1. In your judgement is Intel a “monopoly”?

Did Intel use monopoly-like power; in

other words, did Intel achieve its objective by relying on power that it had due to
its control of a large portion of the market? Explain your answer.

In our opinion, Intel is considered as monopoly even though it does not control all
businesses in the market, but it does control majority of the market. First, we want to
give short explanation about monopoly. Pure monopoly itself means a market in which
a single firm is the only seller in the market and which new sellers are barred from
entering. Here some characteristics of monopoly market:
a) One dominant seller controls all or most of the market’s product, and there are
barrier to entry that keep other companies out
b) Seller has the power to set quantity and price of its products on the market
c) Seller can extract monopoly profit by producing less than equilibrium quantity
and setting price below demand curve but high above supply curve
d) High entry barriers keep other competitors from bringing more product to the
market

The explanation above is just an explanation about monopoly market in general, thus
we can make a correlation between the theory with the case problem. First, Intel
developed and patented a new microprocessor which legally barred AMD from making
it. Second, Intel negotiated with Dell, the other computer manufacturer, to only purchase
microprocessors from Intel and stop buying AMD’s products.

This situation leads to a significant decrease in AMD’s sales. In returns, Dell and other
computer manufarturer receives rebates from Intel. Rebates is return of a portion of a
purchase price by a seller to a buyer, usually on purchase of a specified quantity, or
value of goods within a specific period. Unlike discount, rebate is given after the
payment of full invoice amount. However, the rebates that Intel gave to Dell were
payments (not related to the number of processors they bought). Another reason why
Intel considered as monopoly-like power is when they coded software to intentionally
run slow on AMD processors and not in Intel processors.

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 2. In your judgement, were Intel’s rebates ethical or unethical? Explain your answer.

As we know that at first Intel was the first one to make the microprocessor but it
happened that it is unsuccessful because of some trouble to the microprocessor and is
making the program slower. Then AMD came in and make a new microprocessor and
it works faster and more powerful than any of Intel’s. So then, AMD take over the
market and AMD’s market share grew from 9 percent to 25 percent of the PC processor
market, while Intel’s market share was increasing from 90 percent to 74 percent.

Based on the case we know that Intel operated unethically when offering rebates to their
customers. What does rebate mean? So, rebate is an amount paid by way of reduction,
return, or refund on what has already been paid or contributed. It is a type of sales
promotion that marketers use primarily as incentives or supplements to product sales.
The mail-in rebate (MIR) is the most common.

So we think in our opinion, that it is unethical just to pay other companies such as Sony,
NEC, and Toshiba millions of dollars in rebates just to provide them to stop consuming
and buying AMD’s microprocessors and they are only allowed to use Intel’s
microprocessors.

3. Was it unethical for Intel to use its compilers and its libraries of software code in
the way it did, or is this permissible for companies in a free market economy?
Explain your answer.

To answer this question, we must recall the 3 moral values for perfectly competitive
free market to be ethical. In this market, buyers and sellers exchange with one another
that is just and equal for each party. They maximize the amount of goods they want to
allocate and bring the achievements in such way that the buyers and sellers have a right
to be of free consent. However, Intel seems to tried their best to sell it at competitive
price.

The second value, is that the goods and resources are efficient. This is where Intel’s
morals become darker. They created a product where the demand was high, but on the
other hand not being ‘morally ethical’ to their customers knowing that they product

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 could not work with AMD processor before. They’re ethically wrong since they did it
purposely.

The last value is about establishing justice and maximizes utility that respects buyers
and sellers negative rights. This can be achieved by freedom of opportunity and
voluntary exchange. Intel wasn’t forcing their buyers to buy its libraries and source
material, but instead they tried to persuade or bribe them by offering rebates or money
back.

The action of Intel could lead them to be putted “under the microscope”. Even though
the put their price lower than their competitors, it would not prove valuable outcome
nor provided buyers with satisfying deals. By offering rebates, they might put other
companies to the end of the edge.

4. Were Intel’s rebates unethical? Explain why or why not.

I think Intel’s were operated unethically because these reasons :

a) Intel violated AMD’s negative right of operating by offering a rebate to
customers.
b) Intel has violated contractual rights and duties.
c) Intel may also have violated utilitarianism.

Intel businesses is unethical because they deliberately try to kill the market of AMD’s
microprocessor using their monopolist power, buyoff companies that using AMD’s by
giving ‘rebates’ as a rewards for those who boycotting AMD’s products, and wobble
any AMD’s products that are run. It is dishonest and if Intel did not have the best price
at one time, they should invent or re-evaluate their products so they can beats out
AMD’s product naturally.

5. In your view, did Intel violate either of the two key sections of the Sherman
Antitrust Act? Explain.

In our point of view, Intel violate the two key section on the Sherman Antitrust Act
with three situation that Intel made. The two key section are:

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 1) Section 1 said:
Every contract, combination in the form of trust or otherwise, or conspiracy, in
restraint of trade or commerce among the several States, or with foreign nations,
is declared to be illegal.
2) Section 2 said:
Every person who shall monopolize, or attempt to monopolize, or combine or
conspire with any other person or persons, to monopolize any part of the trade
or commerce among the several States, or with foreign nations, shall be deemed
guilty of a felony.

Why Intel violate the two key section on the Sherman Antitrust Act?

1. First, Intel developed and patented the microprocessor which legally barred
AMD from making it.
2. Second, Intel coded software or programs to intentionally made the programs
on computers run slow or not working properly with AMD processors.
3. Third, While AMD’s market share grew from 9 percent to 25 percent of the PC
processor market, than Intel’s market share was decreasing from 90 percent to
74 percent. Intel paid other companies such as Sony, NEC, Toshiba, Dell and
other computer manufartur millions of dollars in rebates just to provide them to
stop consuming and stop buying AMD’s microprocessors and they are only
allowed to use Intel’s microprocessors, this is leads to a significant decrease in
AMD’s market share from 25 percent to 9 percent..

From those three situation, we can conclud the conspiration by Intel with several
computer manufacturer, and the attempt by make program to make AMD’s processor
not working properly and the attempt by patented the mocropocessor which legally
barred AMD from making it is violate the both section.

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