Well that's not entirely true in these cases. The devs/GMs/SE are the ones who have the final say on any matter that goes on within the game. If it weren't the case, there wouldn't be any bans done for whatever reasons. We, the players, determine the norms/etiquette/etc within the grounds of what the devs are fine with.
Win-trading always hurts the content it happens in, no matter what it might be. The question is "in what way?" and to answer that, you just need to look at frequency and player wants. If it truly does become a norm for people to win trade to get what they want, the content itself becomes tarnished by the frequent acceptance that "cheating gets you what you (the general community) want"... it may not get what you specifically want, but others, sure.
Morale is a huge contributing factor to want of participation and, eventually, low morale absolutely destroys said content to nearly irreparable levels unless devs step in to counter it with punishment. I'm speaking from first-hand experience from that one from many years ago, and honestly, so should anyone who wanted to participate in any tournament in this game.
Let's go with WoW for a minute. Many years ago, there was no function to report players as AFK in PvP. Many players (myself included) ended up just AFKing battlegrounds because of how low morale was to even play. Once it became widely known that you could just AFK "win" your way to gear, nearly everyone was taking advantage of that. Alterac Valley became an AFK-fest for both sides. 40v40 turned into 5v8 participating players, if even that sometimes, with everyone else AFK waiting out the win/loss. Basically, whoever had the most active players won... hopefully. This was usually Horde though, because of how much of a joke the objective boss is for AV. You could practically solo him, but that's just going off topic now lol. An example of when bad behavior unpunished becomes a problem. Some battlegroups were better than others... mines was definitely one of the worst.
Now if we look at FFXIV, SE is rather sloppy about their attempts to curb bad behavior. Usually it's because of execution, otherwise it's because of laxed priorities once the players have forgotten (generally a couple weeks after a "fix"). The only existing means of keeping such content as TT and LoV relevant long-term is riddled with win-trading. To practically everyone here, that alone was the primary reason why most of us stopped bothering, despite actually wanting to compete. It became common knowledge that, unless you cheated, you were not going to win or even rank. Even with LoV and their miserable attempt at mitigating win-trades, it just failed horribly and even backfired to punish/hurt players within the system that played legitimately (if I recall right, the higher rank you were naturally, the lower points you'd get... basically, the better you are, the worse you'll do).
Maybe the ranking system for this is enough to sweep win-trading under the rug for it... but it honestly wouldn't surprise me if players, soon, discover a means to win trade here for said rank rewards. If that comes to be, then you can bet that people will suddenly think "what's the point in even trying?", especially if it ends up being to the degree that win-trading obtains highest ranks lol.
You're absolutely right on the interpretation, but when you're in a position of control, you generally don't let people be bad if you can rightfully punish them for being that way. That'd be like if our law enforcement did not actually have punishments for crimes committed, but instead just told people "please don't do this", when referring to murder/theft/assault/etc. I'm fairly confident I'd have stolen quite a lot and killed a few people by now if such a thing was the accepted norm. People are going to be bad, one way or another, but you need to dissuade the vast majority by having (and most importantly: actually going through with) consequences for their actions.




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