This complaint (PDF) alleges a whole host of monopolistic (or “anti-competitive”, or “unfairly competitive”) actions on Intel’s part. Some of the practices include:
Retroactive pricing discounts for OEMs who meet Intel’s purchasing goals: if Dell, for example, buys enough CPUs from Intel, then Intel drops the price, including the price of all of the CPUs sold that quarter. This makes the marginal cost of CPUs zero or negative. This creates pressure on the OEMs to meet Intel-dictated “goals” to remain competitive with the other OEMs.
Joint purchases of advertising campaigns featuring the “Intel Inside” logo. If Toshiba deals exclusively with Intel, then they can use the “Intel Inside” logo, for which Intel will chip in on the costs of advertising. This is essentially a kickback for anyone who plays nice with Intel.
Acting as a third-party “spoiler” to scuttle deals between AMD and their vendors. A particularly revealing case was a deal between NEC, Honda, AMD, and apparently Intel: “Intel was forced to relax its hold on NEC’s business when long-time NEC customer, Honda Motor Company, demanded that NEC supply it with servers powered by AMD’s Opteron microprocessors. After underwriting the considerable expense of designing and manufacturing an Opteron server for Honda, NEC then inexplicably refused to market the product to any of its other customers.” Here, AMD used what little market influence they had, and still ran into a stone wall.
Withholding agreed-to deliveries from OEMs because those OEMs deal with AMD Until the OEM ceases their dealings with AMD, Intel shipments arrive late or incomplete. The stonewalling costs the OEMs reputation with their vendors.
Interference in AMD product launches: Intel cautioned their OEMs that sending executives to the AMD product launch would be seen as a sign of disloyalty, and could cost the OEMs Intel’s cooperation.
Bundling: Intel makes CPUs and motherboards. When you buy these together, Intel gives you a deep discount.
Intel bribes distributors to refuse to deal with AMD.
[…]
…And on and on!
Anyway, here’s my first point for debate: (1) Intel has effectively created a monopoly for themselves in the x86 CPU market. I think the complaint is detailed enough that AMD must have some kind of proof for claims that are so radical. My problem is, as a libertarian, I can’t think of a good way to break up the monopoly that doesn’t violate the principal of non-coercion.
If you agree that breaking up monopolies is one role for government, and you accept Premise 1, then you should probably be willing to admit that (2) The U.S. Government should award AMD some relief. I’d entertain arguments against this on lots of fronts: should governments break up monopolies? Is this one of those cases? This is a big point for debate, if you want it to be.
But what I really came to ask is this: how can the government force Intel to play nice? I submit that (3) A truly fair remedy would be a condition that the government would be able to enforce on both companies. An example of this would be uniform pricing schedules – suppose that AMD and Intel were forced to each submit pricing data to a trusted 3rd party, and that any discounts for volume orders were included in this schedule. Both schedules would be published by the 3rd party simultaneously.
What other remedies are possible that Intel can’t do end-runs around by renaming their kickbacks?
This sort of thing is common to almost all high-tech manufacturers. Nortel and Cisco hand out price points for their voice and data products based on retroactive discounts, for instance.
I don’t know that I’m necessarily convinced that Intel really has a true monopoly going, but I can recognize that it’s gotta be damned frustrating for AMD. They’ve been kicking Intel’s ass in terms of price/performance for a couple years now, and off and on been kicking Intel’s ass in terms of pure performance too, and they haven’t picked up any market share whatsoever from that. Clearly there’s something screwed up in terms of open market competition here.
Gorsnak: Intel has quite a reputation as a manufacturing powerhouse. It doesn’t matter how good your product is if you can’t deliver enough of it on time. Companies like Dell are extremely hard to deal with-- they got to the top of the heap by making their supliers meet rigorous standards of not only price and perfromance, but also delivery and product reliability. They’d love nothing more than to have a second source for microprocessors. If they don’t use AMD products, they probably have a very good reason for not doing so, and it’s unlikely that Intel could bully them into that position.
I wouldn’t call it a monopoly. Unlike Microsoft’s Windows monopoly, there is no real barrier keeping AMD from competing with Intel. A system powered by an AMD processor can use all the same software and hardware as an Intel system (except the motherboard).
Intel’s behavior certainly seems anticompetitive, but I don’t know if that’s really illegal if they don’t have a monopoly.
