Just on that last paragraph, because the frame annoys me - that is bullying. It isn't fair to insinuate that a company did something wrong by attempting to obey the law.
MS knows all about antitrust. They've hired a bunch of lawyers and told them to do what needs to be done to be compliant with the regulations. That shouldn't then be implied as evidence that they are guilty of antitrust activities! What are the lawyers supposed to do, structure the company to maximise the likelihood of an antitrust lawsuit being bought? Nobody should want that, regulator, company or customer.
This is a confusing argument to me. Are you saying that structuring and smurfing should then be legal? All structuring and smurfing is is an attempt to make sure that financial transactions stay below the statutory reporting threshold.
Also, I think you’re conflating my statement which was meant to be prescriptive with a descriptive statement. I’m saying if structuring and smurfing are illegal in a financial context, MSFT doing so to skirt antitrust laws should be similarly illegal - if the laws don’t prohibit it, the laws should be updated. But I’m not a lawyer so it’s possible laws already prohibit it or MSFT violated some laws. Commenting in either direction on an information free article isn’t wise.
As for the spirit of the law vs letter of the law, that’s an ongoing debate as old as history. It’s personally weird to me to encounter letter of the law people given that the spirit of the law has a much richer history behind it to my view and seems more defensible. Some amount of rule lawyering is required, but violating the spirit of the law is a more robust legal principle that can withhold participants trying to find creative workarounds around the spirit of the law.
You picked a particularly bad example. Structuring is a notoriously bad law because innocent people make transactions that would be considered structuring all the time, and making it illegal has no legitimate purpose when the government could just use the aggregate amount of deposits over some period of time for its reporting threshold instead of the amount of each individual deposit. It's like creating a rule with a loophole that gets exercised through ordinary behavior, and then instead of closing the loophole they impose criminal penalties on the ordinary behavior.
But then you consider that it's used for civil asset forfeiture (i.e. law enforcement stealing money from innocent people without ever proving a real crime) and it suddenly makes sense:
Whereas with MSFT it's a different situation. There is nothing illegal or wrongful about depositing a large amount of money, there is just a heinous law that makes it illegal to do it in a common way. Whereas monopolizing a market is intended to be illegal regardless of how you do it, so there shouldn't be a way to structure things to monopolize the market without breaking the law. The way you're intended to comply with the law is by not monopolizing the market.
With banking, structuring laws mean banks need to report any transaction over $10,000.
So if I need to send you $100,000 and s split it up into 11 payments so each payment comes under the $10,000 reporting limit that breaks the law because my payment was for $100,000 but i structured it to get around the $10,000 reporting limit.
If Microsoft approaches anit trust limits if it owns more than 50% of a company and buys 49% then no strucuturing took place as they only bought 49%. Now if they bough 10% in each of 6 different shell companies that they own such that they'd control 60% of hte company, then this is illegal as it works around the limits.
But owning up to the limit is perfectly fine as it doesn't in anyway break the law or work around it. That's the very reason for having a limit, to say you can go up to this limit, but not over.
I'm guessing you don't deal in finance at all as we deal with this all the time. You'll see funds owning up to 9.9% of companies to avoid the 10% reporting threshold. Again, nothing illegal here as the government has said they are perfectly fine with funds owning up to <10% of a company.
Ah I see, I was in two minds about including the quote but decided against it. I was talking about "Microsoft structured its minority stake in OpenAI in part to avoid antitrust scrutiny, The Times has reported. Microsoft also reached a deal in March to hire most of the staff of Inflection AI, another A.I. start-up, and license its technology. Because the deal was not a standard acquisition, it may be harder for regulators to scrutinize.", not what you wrote. Obviously they structure the deal to involve scrutiny; they aren't going to structure it to invite scrutiny; the deal is designed to avoid anything that would allow a random regulator to get involved. The Times is insinuating without cause.
I don't think you're in a position to bully Microsoft. I doubt they care about your opinion.
If you need to intentionally structure a deal to avoid scrutiny and have it described that way, it implies what you really wanted was much worse.
“We packed the goods in nondescript boxes to avoid scrutiny by the border guards…”
Scrutiny isn’t something you need to avoid as a big company if you’re not fucking around. The lawyers are there to handle the scrutiny, not to hide stuff from it.
> If you need to intentionally structure a deal to avoid scrutiny and have it described that way, it implies what you really wanted was much worse.
