By Robert H. Lande|July 31, 2008
It's time we admitted it: We're beginning to fight World War 4.0. World War 3.0 was what many called the highly publicized antitrust actions of the U.S. and the Europeans against Microsoft in the 1990s and early 2000s, involving PC operating systems and related markets. Now we're seeing the first of a series of antitrust lawsuits against Intel that is just as important - one that should capture the public's attention the same way the Microsoft cases did.
Just over a year ago, the European Competition Commission issued a Statement of Objections alleging that Intel abused its dominant position in the market for X86 microprocessor chips. Japan and South Korea each investigated and found similar violations of their laws, and the U.S. Federal Trade Commission and the state of New York opened analogous investigations. Most recently, on June 17, the Europeans issued a supplemental Statement of Objections, adding even more charges against Intel.
In short, Intel is in big trouble.
Although nothing is final in the U.S. or Europe, the charges against Intel are remarkably similar to those proved against Microsoft, which involved a legally established monopolist trying to preserve its position through the use of illegal tactics. In neither case was the monopolist accused of attempting to do this through excessive innovation, competition on the merits, or new products. Rather, in both cases, the disputed tactics focus on impediments against competitors - leveraging a monopoly product against would-be rivals through anticompetitive tactics, disguising predatory pricing and actively taking steps to suppress rivals' position in the market.
Together, Microsoft and Intel monopolize the two key products that comprise PCs; they are sometimes referred to as "the Wintel monopoly." Microsoft's share of the PC operating system market long has exceeded 80 percent, while Intel has at least that large a portion of the market for the X86 chips used to power PCs worldwide. Only Intel and Advanced Micro Devices have any chance of being a major player in the global $30 billion X86 chip market for the foreseeable future.
During World War 3.0, Microsoft was found guilty of illegally maintaining its OS monopoly by a variety of anticompetitive tactics. For example, Microsoft took steps to prevent its browser rivals from distributing their products. Microsoft officials could establish no business justification for this or for the other tactics they deployed to destroy their main browser rival, Netscape.
