Microsoft-Intel Capable Collusion?

Microsoft is going to be in a heap of trouble because of the Windows Capable lawsuit—and perhaps Intel, too. Windows Vista Capable certification for the Intel 915 chip set may have violated U.S. antitrust laws.

For more than a year, I've complained that OEMs shipped Windows Vista PCs with deficient graphics accelerators. I never imagined that Microsoft was involved. Why would the company want to ruin the Vista experience?

But e-mails released yesterday (while I was out of the office at a Microsoft event, damn it) suggest otherwise. I was wrong about Microsoft. By all appearances, the company colluded with Intel to qualify a knowingly, deficient graphics chip set as being Windows Vista Capable.

Todd Bishop of the Seattle Post-Intelligencer blogged the full text of internal Microsoft e-mails late yesterday. The communications were released as part of discovery for the Windows Vista Capable class-action lawsuit.

The lawsuit, which was filed at the end of March, alleges that Windows XP PCs carrying the "Vista Capable" logo couldn't fully run the newer operating system. My own earlier testing confirms that at least some PCs running the Intel 915 chip set were incapable of running all Windows Vista features, mainly the Aero user interface.

Page 30 of the 158-page court document has a staggering Microsoft admission, and one that strongly suggests collusion between two monopolies.

Microsoft executive John Kalkman explains that Microsoft "lowered" the Vista Capable requirements to accommodate Intel: "We lowered the requirement to help Intel make their quarterly earnings so they could continue to sell motherboards with the 915 graphics embedded."

By my reading—and qualifying that I am no legal expert—the agreement appears to loosely fit the U.S. definition of collusion. By lowering Vista Capable standards, presumably knowingly below a capable of threshold, Intel graphics chip sets were fixed at a lower price than they should have been in a competitive market. Microsoft made the change to accommodate a single partner and one that arguably is another monopoly. The European Union already is investigating Intel for anticompetitive, monopolistic activities.

If nothing else, there arguably is a violation under either the jurisdiction of the U.S. Federal Trade Commission or the Securities and Exchange Commission. I include the SEC because of the material gain to Intel earnings.


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