boss takes one group from my friend and gives it to a close friend of a close friend of the boss herself - and even lies about the motive, quoting non-existing university policy constraints. Apparently, running an excellent class by my friend doesn't mean much for that boss when a close friend of a close friend gets involves...

I think you're missing the point.  You may be right but this is not enough to change the situation: you have someone hell-bent on assigning the 2nd group to someone else and this person has the discretionary authority to do so.  There is nothing fair or right about this, and no defence other than doing your own thing and excelling at what you do.

Ownership / rights can also differ between faculty statuses within a university — I've heard of cases where teaching faculty don't have the same IP rights in their materials as tenure-track faculty, and it's easy for policy to also treat adjuncts (which it sounds like this situation is) differently as well.

I've seen a similar situation and it's sounds as if your impression is correct -- your friend is being abused to help a friend of the Dept. Chair. As for what to do, playing it straight seems to work best. Treat them as a normal co-instructor, which includes sharing notes, weekly meetings and so on. But "doing all the paperwork" isn't a thing. I don't think ethically your friend can grade the other class's assignments or tests, and new assignments or tests should be co-written. By the end of the semester, or possibly sooner, it will be obvious to the Dept Head "well that attempt to give my friend a do-nothing class didn't work out".
As to why I think this is a screw-job, number one is, again "do all the paperwork" for a section you're not teaching isn't a thing. It's pretty much the Dept Head acknowledging that his friend isn't capable of doing the job. Number two is that merely adding another instructor for no good reason to an elective makes no sense. When you have an adjunct doing a good job on a non-core course, you leave them alone. If they leave while the course is still relevant, deal with it then. And if they somehow want to worry about that now, a tenured or tenure-track professor would be chosen -- someone who permanently works there. There would be a process to see who would be a good fit, not an off-hand "oh, this person is teaching a section now".
As far as my advice about playing it straight, it's because there's nothing on paper that's unusual. Having two people teach different sections of a class is normal. Sharing course material with a new instructor is also normal (for someone seriously interested in learning the new course I always hope they'll find at least a few things in my notes they want to use for themselves). Being given poor or no reasons for course assignments isn't unusual. So yeah, it seems obvious your friend is going to be underpaid to carry the Dept Head's friend, but on paper it looks exactly like standard co-teaching (except for the bizarre "do all paperwork" thing). So your friend should share notes, grading criteria, offer to have a weekly meeting and so on, and in general be nice.
Now my guess is it will fall apart for, one: your friend's notes, slides, etc... are probably a third or less of the actual class presentation. A power-point bullet probably reminds her of a 5-minute explanation; a written out example is missing what it's an example of and why (I know mine are). "Giving instructor B your notes" won't be the turn-key solution they assume it is and instructor B probably won't want to do the work to learn the material. The other is that, for the fourth time(?), your friend can stand on not doing paperwork for the other course. To bring it home, student's in section B with Q's about their grades can't be redirected to your friend, who is not their instructor.