Intel Corporation hidden price fix paid by procurement in PC Supplier end purchase price on every Intel microprocessor based PC, since March 1993, averages $12.25 from Intel.
Robert Crandall and Charles Jackson in Antitrust in High Tech Industries propose discontinuous technological innovations have greater impact on high tech competition than government antitrust measures focused on incumbent technologies.
Joshua Wright in a parallel piece entitled Does Antitrust Enforcement in High Tech Markets Benefit Consumers suggests FTC and EUCC challenging Intel business practice raise similar issues concerning the effectiveness of competition policy in dynamically competitive industries. Both authors miss two fundamental facts concerning innovation. First, innovation continues regardless. Second, that distribution channels tied in sales agency by dominant technical regimes are the primary threat to competitive innovation.
Where ever a puzzle to solve someone will attempt to solve it. Whether the opportunity solver foresees evolutionary path for existing technology, bridge toward discontinuous track, from interventions too address hurdles that resist science offering a revolutionary consequence, once solved, that can deliver on the truest forms of technical innovation.
Antitrust science in no different solving puzzles to deliver innovations that any normal science attempts to deliver. Fraught with hurdles is hypothesis correct, do we have tools capable now, tomorrow or never, from what facts do we work the complete, incomplete, or arbitrary? What are the intangibles? With politics in science can religion get in the way? Where key to antitrust science must address what matters, rather than antimatters, and when all attempts to discover must focus first on trust and then on innovation.
Trusts don’t limit innovation they observe it, can adopt and will adapt it possibly through theft. In commercial environments especially where high value stream’s maintained by incumbent networks guard their established structure. And will fight and manipulate to insure investments in their network today deliver network rewards tomorrow. Wherever current future time effects occur pure science must commit itself to guarding competition for Nation, industry, market and consumer good. Alternative is competition in a warped space by warped science.
That is because trusts are the destructive element in technical industry not innovations or regulators. In technical science regulators are well understood for ability to stabilize and harmonize or too destabilize if that is their aim. Because the one fact you can trust in any technical network is that it may not be open or may be only partially open. It is the closed loop nature of some techno-political system’s that inhibit participants to compete on their merit with innovations. It is the trust in antitrust that prevents them from doing so.
In technical environments innovation can occur individually, randomly, but most often within the framework of its own box. Where individuals working in groups operate in a system structure of established relationships often predisposed to see things the way they are, not as they actually are or could be. In this world of multipoint network presentation we must look beyond the box the system paints for us. The box is often incomplete and lacking outside indicators meant too limit, presenting only partial answers, that can bar innovation from bringing competitive solutions to market. Too go with the flow of the compliment even in open structure? Or too compete with ideals and solutions that can reconfigure network values on new utility models that end buyer’s value? Technical networks with market control resist reconfiguration of this second type as a threat to their continued values and margins supporting constituency. And so goes the market.
Pursuant to Mr. Wright’s address in “Does Antitrust Enforcement in High Tech Markets Benefit Consumers? Stock Price Evidence from, FTC verse Intel”, I can only advise Mr. Wright trapped in the box of a market creation. Including continued address of a political divergence focused on the potential of antitrust false positives associated with Intel sales contracts that are 1st Dollar discount and Loyalty payments that may not harm consumers. Recognizing in this instance Intel network political hurdle that defocuses from anti trust true positives; cartel tied sales distribution, monopoly price overcharge, history of money laundering, mail fraud, cross enterprise cross profession network crime that is RICO.
Yes, Intel 1st Dollar Discount and Loyalty payment may well be consumer false positives. Harming AMD and passed through too consumers? Tactically, Intel end strategy to shut down AMD, entrapped within a history of Cartel restraints into a 20% market share box. Systems within Intel industry and market structure have always been dialed to deliver this result. That is to foreclose competition.
According to Mr. Wright it is not on the surface apparent, comparing last decade’s Intel verse Advanced Micro Device stock prices, that Intel monopolized the market in ways which depressed AMD’s stock valuation. Or that stock price data shows Intel’s behavior harmed AMD or vice versa. So in this first case what’s left out or deleted from analysis?
On the contrary, to his latter point, Mr. Wright omits three antitrust discoveries. A cartel price fix for closed loop product routing which raises consumer computer purchase price average 6% calculated on Intel processor price to OEM embedded into computer system price. Second, a consumer monopoly over charge on multiple first quarters of production, which is incontestable, examining Intel price on limited output in relation to monopoly competitive output. Finally, opportunity cost lost by end users who made their Intel intra platform computer purchase decision based on Intel + Media benchmarks rigged to over state Intel microprocessor performance.
All these acts harm end customers revealing monopolist per se administration in a destructive sales triad. A distribution cartel between Intel, Microsoft, PC Companies, Media Sales Agents and heavily influenced by their closed system value generation to investment banking. Structure is rigged, players key to the cartel know of the fix, all players including AMD do the best they can within the box that has been defined for them. Where AMD must continue successful operation within the confines of Intel’s exclusive dealing ties in what appears to be a disintegrated distribution system that is not.
Here note that innovation is not being limited within technical industry, as much as it is being limited by channels; PC Company entry points and Media Sales Agent exit points, competing for exclusive Intel margin values in a tied sales system up until just recently.
