Why Aren’t Hardware Limits on Netbooks an Anti-Trust Violation?

Continuing on today's theme of asking dumb questions about areas of law I don't know enough about, here's a question about anti-trust law, spurred by the news that Administration Plans to Strengthen Antitrust Rules.

Why isn't this, which no one even attempts to hide, an anti-trust violation???

Basically, Microsoft will only allow netbook makers to load XP on machines that are a touch on the slow side, and don't have quite enough RAM — and have been crippled to prevent users from increasing it.

PC makers must limit screen size to 14.1 in. and hard-drive capacity to 160GB. Ultralow-cost PCs with touch screens will also be eligible. Earlier terms set in April did not allow touch screens at all and limited screen sizes to 10.2 in. and hard-drive capacity to 80GB. The processors are still limited to a single-core chip running at no more than 1 GHz, with memory limited to 1GB of RAM.

Why isn't this illegal? Don't the anti-trust laws prevent a software maker with a dominant position from dictating hardware to pc makers in order to protect the market share of a different product?

Then again, it may be wrong to blame Microsoft for what may actually be a case of collusion with the hardware people:

The goal of the program is apparently to limit the hardware capabilities of such PCs so that they don't eat into the market for mainstream PCs running Windows Vista, something both Microsoft and PC vendors would want to avoid.

That sure sounds like the sort of collusion I thought the anti-trust laws prevented. Everyone is being so open about this, I have to assume that there's a reason why it's legal. I'm just wondering what it could be.

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8 Responses to Why Aren’t Hardware Limits on Netbooks an Anti-Trust Violation?

  1. eric says:

    “Everyone is being so open about this, I have to assume that there’s a reason why it’s legal.”

    Maybe they’ve just concluded that the chances of antitrust enforcement are so slim that it isn’t worth being coy?

    In any event, it will be very interesting to see what, if anything, comes of the Obama administration’s new antitrust stance.

  2. chickens_home_to_roost says:

    Very simple michael, “he that pays the piper calls the tune.”

    During Obama’s campaign the dopes of this country bought into the lie of his fund raising from “grass roots.” The dopes in the media played right along.

    So to answer your question, “how is this legal?”:
    http://blog.seattlepi.com/microsoft/archives/158107.asp
    http://blogs.computerworld.com/microsoft_and_google_execs_donate_450_000_to_the_obama_inauguration
    http://www.opensecrets.org/orgs/summary.php?id=d000000115

    And who knows how much more Microsoft gave through hidden bundling. Fat chance if you think Obama’s teleprompter script writers are going to bite the hand that feeds them.

  3. michael says:

    I don’t have a quarrel with the claim that the Obama won’t do anything about these hardware limits for the simple reason that I don’t have an opinion on the subject, lacking key relevant information.

    But I do have a quarrel with the claim that the Obama administration should be blamed for the current state of the law (whatever it is), since the key technical decisions here were all made during the former administration, and the legal decisions also pre-date this administration.

    I’d like to know first if this is an enforcement issue, or an underlying legal issue. Once we know that, we can figure out whose fault it is.

    I also have a quarrel with the suggestion that even a few hundred thousand given to the $53 million inauguration would be enough to buy a policy outcome, or that the fundraising wasn’t significantly from ‘grass roots':

    President Obama’s inaugural committee raised far more than its fund-raising goal, taking in well over $53 million, much of it from 458 elite donors who kicked in $50,000 apiece.

    Overall, the committee reports it has received at least $48 million in donations from about 217,000 individuals, most of whom gave small amounts, plus more than $5 million in television fees and other revenues.

    So I make that about $23 million from 50K donors, which is less than half of the total – the rest being more grass-rootsy. And that $50K limit is itself significant.

    Compare to the fundraising for Bush’s second inaugural, which had a contribution limit of $250,000, not $50,000:

    … most of the multi-million dollar bill will be paid for by Exxon Mobil Corp., Bristol Meyers Squibb, former Enron President Richard Kinder, and dozens of well-connected Bush fundraisers.

