They're bad bc of their mistreatment and mismanagement towards their acts (artists/groups/idols):
1)The neglect and underpromotion as their acts become seniors. (I don't think I need to elaborate on this cause every fandom under SM knew cases of their faves at some point getting this treatment). SM only push and promote new and young acts for while before abandoning them as they get older/become seniors. e.g. Short promotion cycle or no promotion at all.
2)Slave contracts that resulted in lawsuits started by JYJ which revealed SM made them sign 10-15yrs(I don't remember the exact number, I can only give a range) contract which is inhumane. It was also revealed that Yoona and Taemin originally had their contracts signed up to around 13-15 yrs if I'm not mistaken while their group members had 10 yrs. Korea Fair Trade Commission ordered SM to change the contract terms and reduce the contract length to 7 years. This shows how SM already broke the law early on, exploited and took advantage of these kids by signing them up when they're young and naive and then groom them up to become stars that make money for them by milking and overworking them like slaves with the long contracts to keep them in the company as long as they can.
3) Overworking their acts to the core to the point of injuries(life-threatening injuries) sacrificing sleep/rest and health.
4) Discrimination towards foreign idols.
5) Gaslighting/Guilt-tripping their idols.