The FEC made an under-the-radar move that campaign finance experts say opens a huge loophole giving corporations more power
Getty Images/Drew Angerer
- The Federal Elections Commission ruled last week that Microsoft can offer election security software free of charge to political candidates and committees and not run afoul of campaign-finance laws.
- Campaign-finance experts said this creates a massive loophole that corporations can now exploit.
A ruling last week by the Federal Election Commission related to Microsoft and security software it wants to offer free of charge to political candidates and parties could have massive implications, creating a loophole that allows corporations to skirt campaign-finance laws, experts say.
In a 4-0 decision last week, the FEC ruled that Microsoft can provide federal candidates and national party committees with free election security services after the company sought an advisory opinion from the commission last month.
Microsoft said it was offering its AccountGuard service on a nonpartisan basis to candidates, party committees, and some nonprofit groups free of charge. The purpose of doing so, the company said, was to help thwart foreign electoral interference. Company lawyers told the FEC that Microsoft also has a "compelling business interest in maintaining its brand reputation," one that would be harmed by potential election-related hacking.
The FEC concluded that Microsoft's offering of the service for free to such candidates and groups wouldn't constitute an illegal in-kind donation since AccountGuard was not being offered for political purposes. Corporations are banned from making such in-kind contributions under existing anti-corruption laws.
In its ruling, the FEC concurred with Microsoft's view that its brand could sustain significant damage if hackers broke into a candidate's Microsoft-hosted email account, for example. The ruling provided Microsoft with an exception to existing election law that prohibits companies from providing free services to candidates that it does not provide free of cost to the general public, and the FEC said it did so because the company was acting out of its own business interests and not to curry favor with politicians or political groups.
"The FEC's decision enables us all to work closely together to protect elections from cyberthreats, and we're grateful for the bipartisan work of the Commissioners," Tom Burt, Microsoft's corporate vice president for customer security and trust, said in a statement to Business Insider. "It's important we take the steps needed to protect our democratic institutions, and we look forward to partnering with others on solutions like AccountGuard so we can do our part to build trust in our elections."
'It's a loophole you could drive a truck through'
Though the exception is for a very specific, nonpartisan instance, opponents of the ruling said it flies in the face of existing law and "opens a major loophole" that will allow corporations to now provide free services to candidates and political parties.
"The law prohibits a corporation from giving candidates free services or discounts they do not offer to others in the ordinary course of their business," Larry Noble, the senior director and general counsel of the Campaign Legal Center, told Business Insider in an email. "If Microsoft believes that security problems with its software will damage its reputation, it can offer the services to all customers. Or it can base what it charges for the service on the size of the customer, what products it buys, or other normal business considerations."
"But offering a free service to a client because they are a candidate or political committee is exactly what the law prohibits," he continued. "It is a way to buy access and influence and the FEC should have shut it down."
Noble said that the FEC's rationale of providing Microsoft with this exception because it is in their business interest "can and will be used by other corporations looking to get around the long-standing [ban] on corporate contributions."
"And the history of the FEC proves that these loopholes just grow larger," Noble, a former FEC general counsel, added.
Adav Noti, an attorney at the Campaign Legal Center and a former associate general counsel at the FEC, told Roll Call that the FEC's rationale opens the door for any corporation to "give anything to a candidate" because any such contribution could be defended as being done in the name of "business reasons."
"It's a loophole you could drive a truck through," he said. "If I were a campaign finance lawyer who had corporate clients, I would certainly alert them to this and see what they could do with it."
Get the latest Microsoft stock price here.
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