    Nearly half of the $40 million fundraising goal set by President Bush’s private inaugural committee has been met, paid for almost entirely by US corporations. According to a new analysis by the government watchdog group Public Citizen, 96 percent of the $17.8 million raised is from corporations or their chairpersons, CEOs, or presidents.

    As of Friday, the Inaugural Committee reported it had reached more than $25 million in contributions, and the final total could well exceed the $40 million in private contributions collected for the 2001 inauguration.

    Rather different.

  4. chickens_home_to_roost says:

    Again with the Bush bashing? When will you Obamatons break your programming that every criticism of Obama is, ipso facto, an endorsement of Bush? Bush was a marionette controlled by different puppeteers.

    Obama will do nothing with Microsoft. He might dig around Google to shake them down for more donations to Democratic candidates, but ultimately he’ll do nothing. The real test will be if he actually cracks down on overseas tax shelters, of which allegedly Google and Microsoft are huge beneficiaries. Will he actually collect $ for you and me, or will he just shake them down for more campaign money and then back off? Time will tell, but the smart money says that once a Chicago politician, always a Chicago politician.

    Oh, you thought you voted for the Messiah? HA!

  5. chickens_home_to_roost says:

    Again with the Bush bashing? When will you Obamatons break your programming that every criticism of Obama is, ipso facto, an endorsement of Bush? Bush was a marionette controlled by different puppeteers.

    Obama will do nothing with Microsoft. He might dig around Google to shake them down for more donations to Democratic candidates, but ultimately he’ll do nothing. The real test will be if he actually cracks down on overseas tax shelters, of which allegedly Google and Microsoft are huge beneficiaries. Will he actually collect $ for you and me, or will he just shake them down for more campaign money and then back off? Time will tell, but the smart money says that once a Chicago politician, always a Chicago politician.

    Oh, you thought you voted for the Messiah? HA!

  6. TD says:

    Given Christine Varney’s speech yesterday repudiating the DOJ Joint Hearings Antitrust Report (which counselled restraint) in favor of a far more active antitrust regime, I would not be surprised to see high-tech companies (singled out in Varney’s speech) as targets for the agencies. DOJ will now abandon the cautious approach tendered 25 years ago by Judge Easterbrook in favor of an approach stressing that “vigorous antitrust enforcement must play a significant role in the government’s response” to the current economic crisis.

    Whether this is a positive development or not remains to be seen. Antitrust standards are notoriously “squishy,” and Varney’s assertion that a New Deal-like relaxation of enforcement is a clear and present danger (hyperbole on my part) may be more populist than practical. We shall have to wait to see what kind of cases the agencies care to bring. The last thing, in my view, that the US needs is for the agencies to take on an overly regulatory model like that present in the EC that does not always look at competition and consumer welfare, but focuses on behavior as opposed to effects-based analysis (notwithstanding the EC’s half-hearted protestations to the contrary).

  7. TD says:

    Given Christine Varney’s speech yesterday repudiating the DOJ Joint Hearings Antitrust Report (which counselled restraint) in favor of a far more active antitrust regime, I would not be surprised to see high-tech companies (singled out in Varney’s speech) as targets for the agencies. DOJ will now abandon the cautious approach tendered 25 years ago by Judge Easterbrook in favor of an approach stressing that “vigorous antitrust enforcement must play a significant role in the government’s response” to the current economic crisis.

    Whether this is a positive development or not remains to be seen. Antitrust standards are notoriously “squishy,” and Varney’s assertion that a New Deal-like relaxation of enforcement is a clear and present danger (hyperbole on my part) may be more populist than practical. We shall have to wait to see what kind of cases the agencies care to bring. The last thing, in my view, that the US needs is for the agencies to take on an overly regulatory model like that present in the EC that does not always look at competition and consumer welfare, but focuses on behavior as opposed to effects-based analysis (notwithstanding the EC’s half-hearted protestations to the contrary).

  8. Microsoft will do everything to increase the profit. I found that “Microsoft and Intel have reached an agreement that the next generation of Netbooks will not have displays larger than 10.2 inches. Vendors that insist on making minilaptops with larger LCDs will not be eligible for the lower Windows 7 volume licensing rates for these machines.” So, we can only have at most 10.2 inches monitor on any netbook, I think.

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