[crote]

Option 1: $183B valuation, $1.5B settlement.

Option 2: near-$0 valuation, $15M purchasing cost.

To an investor, that just looks like a pretty good deal, I reckon. It's just the cost of doing business - which in my opionion is exactly what is wrong with practices like these.

[Joel_Mckay]

In most places, a legal settlement is considered a tax deductible loss. At a certain scale it will likely cost the company nothing, but these kinds of cases often trigger speculators grabbing discount stock from panicking amateurs. lol We still have no idea what they sell, so avoided exposure to their antics... =3

[tpmoney]

But that isn't how tax deductions work. Since taxes are always a fraction of income, a deduction can never save you more money than you already paid out to get the deduction in the first place. If you have a 10% tax rate, your options are:

A) Make 100M, pay 10M in taxes

or

B) Make 100M, pay 10M in lawsuit settlements, pay 9M in taxes

You come out ahead every time by not paying the settlement in the first place.

[Joel_Mckay]

You may be confused, but a business loss deduction usually reduces a taxable income. In general, most systems only require the cost/loss was incurred during gaining or producing income from a business or property.

For a significant sum, we should assume their team consulted a specialist firm on the subject at their location. People don't often YOLO this stuff at that scale, and businesses don't always settle every time they get shaken down for cash... some go to war, as it can be cheaper to sandbag/delay till opponents go bankrupt.

Have a great day. =3

[tpmoney]

> You may be confused, but a business loss deduction usually reduces a taxable income.

Yes, I know, which is why in option B the taxes required was $9M instead of $10M. The 10k payment reduced taxable income from $100M to $90M. Business taxes are notoriously complex, but I am aware of no IRS rules that would allow a 10M legal settlement to reduce the taxes owed by >= $10M. If you believe I remain confused, please by all means provide an example scenario and/or citations to the relevant tax statutes.

[fn-mote]

> which in my opionion is exactly what is wrong with practices like these.

What's actually wrong with this?

They paid $1.5B for a bunch of pirated books. Seems like a fair price to me, but what do I know.

The settlement should reflect society's belief of the cost or deterrent, I'm not sure which (maybe both).

This might be controversial, but I think a free society needs to let people break the rules if they are willing to pay the cost. Imagine if you couldn't speed in a car. Imagine if you couldn't choose to be jailed for nonviolent protest.

This isn't some case where they destroyed a billion dollars worth of pristine wilderness and got off with a slap on the wrist.

[zmmmmm]

> I think a free society needs to let people break the rules if they are willing to pay the cost

so you don't think super rich people should be bound by laws at all?

Unless you made the cost proportional to (maybe expontial to) somebody's wealth, you would be creating a completely lawless class who would wreak havoc on society.

[LMYahooTFY]

The law was not broken by "super rich people".

It was broken by a company of people who were not very rich at all and have managed to produce billions in value (not dollars, value) by breaking said laws.

They're not trafficking humans or doing predatory lending, they're building AI.

This is why our judicial system literally handles things on a case by case basis.

[godelski]

I just want to make sure I understand this correctly.

Your argument is that this is all fine because it wasn't done by people who were super rich but instead done by people who became super rich and were funded by the super rich?

I just want to check that I have that right. You are arguing that if I'm a successful enough bank robber that this is fine because I pay some fine that is a small portion of what I heisted? I mean I wouldn't have been trafficking humans or doing predatory lending. I was just stealing from the banks and everyone hates the banks.

But if I'm only a slightly successful bank robber stealing only a few million and deciding that's enough, then straight to jail do not pass go, do not collect $200?

It's unclear to me because in either case I create value for the economy as long as I spend that money. Or is the key part what I do what that money? Like you're saying I get a pass if I use that stolen money to invent LLMs?

[LMYahooTFY]

You're asking me if straight up stealing money from a bank is comparable to stealing books in 2025 to train an AI which will generate untold value for people?

[godelski]

Look, I don't care if you pirate books. But we'd agree that it would be different if you downloaded millions of books and sold them, right?

Now they weren't selling and if it is transformative is still in question. But let's not worry about that. Let's say that you just made billions off of having illegally downloaded all those books.

I hope we can agree that this is a very different thing than a student pirating their school books. The big reason why this leaves a bunch of people with a bad taste in their mouth (even those who believe it is a transformative use) is because the result was dependent on access to those works. Billions were made and nothing was shared with those who built the foundation.

In fact, let's look at this from a very different lens. Do you not think it is a bit upsetting that there are trillion dollar companies that are highly dependent on open source software where there's a single developer who is making no money off of their work? Their work has clear monetary value, but they allowed it to be used for free. Is someone who makes millions, billions, or trillions off of that work obligated to give some back? Not legally, morally. What is fair? Would you give back? Why or why not? Are you grateful? Is it just their loss? What are your thoughts about this?

