08.16.09

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Does the Intel/Microsoft Relationship Qualify as a Cartel?

Posted in GNU/Linux, Hardware, Microsoft at 6:22 pm by Dr. Roy Schestowitz

Summary: Serious questions are raised following the battle against low-cost computing

EARLIER ON in the day we wrote about the possibility that Microsoft was breaking more than one law amid collusion with Intel [1, 2]. As the Russian authorities investigate the issue we also come to discover that the headline from Linux Today has come from Groklaw. To quote Groklaw’s view on the same article: “I have a question, simple soul that I am. Why are two monopolies allowed to dictate what a netbook is allowed to be like? As in, how dare they force the market to accept lower specs than the tech allows? And my follow up question: Where are the antitrust regulators on this?

On the surface, it is a rather simple case of manipulation in the market and mutually-beneficial price-fixing (where the market, i.e. the customers, have no say). Does it qualify as a cartel? That’s the principal question in some people’s minds.

SM writes (in part):

Why are two monopolies allowed to dictate what a netbook is allowed to be like? That is a question for the EU and DOJ anti-trust authorities to answer.

However the reason the Microsoft-OEM cartel is carrying out this market and price fixing arrangement is pretty obvious. The idea is to eliminate Linux preloaded netbooks from the market by selling Windows at below zero cost (ie. a nominal price plus advertising and marketing rebates), and then claw back the subsidy by charging more on higher end PCs and laptops where Linux is not in competition, and which Microsoft’s monopoly position allows it to do. This is a classic and obvious price/market fixing strategy, and completely illegal, and something that Microsoft has been able to execute very successfully in the last year.

GreyGeek then replies:

Like the Judges, Police and politicians in Chicago during the Capone era, the US Department of “Justice” has turned a blind eye on these blatant violations of the Sherman-Clayton Anti-Trust Act, which have continued unabated since Microsoft was “punished” for them nearly a decade ago.

The Capone era police and politicians were PAID off by Capone to thwart justice. One of Bush’s first acts as President was to replace the existing DOJ team, which won TWO convictions against Microsoft, and replace them with a team which immediately surrendered to Microsoft and sued for peace in the form of a “negotiated” settlement, after replacing the Judge who wanted to break up the convicted felon just like a previous court did to AT&T. Apparently either the politicians thought it would be bad for “bidness” or they were paid off in the form of campaign contributions, the current and legal form of political bribery.

SM is at it again:

In any case, it is apparent that the OEMs have accepted a price fixing and market manipulating agreement with Microsoft, and whether they were induced to do so by Microsoft offering better terms for them to do so or whether they were forced to do so by punitive threats from Microsoft, does not matter. The fact that they have agreed to fix prices at a differential rate and to engage in an artificial market manipulating arrangement with Microsoft is enough to make them participants in a cartel.

It is important to remember that this is an Intel+Microsoft collusion, the OEMs being just optional accomplices that may sometimes have no other choice. OEMs and shops, unlike the OS and chip vendors, haven’t a monopoly they can abuse. For more information about this repeating pattern of corporate behaviour, see:

Here is a new article which serves as another reminder of Intel’s more recent felonies.

“Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years,” EU Competition Commissioner Neelie Kroes said in May. The commission said Intel had used wholly or partially hidden rebates to get PC makers such as Acer, Dell, HP, Lenovo and NEC to buy all or almost all their CPU supplies from Intel instead of AMD.

In spite of impotent regulation in the United States, Intel was found guilty in Asia and also guilty in Europe. And that’s just in the past year alone.

Intel: criminal inside

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6 Comments

  1. Mikko said,

    August 16, 2009 at 6:34 pm

    Gravatar

    in Sweden you can’t find a netbook without windows xp

  2. Yuhong Bao said,

    August 17, 2009 at 1:38 am

    Gravatar

    “Intel was found guilty in Asia and also guilty in Europe.”
    Yep, AMD was gloating over the latter victory, even displaying it on the home page:
    http://breakfree.amd.com/
    http://blogs.amd.com/nigeldessau/2009/05/13/power-to-the-people-or-it%E2%80%99s-about-the-consumer-stupid/

  3. Yuhong Bao said,

    August 17, 2009 at 1:42 am

    Gravatar

    One more link on this:
    http://news.cnet.com/8301-13924_3-10242372-64.html

    Roy Schestowitz Reply:

    Putting it into context, many characterised AMD as a “whiner” for many years. AMD shows its critics that they (the critics) were wrong. Moreover, those who claim that “AMD is behind anyway” do not account for the reason this happened in the first place. Where would we be in terms of technology and price if Intel had competed fairly and stayed close(r) in the chase with AMD.

    Yuhong Bao Reply:

    “Putting it into context, many characterised AMD as a “whiner” for many years. AMD shows its critics that they (the critics) were wrong.”
    Yep.
    “Moreover, those who claim that “AMD is behind anyway” do not account for the reason this happened in the first place. Where would we be in terms of technology and price if Intel had competed fairly and stayed close(r) in the chase with AMD. ”
    Well, the reason AMD is behind now is more technical. But keep in mind it was only in 2006 that Intel regained it’s lead, and the crimes dates from 1999 all the way to 2007. So, yes, it is no excuse.

  4. Mikko said,

    August 19, 2009 at 3:21 pm

    Gravatar

    called one seller of netbooks

    no you can’t have one without windows xp because it’s included and can’t be removed

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