Computer Prices Have Fallen By 90% Over the Last Ten Years

on Tuesday, March 1, 2011

HT: Mark Perry

WASHINGTON POST -- The world's biggest semiconductor maker yesterday was fined a record $1.45 billion by European regulators for allegedly using its dominance to edge out rivals, a decision that has cast a spotlight on similar investigations by U.S. antitrust watchdogs.

After a five-year review of Intel's sales tactics, the European Union's competition commission said the company, with 70% share of the global chip market, gave hidden discounts to computer makers to use its chips and paid the firms not to use those made by competitor Advanced Micro Devices. It also paid a major retailer to stock only computers outfitted with Intel chips, the commission said.

According to Dan Ackerman of CNET News, "Assuming Intel sells the Atom CPU (found in virtually every Netbook) to system makers for around $53, then it would only take 27,169,811 new Netbook sales to make up for the proposed fine."


This seems a little strange to me. Why is a company being fined for having higher quality lower priced products? The whole purpose of anti-monopoly laws are to stop companies from raising prices because there is no competition, right?

The true anti-competitive behavior of a monopolist that should most concern government officials is when a producer or cartel like DeBeers or OPEC, restricts output and raises price. In the case of Intel, microchip output has been increasing, quality and speed have been improving, and prices have been falling.