Those of us who have been building our own computers for awhile remember a time when Intel was the only (mainstream) game in town. Then AMD came along. Currently AMD’s products are good enough to enable them to remain in the market despite Intels (possible) effort to “fight dirty”. And it’s not like AMD is squeaky clean either (note, by rumour).
The problem with the CPU market is that these products are very costly to design and manufacture, and if a new product should flop that could seriously hurt the company behind it. At the same time the market wants standardization and cross-compatibility. I think we should be lucky we got two big players instead of one.
Another problem is that these are multi-national businesses, so it’s not only up to the US to take action, others have to step up to the plate too.
Anyway, if this is true it’s nothing new, it happens pretty much everywhere, (we’d have our fair share of WalMart threads) both in the business to consumer and business to business market. As for the OP’s point 3, what is needed is regulation, whatever deals are made can later be found by checking the books.
I submit there’s a difference between a theoretical monopoly and a practical monopoly. If company A sells 999.999 units and company B sells 1 unit (to his neighbor), that should be treated as a monopoly by anbody but the people at Dictionary.com.
MS has (or at least had) a monopoly on PC operating systems because there are significant barriers to the success of a new OS. A new operating system can’t succeed without software, but no one will write software for an OS that no one uses. (Not to mention the anticompetitive practices Microsoft used to discourage PC manufacturers from distributing other OSes.)
It’s taken Linux many years to get as popular as it is now, but it still isn’t very popular with home users, and many programs that users demand simply aren’t available for Linux. Emulation has gotten better, though, so one might argue that the barriers are much lower today because many apps developed for Windows (particularly games, which aren’t easily cloned as free software) can be run on Linux.
Just to be clear, AMD’s share of the uP (microprocessor) market fluctuates from between 15% and 20%. Again, this is about anti-competitive practices, not Intel being a monopoly even though the press oversimplifies it that way for soundbite purposes.
Offering discounts is not illegal. But would the court consider e.g. the following to be anti-competitive and thereby illegal?
Last year I was desperately looking to buy an AMD notebook. It had to be 64-bit. I was completely frustrated to find they weren’t available anywhere. They just didn’t exist. I guess now I know why.
Investorwords.com Investordictionary.com Here’s one from Canada, check the examples section Here’s a whole bunch from googleThis one shows many definitions that include having control over the market rather than forcing the silly definition of “one and only one supplier” that is pretty much unknown in real markets. If that’s your working definition, then you need to be in “college-exampleland” where there are plenty of frictionless pulleys, ideal gasses and monopolies to apply your formulas to.
Offering a great discount is not anti-competitive, it is the essence of competition. As long as you are not being predatory, it’s legal and desireable. This other stuff is total BS, and Intel deserves to be taken down a notch. I looked at all the major PC companies, and am hard pressed to find a single AMD processor in the bunch.
Yes. Okay. I think we all understand that “mono” means “one” and the existence of any competitor stretches the word’s original etymology. However, the above-cited Investor Words dictionary defines a monopoly as
And, whether or not we award you the point on the pedantic definition of “monopoly” (I don’t) you are splitting hairs and completely failing to address the anti-competitive practices. Wikipedia defines several of these, and AMD has accused Intel of several of them: dumping, limit pricing, and exclusive dealing.
I think the behavior that most clearly makes AMD’s case is Intel acting as a third-party spoiler in two-party talks between AMD and a potential customer. All of AMD’s potential customers are currently Intel customers or potentially Intel customers – they both sell x86 uPs, and they’re the only ones who do so. Whenever AMD is in negotiations, Intel shows up and muscles them out of the way.
AMD currently manufactures higher-performance processors which generate less heat, and sells them for a lower price than Intel. They have the best entry in the 64-bit desktop market, but you’re not going to find AMD’s boxes sharing shelf space 50/50 with Intel’s – retailers who give more than 20% of their shelf space to Intel face heavy financial penalties from Intel.
If they’re true, the court probably would. They sound pretty fanciful to me-- I have had extensive dealings with both companies in question over the years.
In the competitive PC market, I find it very, very hard to believe that not one single notebook manufacturer would use an AMD product, if it actually existed and was available at the time.
I’m quite sure the dictionary definition is irrelevent, anyway. What matters are the legal definitions, and I would be interested to hear from someone who knows how these are defined.