On Mr. Wright’s first point, Intel monopoly affect on AMD stock valuation, I cannot say without extending analysis taking into account Intel and AMD product runs. What I can infer as industry participant and once AMD employee is that limits, set by Intel Network on AMD a long time ago, boxed the enterprise into no more than 25% share position and often less. Informed traders including those educated on MDR QUANDA know this and play duopoly stock valuation accordingly where aim is never to loose on margin. So even in 20% box AMD can do well within certain perimeters associated with product although their ability to leap frog with self managed process has been eliminated by Intel Network. And continues too harm Nation, industry, markets and consumers by continuing too place burden on AMD. By restricting channel flows regardless of capacity restrictions that also remain in face of Intel exponential capacity the result of multiple monopoly foreclosures.
Robert Crandall and Charles Jackson in Antitrust in High Tech Industries are also limited from certain information that could affect their view of Microsoft. And that is Microsoft tied to Intel systems structure accelerating monopoly potentials for both enterprise tied in horizontal combination. Because Microsoft not only tied its OS contractually to PC OEM computer offerings, but tied its self a second time to Intel microprocessors, being routed by the cartel through tied distribution channels collecting Intel price fixing charge buried into every computer chassis.
Where Intel Inside tied charge back system, not a two but three step sales system, aligns Microsoft with Intel horizontally. With both engaged in vertical by horizontal product routing through PC Dealer to Media Sales Agent distribution tied attraction. In a closed loop system where Intel charges all microprocessors with a commission value, for media agent to recoup as their Wintel content production reimbursement fee. A system driven on mass weight of PC company microprocessor purchase’s from Intel. PC Companies who are microprocessor broker dealers purchasing quantities from Intel exceeded by 2:1 their actual PC end systems demand. Intel microprocessor broker dealers who are also PC sellers earn more charge back values for media to capture, on every future Intel computer sale, operating in cartel tied sales agency. The reason current time future time effects are so important too catch and correct when administering real time antitrust remedies.
All are dealers in Wintel system sales. Intel notes weight of PC company microprocessor purchases and accrues charge back for media sales agents to capture on every sell through. PC Company’s trigger media access to accruing commission values on ad insertion order. Directed media then invoices back for their equivalent PC Company kick back from Intel for sales agency. This act of media charging Intel back the equivalent PC company media price registers Intel microprocessor & Microsoft operating system sell through PC Dealer and Media Sales Agent tied channels. And is meant to feedback too Intel as a metering device.
This sales system can be accelerated on the weight of PC company sales values accruing at Intel for media charge back too release their per unit sales commission. Commissions are high to low on Intel microprocessor price to PC OEM routed inside the PC Company central processing unit or computer chassis. Here media will focus accelerating specific computer brand model’s known to carry the highest charge back values. Including on the sheer weight of this media production cost offset accumulating in PC Dealer brand pools.
Brand fees earned by PC Dealers on microprocessor purchases, triggered by advertising insertions, collected as Intel kick back by Media Sales Agents, administered by Intel in contract and combination with two laterals of the cartels dealing group.
In this Intel Inside example, 1993 through 2006, which is a predecessor of 1st Dollar kick back and Loyalty bribes, dealer to media tied sales attraction is relied on by media for collecting their brand fee commission. Relied on by the cartel for artificial acceleration of Intel and PC Dealer product’s out of inventories onto consumers. System restraint drives up competitor cost of sales, limits market participation for competitors outside cartel tied distribution system. Microsoft rides this distribution system through two ties; its own OS license restricting PC Company software modification and Intel price fix which combines media with PC Companies in joint sales agency.
There is a second social industrial harm here unforeseen in Microsoft litigation affecting software companies and alternative compute platform suppliers. And that is the number of Intel microprocessors on which Microsoft ties by license below one of 3 levels of Intel cost; less than Intel average total cost to produce, less than Intel fixed cost, less than Intel variable cost to produce. Processors produced by Intel intending to monopolize markets on surplus dumping and the tied price fix charge attached to each and every one of them.
Alternate microprocessor and other computer platform player’s outside cartel distribution system become non participants in Wintel gaming system structure. Here the key antitrust consideration is not accelerating competition, where media agents are competing for Intel Dealer accruing brand fees, but to free the total system structure from Intel and Microsoft contractual requirements that drive artificial acceleration of computers on consumers for an Intel kick back collected by media on every future sale for their continued agency.
In such an environment innovation rarely leads to market power. Market power becomes the result of 18 years participation in cartel distribution network. Wintel price fixing tied with limiting systems intended to monopolize is undeniable on how Intel systems operate in a semi closed channel structure. Structure, contract and economic proofs of monopoly are easy to catch and error correct with less than 200 document requests. Each speaks for their very own system structure intent. And require no more correction than to eliminate anticompetitive systems within structure and removing people responsible for concealing them. Advantage is conduct proofs become secondary in support. Sherman Act Section 1 and Clayton Act address avoids question of Section 2 false positives. An open structure delivers Nation, industry, enterprise, market and consumer dynamic efficiency.
Respectfully submitted,
Mike Bruzzone
U.S. Attorney NCD recognized 31 USC 3279
Government Services Adminsitration Title 48 Relator; 2008
FTC Invited field reporter Docket 9288, 1998-2000
CDOJ and NYDOJ first to report; 1998
CDOJ lettered to work report; Intel Section 1 Framework; 2000 –
SEC Notice; 2007
FTC voluntary analyst Docket 9341; under Labor Code 3363.5; 2009
Prior Cyrix, NexGen, ARM, AMD, IDT Centaur Marketing Manager
FBI Original Source of Intel Network RICO; 1996
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