Intel – Last week’s news was dominated by New York Attorney General Andrew Cuomo’s decision to file an antitrust lawsuit against Intel. As one reporter noted, the lawsuit reads like a script from the Sopranos, alleging that Intel used “bribery and coercion to maintain a stranglehold on the market” as part of a “worldwide, systematic campaign of illegal conduct.” The complaint is filled with similarly hyperbolic allegations of “robbery,” “payoffs,” and “cover ups” that make it a fun read by legal brief standards.

Yet, many experts, including us, are skeptical. While these charges are similar to the ones made by the European Commission, the New York Times reminds us that “Rebate payments and other incentives provided to customers fall into a murky area of the law, according to antitrust scholars. As John E. Lopatka, a professor and antitrust expert at Pennsylvania State University’s Dickinson School of Law, told the Times:

“A lot of what they are talking about here sounds nefarious, but others would look at it and say that is how markets work.”

The Times also suggests there might be a political angle that may be driving this lawsuit:

Antitrust experts following Mr. Cuomo’s actions said that both A.M.D. and I.B.M. — which is based in Armonk, N.Y., and competes against Intel in the server chip market — have invested billions of dollars in chip manufacturing plants in New York.

Keith N. Hylton, a professor at the Boston University School of Law, said that Mr. Cuomo could benefit politically by taking such a prominent stand on behalf of local workers and consumers. “An attorney general is understood to be an aspiring governor,” he said. “They are politicians, and they want to be on the gravy train for big cases.”

One area where the lawsuit definitely fails to impress is in its effort to show any actual harm from the allegedly nefarious actions. As Jonathan Zuck wrote in his statement about the lawsuit:

“The fact that the chip industry has delivered exponential innovation while decreasing prices faster than any other technology industry seems to be a significant hole in the case. From 2000 to 2008, computer chips have gotten 28x faster at the same time real prices have dropped by nearly 60 percent.”

Yet, Section IV.B. of the complaint, entitled “Harm to Consumers, Competition, and Innovation” offers a lot of broad assertions but no evidence to back them up. It will be interesting to see NY attempts to develop their theory of actual harm. Additionally, many experts are also interested to see what effect the NY AG’s lawsuit has on the ongoing FTC investigation. According to Center for American Progress fellow David Balto, the FTC is looking a different kind of case:

“The New York case is a case about the past,” Balto said. “The FTC case will be a case about the future. It will be focusing on dynamic competition, the impact on innovation, on how Intel’s conduct … is going to harm competition and consumers in the future, stifling the ability of new rivals to emerge…

Oracle – Across the Pond, Oracle appears to be hunkering in for a serious battle with the European Commission over its proposed takeover of Sun Microsystems (and the MySQL open source database product that Sun currently owns). According to the Financial Times, the Commission is preparing to launch a formal complaint after Oracle refused to offer any concessions to the Commission. The Commission has been threatening to scuttle the deal unless Oracle spins out the MySQL division of Sun, which is a significant competitor to Oracle in several markets. Essentially, the Commission seems to believe that the fact MySQL is open source is enough to ensure its long term survival as a competitor to Oracle’s database.

According to the New York Times, the Commission is now left its choice of bad options going forward.

By confronting Oracle, E.U. regulators risk ushering in a new era of trans-Atlantic tensions over antitrust law. Yet letting Oracle off the hook would smack of weakness after Neelie Kroes, the E.U.’s outgoing competition commissioner, spent the past weeks trying to goad some of Oracle’s top executives into making concessions.
The dilemma has prompted speculation that the best outcome for Ms. Kroes would be for Oracle to drop its interest in buying Sun, relieving the regulators of the need to make a choice.
“Neither path Ms. Kroes faces is a pretty one, and yet this is the decision she might end up being remembered by,” said Spyros Pappas of the law firm Pappas & Associates in Brussels. “Probably the best escape for her would be for Oracle to cancel the deal.”

Google – Last Thursday, Eric Schmidt sat down for an extensive interview with with Fox Business New’s Neil Cavuto. About halfway through the interview, Cavuto asks Schmidt about his company’s antitrust problems:

CAVUTO: Do you look at Google and what is happening right now? Everyone does mention the Microsoft comparison. They mention the IBM comparison, other behemoths in the day that got a little cocky, got a little super sure of themselves, and, then, boom, upstarts came along. And the reason why I mention it is, they say, people, kids today, they are on Twitter, they are on Facebook, and all, and that is their universe. And for many of them, you are not.

SCHMIDT: Well, everything we have seen indicates that Twitter and Facebook users are using Google even more, so we are very happy with that. But general question of leadership and sort of are you the next Microsoft is really a function of attitude. The companies that you mentioned made mistakes years ago that hopefully we are not making, and hopefully the mistakes we are making now won`t put us in those kinds of predicaments, that our sensitivity toward end users, our focus on consumers, our focuses on bringing costs down, not up, our focusing on letting people get out and take their information with them, is a much better model for the information age than these older models.

It is an interesting philosophy for Google to pursue, but it ignores the fundamental reality that Google is now a large company with a dominant market share, whose ambitions include rapid growth. Even moves that are clearly pro-competitive from Google’s perspective can have devastating consequences for smaller firms in those markets. Just look at how Google’s decision to offer its own satnav solution
for free has affected firms like Tom Tom and Garmin.