AMD vs Intel: The Settlement of a Useless Lawsuit
While it might look like victory for AMD, the lawsuit was actually useless because the damages caused by Intel’s unlawful actions go further than the amount of the settlement. Indeed, AMD lost more than just sales on a product line. AMD actually lost long-term market share and stronger positioning.
Furthermore, AMD has to deal with the fact that it has to fight the legal battleground against a much stronger opponent. When one considers the complexity of the legal system and the kind of legal expertise Intel has access to, it is unavoidable that a settlement for only a portion of the damage can be recovered through legal means.
Why bribery?
The funny thing is that AMD is not the only player in the industry to suffer from Intel’s trust with PC manufacturers. To be convinced of this statement, we must ask ourselves the following question: why does Intel have to resort to anti-competitive behavior? The main justification behind such behavior is that Intel does not believe its product to be competitive against that of AMD. Knowing that the market’s natural response would be to turn to the better product, Intel used the good old bribery technique to keep its clients faithful.
Consumers and innovators suffer
When big PC manufacturers (like HP and Dell) are in bed with Intel, consumers are stuck with buying an inferior technology that is the main one available on the market. Furthermore, when HP and Dell go for Intel because of some deal made under the table, AMD has to absorb hug losses. This is because all that money invested in R&D is flushed down the toilet. All the economies of scale that would have eventually rewarded AMD in the form of return on investment is now transferred to the inferior product. That same economies of scale that would have brought a better product for a lower price are now transferred 1) to PC manufacturers’ decision makers, and 2) Intel in the form of more orders for its product.
Failure of antitrust law
As we can imagine, the consequences for the whole industry are disastrous: both innovator and consumer lose money and the crooked gain money. Of course, antitrust law is there to avoid this kind of situation by protecting the market from unfair competition and the consumer from the monopolist’s tyranny. Unfortunately, legislation is not structured in a way that would effectively prevent these things to happen. As we can see in the case of AMD vs Intel, AMD had to make do with a settlement for a fraction of what it lost.