Monday, October 29, 2007
Wintel Under the Antitrust Microscope: A Comparison of the European Intel Case with the U.S. Microsoft Cases
Posted by D. Daniel Sokol
Norman W. Hawker, AAI Senior Fellow and Associate Professor, Haworth College of Business, Western Michigan University, offers a comparative analysis of the Intel and Microsoft cases in Wintel Under the Antitrust Microscope: A Comparison of the European Intel Case with the U.S. Microsoft Cases.
ABSTRACT: The European Union has issued a statement of objections to Intel regarding the company’s conduct aimed at suppressing competition from Intel’s chief rival, AMD. Although the statement of objections remains confidential, the allegations in AMD’s private litigation are public and provide a useful basis for analysis. Intel dominates the PC chip market almost to the same degree that Microsoft dominates the PC operating system market. As in the Microsoft case, Intel’s aggressive marketing tactics prevented OEMs from offering rival products to consumers. And like Microsoft, Intel has engaged in this conduct to maintain its existing monopoly. These parallels between the Microsoft and Intel suggest that Intel’s anticompetitive practices harm consumers, including American consumers, by denying them the access to innovative products at lower prices from rivals. The United States established that Microsoft repeatedly and willfully violated the antitrust laws, but failed to achieve an effective remedy. The EU, however, should have an easier time achieving an effective remedy. First, unlike the OS market, a viable competitor still exists in the chip market, i.e., AMD. Second, Intel has relied primarily on exclusionary rebates, not commingling of intellectual property, to maintain its monopoly. Consequently, the EU should be able to fashion a remedy that does not require Intel to redesign its product.