Intel Monopoly

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Rich Tehrani
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Intel Monopoly

I spent some time reading some of the compliant against Intel from AMD. I found it interesting that AMD waited until recently to file such a lawsuit but as I understand from my reading, AMD claims that since AMD launched its Opteron processor, the first such processor to allow 64 bit computing and 32 bit compatibility, Intel became increasingly egregious. For a while, Intel decided their 64 bit solution would not need backwards compatibility. They have since changed course.

This early decision hurt Intel in the market and AMD claims this was the reason Intel really started to use its monopoly position to keep retailers and manufacturers from selling AMD based solutions.

According to AMD’s complaint against Intel:

Intel’s conduct has unfairly and artificially capped AMD’s market share, and constrained it from expanding to reach the minimum efficient levels of scale necessary to compete with Intel as a predominant supplier to major customers. As a result, computer manufacturers continue to buy most of their requirements from Intel, continue to pay monopoly prices, continue to be exposed to Intel’s economic coercion, and continue to submit to artificial limits Intel places on their purchases from AMD. With AMD’s opportunity to compete thus constrained, the cycle continues, and Intel’s monopoly profits continue to flow.

Consumers ultimately foot this bill, in the form of inflated PC prices and the loss of freedom to purchase computer products that best fit their needs. Society is worse off for lack of innovation that only a truly competitive market can drive. The Japanese Government recognized these competitive harms when on March 8, 2005, its Fair Trade Commission (the “JFTC”) recommended that Intel be sanctioned for its exclusionary misconduct directed at AMD. Intel chose not to contest the charges.

There are a number of reasons to file such a complaint such as influencing the general public to feel sorry for AMD, to pressure Intel to lighten up on its alleged monopolistic practices and finally to gain positive press. Interestingly I was enticed to click on and download the complaint as a result of an AMD ad on NYTIMES.com.

My take? Intel is famous for instructing its employees how to run a company that is not a monopoly. There was an internal handbook widely available on this matter for a number of years and I would be surprised to learn that this practice has been abandoned.

IMO Microsoft is a much bigger monopoly and competes with and destroys dozens of companies t a time. If the government lets Microsoft be a monopoly and get away with it, why bother Intel?

Of course Microsoft argued that Linux was a threat and indeed it was and is. Intel doesn’t have such a foe. Imagine a free open source microprocessor, now that is a recipe for destroying Intel’s business.

I think the odds are in Intel’s favor based on the Microsoft situation and will keep you posted.

Interesting link to Intel’s Extended Memory 64 technology.



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