The AMD v. Intel anti-trust case seems to be back in the news again. I made an entry on the event since its early days in late june of this year, on my previous blog. The following is a reprint of said entry—with minor alterations.
“Economic Coercion.” Such is the contradiction in terms that Advanced Micro Devices (AMD)
accuses Intel Corp. of being guilty of—hence, the former is
suing the latter for being a “monopolist” in a soon-to-be-launched “anti-trust” battle.
But just what is “coercion?” It is the initiation of physical force, or a threat thereof, to compel an indivdual(s) to act against the free judgement of his mind, i.e., against his will.
To anyone aware of the basic principles of Economics, such action is impossible under a free market. So what excatly is Intel guilty of? Well, according to AMD, the list is rather long. For space and time constraints however, I shall confine myself only to a few points.
The
complaint’s first paragraph starts as follows:
Like Standard Oil at the turn of the Nineteenth Century and Alcoa Aluminum during the Twentieth, Intel holds a monopoly in a market critical to our economy, microprocessors that run the Microsoft Windows and Linux families of operating systems ... Although AMD competes with Intel in this global market, Intel possesses unmistakable and undeniable market power, its microprocessor revenues accounting for approximately 90% of the worldwide total (and 80% of the units).
Why is this an allegedly unforgivable evil? Because just “like Standard Oil at the turn of the century and Alcoa Aluminum during the Twentieth,” Intel Corporation is big and successful by virtue of its excellent productive power, and its consequent unmatched ability to efficiently serve the wants of its customers—through voluntary trade and exchange. This is what AMD equates to “monopoly,” i.e., your government favored, local post office.
The diatribe continues:
Just like Standard Oil and Alcoa before it, for over a decade Intel has unlawfully maintained its monopoly by engaging in a relentless, worldwide campaign to coerce customers to refrain from dealing with AMD. [Emphasis mine.]
It is important to know that
AMD here defines “monopoly” as
any individual or corporation that, under any circumstances, possesses total, or near-total, share of a given market’s supply. The purpose of this “definition” (if it can be called that,) is to obliterate the difference between (1)— a corporation that
earns its share of the market through greater productivity and therefore more [voluntary] consumer patronage than its competitors, and (2)—a company that grabs and reserves exclusive market share through the
initiation of physical force, or a sanction thereof, by the State [e.g., by the imposition of
legal barriers to entry in a certain field].
This latter, in fact, is the only one that can be called a “monopoly.” Clearly, Intel is no such thing—as it never held a club and promised to bash-in the brains of any one consumer who refused to purchase a Pentium 4 microchip—and AMD’s complaint that Intel “coerce[d] customers” reduces to the fact that Intel has offered to those customers better goods at cheaper prices than AMD ever could, i.e., that Intel appealed to the self-interest of its customers as one does when one deals with rational beings.
Yet despite the utter lack of initiation of physical force on the part of Intel, i.e., of violation of rights, the company is portrayed as a criminal. Why? Because it has “unlawfully maintained” its rightfully earned share of the market. This nonsense is possible only if the
law itself has been perverted from its proper function—which consists of protecting the indvidual rights to life, liberty, property, and their other derivatives—to the disgraceful function of violating the very rights it is supposed to protect, and committing the very injustices it is supposed to punish. “
Unlawfully maintained” is not synonymous to “
unjustly maintained.”
In another “
open letter” issued by
AMD chairman and
CEO, Hector Ruiz,
AMD lists a condensed version of Intel’s alleged evils—and so it goes:
Our competitor has harmed and limited competition in the microprocessor industry. On behalf of ourselves, our customers and partners, and consumers worldwide, we have been forced to take action.
... Intel’s actions include:
-
Forcing major customers to accept exclusive deals,
-
Withholding rebates and marketing subsidies as a means of punishing customers who buy more than prescribed quantities of processors from AMD,
-
Threatening retaliation against customers doing business with AMD,
-
Establishing quotas against customers from selling the computers they want, and,
-
Forcing PC makers to boycott AMD product launches.
Of course, all the references to “force,” “threat,” and “punishment(!),” simply mean that Intel set terms on how to use its property, and at what price it will exchange its products to whomever is willing to buy —and it that it persuaded its customers that they stand to get more out of their investments and purchases by dealing with Intel instead of its competitors. All, actions bound within its just right to property.
Intel never initiated physical force against anyone. If the better interests of Intel’s customers lied with a competitor of Intel’s, certainly, in Reason, there’s no reason why said customers wouldn’t patronize that competitor. But AMD’s trick consists of the following: just as it equates “voluntary trade and exchange” with “monopoly,” and just as it equates “legality” with “justice,” so it equates persuasion with coercion. All of it resulting in the effective obliteration of the difference between actions that violate rights and those that do not; between justice and injustice.
But here’s a little bit of a shocker. AMD seems to think that people have a right to property, and that all of the above listed actions are nothing but proper competition … but somehow, Intel (which AMD itself admits to have “earned [its] success,”) shouldn’t be able to do the same thing to protect its interests—hence the bigotist statement:
For most competitive situations, this is just business. But from a monopolist, this is illegal.
So much for that sacred principle of equality under the law. Now, for an excercise in humor, try replacing “monopolist” in that statement with “woman,” or “jew,” or “black.” It sounds exceptionally hilarious.
AMD, just like all of today’s statists and altruists, seems to think that freedom of competition means that your better competitors have to kiss your @$$ and hurt their own interests in order to advance yours. Why? Because they’re the “big guys” and you’re the “little guy”—and altruism demands the sacrifice of the former to the latter … which it perversely calls “fairness.”
In the realm of reality, however—a realm from which AMD wishes to be sheltered—“freedom of competition” is not synomymous to “guarantee to succeed in competition.” Nor is freedom of competition and end in itself as AMD seems to make of it. Economically, its function in the free market is to put the production of goods and services within the hands of the ablest producers—the result being ultimately decided by the consumers, who will patronize only those producers who best satisfy their wants.
AMD and the drafters of our present legal system seem to be wholly ignorant of this; or at at least, unwilling to recognize that it is true —hence their wish to enforce “free competition”— which of course is nothing but a cover for (1) the state to enlarge its coercive power, and (2) for AMD to achieve a private [short-run] interest at the expense of Intel. With the Supreme Court’s recent Kelo v. New London decision, this seems to have become a sure-fire combination. But in the ever-so-true words of Ayn Rand …
“Free competition enforced by law” is a grotesque contradiction in terms.
