Not Just Microsoft

[unixronin]

The EU has just hit Intel with a $1.45 billion fine for “engaging in illegal anticompetitive practices to exclude competitors from the market”, referring specifically to dirty tricks targeting AMD.

Between October 2002 and December 2007, Intel held more than 70 percent of the worldwide x86 CPU market. The Commission found that during the period in question, Intel engaged in two illegal practices. The first was that it gave wholly or partially hidden rebates to computer manufacturers on the condition that they buy all or almost all of their x86 CPUs from Intel. This illegal practice also included Intel’s making direct payments to a major retailer so that it would stock only computers with Intel x86 CPUs.

The second illegal practice was that Intel made direct payments to computer manufacturers to halt or delay the launch of specific products containing competitors’ x86 CPUs and to limit the sales channels available to these products.

The computer manufacturers named by the Commission as being involved in the rebates and payments included Acer, Dell, Hewlett-Packard, Lenovo, and NEC. The retailer was Media Saturn Holding, the parent company of the MediaMarkt chain.

You know, I’d probably feel better about buying Intel products if Intel apparently believed it could compete fairly with AMD on a level playing field. Every time I hear about another case of Intel playing below-the-belt like this, it makes me feel more strongly that if Intel is this afraid of AMD — and this dishonest — I should be continuing to buy AMD products, not Intel.

Naturally, Intel doesn’t think it did anything wrong:

Intel said in a statement Wednesday that it did not believe its practices had violated European law and that it would appeal the fine.

“Intel takes strong exception to this decision,” the chipmaker’s chief executive, Paul Otellini, said in the statement. “We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace — characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal.”

Oh, really? This is all fair and above-board? I suppose that’s why Intel tried to conceal what it was doing it, is it? Just suppose for one moment that AMD, not Intel, had been doing this, and imagine the resulting howls of outrage we would be hearing from Intel.

Intel has three months to pay the €1.06 billion fine, the largest ever assessed by the EU. If they don’t, they’ll likely be hit with additional penalties — like the €899 million penalty the EU hit Microsoft with in February 2008, after Microsoft failed to pay the €497 million fine assessed against it by the EU in 2004, the previous largest-ever EU antitrust fine.

Comments

[unixronin.livejournal.com]

"biased term"? Can you define any context in which paying off one of your competitor's corporate customers to delay shipping a product that contains the competitor's product is not a bribe? If that's OK, is it also OK to go to the next step and pay off one of your competitor's suppliers to deliver defective parts or contaminated materials, or pay off your competitor's employees to sabotage his product, production process, or factory?

Negative press and boycotts, even astroturfed ones, are dirty pool but legitimate (though I still wouldn't do business with a company that made a habit of using them ... Microsoft, for example). When you start paying off your competitor's business associates and partners to conspire with you to ruin your competitor, you've crossed the line into organized crime.

[fruitylips.livejournal.com]

"Offering an incentive to gain preferential treatment". He's right. 'Bribe' is nothing but a prejudicial term here.

In short, it is common practice to offer some value to a vendor to promote your projects over someone else's Usually this is done by offering better commission programs and pricing on your products, but there's a gazillion other ways that it's done.

While I think this probably is a bit over the line, it isn't exactly something so far beyond the pale of normal retail business that we should all be aghast and up in arms about it.

As for why would Intel do this if they weren't afraid of AMD? Simple. If we are better in technology, price and quality and play 'nice' and they don't, we'll still lose. Notice that in this case, you don't have to be at all afraid of your competitors products. You'd think someone who's made a life out of complaining about how not nice MS is would know that...

[ithildae.livejournal.com]

The legal difference between the standard practice you describe and what Intel got nailed for is that, Intel did it from a monopoly position. When in a monopoly position, viable competition is harder to introduce. Usually, you have higher profits, so that you are able to absorb at or below cost sales long enough to kill a competitor. The only real way to threaten a monopoly is produce product at zero cost, or change the technology landscape.

[ithildae.livejournal.com]

The word bribe is prejudicial in that it is associated with corruption in American English use. Many overt tactics that Intel used are standard practice. It is the covert tactics, that the emails and other extrinsic evidence revealed, that showed a problem.

Dirty pool indeed. If the agreements were not a step over the line, why were they side arrangements, and not part of the contract?