It doesn't. That is like saying that if someone structures their affairs to pay less taxes it implies that wanted to do something illegal. They had to choose some structure, they picked the safest and easiest one. In both the hypothetical tax case and the real MS case, I suspect.
The incentive is to choose structures that minimise regulatory engagement. The fact that MS is following incentives isn't a red flag. Not a green one either, it isn't interesting except as something that the NYTimes can hook insinuations on.
This is a funny discussion, because "structuring" has a very specific meaning when it comes to finance. It's about executing your financial transactions in a way that avoids regulatory scrutiny (for example sizing transactions such that they fall just under reporting thresholds).
Structuring is explicitly illegal in the US.
This is the point that vlovich123 was making, and given you totally missed it, it seems like you might not be familiar with what the term means in this context.
Sorry for being unclear on this, I should have quoted. But I'm not, and never was, talking about vlovich123's point in any comment in this thread. I didn't have an opinion on what vlovich123 said.
It does. You can't replace the X and Y in "Structuring X to avoid Y" and still end up with the same implication.
Structuring your business to avoid breaking the law is good.
Structuring your business to avoid some otherwise regular audits that would reveal whether you are breaking the law is obviously suspicious.
One might think that there is a reason why getting audited might result in negative consequences for your business.
I think the issue here is the overloaded use of the term "structuring."
If I think I might be doing something that antitrust regulators won't like, so I hire a lawyer to tell me what I can do, and they tell me "you can buy up to 49.9% of this company," and I buy 49.9% of the company, that's fine. It's neither illegal nor unethical. It's also not "structuring" in the technical, financial sense, but a layman might say "you structured the deal to avoid falling afoul of regulation," even though it's the wrong use of the word. I think that's what's happening in this conversation (I have no idea about what MSFT actually did or didn't do, just the direction the conversation here is going).
Because laws are always flawless and never contain any loopholes, and it has never happened ever that lawyers were specifically instructed by a company to find those loopholes and exploit them as hard as possible.
The idea of law as having loopholes is relevant for politicians, who are tasked with ensuring that the written law reflects their intent. It's not relevant for courts, regulators, people or companies, who are all tasked with following the law as actually written. For those people there is no "spirit" or "true law".
The reason this is important is it's a sword that cuts both ways. It's always tempting to argue that whatever you'd personally like to happen is what politicians really intended, and any gap between reality and their preferred outcome is therefore a "loophole". But once you get into saying people should follow intent, not written law, others can easily argue that politicians never intended the law to be interpreted like that against them, and so therefore they are morally justified in ignoring it. It can be used against you as easily as you can use it against them.
A common example of this problem is income vs capital gains taxes. One ideological tribe is very fond of arguing that people who have income mostly from investments rather than wages are exploiting a "loophole" in tax law, but of course the reason there are different rates to begin with is exactly because politicians wanted to encourage investment. There's plenty of cases where this intent is discussed in written literature and there's no other reason to distinguish between income sources then set differing rates. There is no "loophole" and nor is the "spirit" of the law being violated. But you hear such claims all the time.
The other reason it's problematic is because you can't really know what the intent of lawmakers was. The law was their best collective effort at writing down what they wanted, as a result of numerous compromises and disagreements between different people. If they didn't write it down properly or the resulting compromise was a mess, that's on them, but a working legal system doesn't allow people to just blow off their written instructions and assume they know what was really meant.
And if the courts use some 'spirit' guide them, companies and their lawyers better try and predict what that 'spirit' recommends.
> If they didn't write it down properly or the resulting compromise was a mess, that's on them, but a working legal system doesn't allow people to just blow off their written instructions and assume they know what was really meant.
Well, then by that definition the real life legal system of the US ain't working?
Originalism is the opposite of that, no? Originalists are all about following what was actually written down, using an understanding of English as it was used at the time. It rejects modern re-interpretations of the law and avoids speculating about the 'spirit' of the constitution, even if that would be more convenient. The competing view is that of a 'living' body of law in which the meaning continually changes without the wording itself changing.
It is and you'll notice a lot of people really, really hate it. Trump just broke all fundraising records by miles, because a lot of people who previously didn't support him feel that New York has ignored the written letter of the law in favor of a tribalistic "spirit". There are similar society-rending controversies happening in Europe due to the activist lawmaking of the ECHR.