[DrillShopper]

Yeah in that way the stealing of books is clearly the bigger crime

[kelnos]

> It was broken by a company of people who were not very rich at all

I think the company's bank account would beg to differ on that.

> managed to produce billions in value (not dollars, value) by breaking said laws.

Ah, so breaking the law is ok if enough "value" is created? Whatever that means?

> They're not trafficking humans or doing predatory lending, they're building AI.

They're not trafficking humans or doing predatory lending, they're infringing on the copyright of book authors.

Not sure why you ended that sentence with "building AI", as that's not comparing apples to apples.

But sure, ok, so it's ok to break the law if you, random person on the internet, think their end goals are worthwhile? So the ends justify the means, huh?

> This is why our judicial system literally handles things on a case by case basis.

Yes, and Anthropic was afraid enough of an unfavorable verdict in this particular case that they paid a billion and a half to make it go away.

[ryandrake]

Hate to break it to you, but that's currently the world we live in. And yes, it sucks.

[zmmmmm]

I'm not sure how you're breaking that to me - it's the entire context of this discussion

[tomalbrc]

The “cost” should not be associated with money

[teiferer]

Well that's what he's arguing, against another post which somehow claims that that's ok.

[cyanydeez]

Yes, let billionaires feast on the poor.

GP is entrained in the pure-self interest is the only matric needed in society.

[theptip]

I agree to some extent, but there is a slippery slope to “no rules apply to the rich”.

I do agree that in the case of victimless crimes, having some ability to recompensate for damages instead of outright ban the thing, means that we can enact many massively net-positive scenarios.

Of course, most crimes aren’t victimless and that’s where the negative reactions are coming from (eg company pollutes the commons to extract a profit).

[beowulfey]

> What's actually wrong with this?

It's because they did not choose to pay for the books; they were forced to pay and they would not have done so if the lawsuit had not fallen this way.

If you are not sure why this is different from "they paid for pirated books (as if it were a transaction)", then this may reflect a lack of awareness of how fair exchange and trust both function in a society.

[almosthere]

Settling is not forced

[kelnos]

Not sure what point that's trying to make. Settling is a) a tacit admission that you feel you might lose, b) thinking legal costs will be to expensive to win, c) thinking the bad publicity of the trial dragging on isn't worth your time, d) just no wanting to spend the cycles dealing with it.

Settling isn't "forced", but it's a choice that tells you that the company believes settling is a better deal for them than letting the trial go forward. That's something.

[beowulfey]

You think they would have done it if they didn't get taken to court?

[crote]

Should I be allowed to walk into the Louvre, steal the Mona Lisa, then pay $10.000 once caught? Should I be allowed to do this if I am employed by Stealing The Mona Lisa, LLC?

> They paid $1.5B for a bunch of pirated books.

They didn't pay, they settled. And considering flesh-and-blood people get sued for tens of thousands per download when there isn't a profit motive, that's a bargain.

> The settlement should reflect society's belief of the cost or deterrent.

No, it reflects the maximum amount the lawyers believe they can get out of them.

> This might be controversial, but I think a free society needs to let people break the rules if they are willing to pay the cost.

So how much should a politician need to pay to legally murder their opponent? Are you okay with your ex killing you for a $5000 fine?

> Imagine if you couldn't speed in a car.

Speed enough and you lose your license, no need to imagine.

Why does this company get away with it, but do warez groups get raided by SWAT teams, labeled a "criminal enterprise" or "crime gang", and sentenced to decades in jail? Why does the law not apply when you are rich?

[rvnx]

Totally agreeing with you. One of the cause can be that if you are rich laws don’t apply to you (Google, Apple, Facebook, etc), and the other thing is that US judges in general will not block your business if it allows to create jobs or to generate revenue and activity from foreign clients (buying pushes USD price upward and strengthens political, financial, technological and intelligence).

[techpression]

And to top it off, the money they pay is VC money that is created from nothing in ”valuations”. So in the end nobody paid anything for this crime.

[kelnos]

Well, presumably this will mean ever so slightly lower returns in the future for their investors, so it's not like it was free. But ultimately I'm sure this settlement was money well spent for Anthropic, and if they could go back and do it all over again, they would have done the exact same thing.

[kelnos]

> The settlement should reflect society's belief of the cost or deterrent

Settlements have nothing to do with either of those things. Settlement has to do with what the plaintiff believes is good enough for the cost that will avoid the uncertainty of trial. This is a civil case, "society" doesn't really come into play here. (And you can't "settle" a criminal case; closest analogue would be a plea deal.)

If the trial went forward to a guilty verdict, then the fines would represent society's belief of cost or deterrent. But we didn't get to see that happen.