These two perspectives aren't both equally valid: the courts are not allowed under any system of civics to simply do whatever the judge feels like. They are only given leeway to interpret the law when they have no other choice because the statutes are unclear. It's a last resort, and often the result will be people "getting away with it" because there's no law against what they did.
Yes, I'm aware of that distinction. However I read the comment I was replying to so that they suggested the antitrust case is unfounded because Nvidia didn't break any laws. It's precisely why the antitrust case is valid/needed, because if Nvidia were breaking any laws, you wouldn't need antitrust, you'd just take them to court.
You ignore “the spirit of the law” with fancy acrobatics around “the letter of the law”… at your own peril.
I can’t comment on the claims here, but if MSFT is skirting the intent brazenly enough, the predictable regulatory reaction is no bullying. Everyone involved is well aware of that dynamic. No need to pity MSFT.
Is spirit of the law ever a concern in the USA? I’m asking because it is in the EU and every US company seem to struggle with the concept if I am to judge by how they engage GDPR, DMA and similar regulations in the EU.
In common law systems (US, UK), there is greater emphasis on the spirit or intent behind the law. Judges have more flexibility to interpret laws and use general principles.
Civil law systems place more importance on the letter of the law. The spirit behind the law is secondary. The written legal codes are more important.
EU law is mixture of both, but most continental European countries have civil law system (Ireland does not, Nordic countries have mix of civil and common law)
Since the 1980s letter of the law has seen a remarkable upswing in power. I wouldn’t say spirit of the law applies anymore to SCOTUS rulings & I suspect federal appointments followed similar biases so it’s up & down the federal court. Not sure about state judges. Do you agree?
The US Constitution has largely been interpreted in a “spirit of the law” manner since the founding. Originalism has taken significant durable gains in terms of SCOTUS appointments since the 1980s; prior to that originalists had a good chance of changing their POV once appointed. I suspect similar viewpoints are reflected in the judge appointments as well. Letter of the law benefits the powerful because they can always stay ahead of legislative attempts to fix the letter of the law (or lobby to change the letter). Spirit of the law is much harder to corrupt.
Spirit of the law isn’t perfect itself obviously because it is legitimate to point out that it becomes hard to know what the law actually is, especially since governments have gotten into legislating a lot of regulatory nuance and it’s hard to distinguish malicious compliance from good faith effort. It’s also corruptible from overzealous prosecution looking to make a name for itself by taking on unpopular entities that aren’t actually doing anything wrong.
> Letter of the law benefits the powerful because they can always stay ahead of legislative attempts to fix the letter of the law (or lobby to change the letter). Spirit of the law is much harder to corrupt.
This is precisely the opposite. "Spirit of the law" makes the rules squishy and indeterminate, providing opportunities for fancy lawyers to bend the result to their own interests.
"Letter of the law" often leads to harsh results when the law is drafted poorly, because if they wrote something dumb then you get something dumb instead of a judge rewriting the law to make people happy. But the people they're making happy are usually the powerful, so pick your poison.
The difference is this: If you use the letter of the law, an ordinary person has the same chance to find a loophole as the rich. Which will tend to cause them to get closed, because the rich have more money but ordinary people are more numerous, and the ability for ordinary people to exploit them would pressure the government to fix them.
Sometimes this would make the law more complicated, because the situation has intrinsic complexity and you have to enumerate the edge cases. Sometimes it would make the law simpler, because the existing complexity is extraneous and only an opportunity for gamesmanship. But either way it creates an evolutionary pressure for improvement.
No law can ever be written to capture every possible application of the underlying spirit. Thus your ability to escape the spirit is directly correlated with how many lawyers you can hire to find loopholes in the text (or just flat out lie).
It’s also important to remember that societies naturally undergo shifts over time. It’s impossible to continuously update a codified set of laws when the underlying moirés of the time have shifted; you’ll just be constantly arguing over the updates to add. Any law written perfectly today becomes imperfect simply through the passage of time. That’s why the Bible and any prescriptive religious text feels so outdated on many recommendations - it’s a snapshot in time of the values of a culture but those values change. There was even a fantastic sci-fi short story on this exact point of cultural shift [1] that’s worth a read.
> No law can ever be written to capture every possible application of the underlying spirit. Thus your ability to escape the spirit is directly correlated with how many lawyers you can hire to find loopholes in the text (or just flat out lie).
The assumption here is that the rules would be complicated and provide lots of opportunities for gamesmanship. Now suppose the rule is "no company shall have more than 30% market share in any market, any that does shall be broken into no fewer than twelve independent pieces."
No loopholes, if you exceed 30% market share you get broken up. And if they find a loophole then you amend the law and take it out.
> It’s impossible to continuously update a codified set of laws when the underlying moirés of the time have shifted; you’ll just be constantly arguing over the updates to add.
That's just politics. Somehow you need a process to decide what the law should be. The output of that process is the new law. If the output sucks then get a new process. But whether people can agree on what the law should be is a separate issue than whether we should even know what the law as enacted is supposed to mean.
> That’s why the Bible and any prescriptive religious text feels so outdated on many recommendations - it’s a snapshot in time of the values of a culture but those values change.
That's fine, nobody is saying that you can't change the law if a case comes out in a bad way. But it should be the legislature rather than the courts to do it, and the new understanding shouldn't be applied to past behavior ex post facto.
Please clearly define the meaning of “you” in your simple law.
Literally me? Okay, I don’t own 50% of the market—my company does.
Oh you mean my company? Okay, my company doesn’t own 50% of the market—each of my companies only control 25%.
Oh you mean me and my companies? Okay, well I only own one company and my wife owns the other one.
Oh you mean… I think you get the point…
Now move on to all the other words you used: what defines a “market”? What does “broken” mean here? What does “independent” mean here? I’m sure it’s quite clear to you—that you know it when you see it. I’m also quite sure others have different interpretations.
I agree with the spirit of your comment otherwise, but simple laws rapidly become complex laws because people are complicated and language is flawed.
That isn't a loophole, it is an interpretation. It isn't possible to have laws without an assumption that a reasonable person is interpreting them (which is 95% of the reasons why judges are involved).
But we know that the interpretation phase has a lot of wiggle room (the US constitution is a regular parade of this sort of thing - the Roe v. Wade fight or the abuse of the commerce clause for example). When they go bad these things aren't loopholes as much as they are just ignoring the written law with a polite fiction and it is up to different interest groups to work out where the power lies to get what they want. Political reality vs. the theoretical rule of law ideal.
But that is necessarily independent of what is written in the law itself. If a group has enough power to overrule the written law then what you write in the law won't be able to stop them.
> Please clearly define the meaning of “you” in your simple law.
"no company shall have more than 30% market share in any market, any that does shall be broken into no fewer than twelve independent pieces."
It doesn't contain the word "you".
> Okay, I don’t own 50% of the market—my company does.
Then your company would be violating the law. "Company" means a set of entities that share a common ownership.
> what defines a “market”?
A set of products or services that serve as fungible substitutes for one another.
> What does “broken” mean here?
It means they no longer share common ownership. This is also what independent means.
> I agree with the spirit of your comment otherwise, but simple laws rapidly become complex laws because people are complicated and language is flawed.
But all of those things are just their ordinary meaning. Writing them down would make the law more explicit but it doesn't make it any more complicated. The definitions aren't each a separate set of criteria that have to be complied with separately, they're just a clarification to reduce possible ambiguity.
In particular, what you're doing is resolving edge cases. But the basic law has already addressed 99% of cases, because they're not ambiguous. An independent restaurant in a major city does not have >30% market share for food because there are many, many competitors. Microsoft has >30% market share for desktop operating systems because Microsoft has ~70% market share for desktop operating systems.
And we have to distinguish between two things here. One is, you see the word "company" and the dictionary says one of the meanings is a military unit, and then Microsoft claims that they aren't a company because they aren't a military unit. But if something has two meanings and one of them doesn't make sense in context, that's not the intended meaning. Using the "spirit of the law" for this kind of resolution is inherently necessary.
The other is, the law isn't ambiguous, but the unambiguous result is undesirable and the only way for a judge to fix it is to disregard the text and make something up. They shouldn't do this.
MS knows all about antitrust. They've hired a bunch of lawyers and told them to do what needs to be done to be compliant with the regulations. That shouldn't then be implied as evidence that they are guilty of antitrust activities! What are the lawyers supposed to do, structure the company to maximise the likelihood of an antitrust lawsuit being bought? Nobody should want that, regulator, company or customer.