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Comment by adventured | Hacker News Reader

Market carve-ups are not an inherent violation of anti-trust laws. Neither are possessing monopolies. Two extremely commonly held and mistaken beliefs.

Allow me to properly word it: market carve-ups, that cause consumer harm, and that the government chooses to prosecute and in which the government manages to prove consumer harm - are a violation of anti-trust laws.

If three companies carve up a market, benefit consumers, and the government chooses not to pursue - that is not a violation of anti-trust laws in any way shape or form. To make this point clearly, if the DOJ chose not to pursue Apple with anti-trust law regarding the ebook situation, what Apple did would not be considered a violation of anti-trust laws. Anti-trust laws are inherently very subjective, they're up to heavy interpretation on the government's side (and then further, what the government can demonstrate when it comes to harm).

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This wasn't even a market carve-up. It was a proposal for IBM to single-source from Intel and Microsoft. That's perfectly legal for a new product that's starting out with 0% market share.

It was legal for Microsoft to single-source the CPU for the Surface from Nvidia. And it would have been similarly legal for IBM to single-source the OS for the PC from Microsoft.

What's more, Microsoft had 0% share of the OS market -- thus, no market power. And it had already agreed to produce BASIC for the IBM PC -- thus, no tying. Ipso facto, Microsoft could not possibly have been guilty of an antitrust violation in 1980 for offering to single-source DOS to IBM.

Only the Register could come up with such an illogical conclusion like that. But then, the Register is so virulently anti-Microsoft that they could probably criticize Altair BASIC on antitrust grounds.

This wasn't even a market carve-up.

Having heard Wharton's story directly from him, I can assure you that was being proposed as told by Wharton was in fact a three-way market carve-up.

• IBM would get business.

• Intel would get embedded devices (Wharton's own work was largely on an embedded controller that's used in automobiles, more units of it have been created than there are humans on Earth).

• Microsoft would get the hobbyist market ("home computing").

Your ad hominem on The Register (El Rag as I like to call it) doesn't address the fact that the source of the story is in fact John Wharton, and he has IIRC publicly discussed it elsewhere. I've got my own beefs with the Register (its irrational opposition to anthropogenic global warming comes to mind). And while long critical of Microsoft, that stance seems to have softened markedly in recent years. The stance of the site is pretty aggressively confrontational -- it's not "biting the hand that feeds IT" for nothing.

That's an interesting anecdote. But that still isn't an antitrust violation.

You need market power in order to restrain trade. Otherwise, you're just fantasizing about seizing control of a market without actually having the power to do so. For example, if you and I get together and divided the smartphone market 50/50 between the two of us, that would simply be laughable, not anti-competitive.

But if you do have market power, then your actions could actually be anti-competitive. If IBM had reached an agreement with, say, DEC to split the mainframe and minicomputer market between them, then that would have been an "unreasonable restraint of trade."

But Microsoft held 0% of the operating system market in 1980. In fact, in 1980, Microsoft had market power only in BASIC interpreters. As long as Microsoft didn't try to tie BASIC interpreters to some other product, it would've been very hard for Microsoft to violate antitrust law, even if it tried.

> Your ad hominem on The Register (El Rag as I like to call it) doesn't address the fact that the source of the story is in fact John Wharton, and he has IIRC publicly discussed it elsewhere.

An ad hominem is when someone claims that an argument is false simply because it originated from a certain source. That's not what I did. I attacked the Register after addressing the argument directly. That's not an ad hominem, that's just an attack on the Register.

P.S. Since the information came from John Wharton, it would be best if we could see what he actually said. Right now, Googling for "John Wharton IBM Microsoft Intel" gives only three relevant hits: two articles in the Register, and your original comment.

You need market power in order to restrain trade.

First off: that's not what the statute says. And again you've failed to provide any documentation for your claims (as adventured has also failed to do).

So I'll leave it there.

As for Wharton's making statements elsewhere: it's my recollection that he had. I haven't looked for them ... and no, don't see anything that's a specific match, though you can certainly place Wharton at Intel and having met with Gates while there.

> First off: that's not what the statute says. And again you've failed to provide any documentation for your claims (as adventured has also failed to do).

As I've already stated, it doesn't matter what the statute says. It matters what the courts have interpreted. See other thread: https://news.ycombinator.com/item?id=7188995

As for sources, see any textbook in antitrust law. Or just Google for the words "market power" and "restraint of trade. " These are not controversial concepts in antitrust law. You don't need a citation to say that the sky is blue.

There are such things are per se violations, but the courts have chipped away at this concept. For example, vertical segmentation used to be a per se violation, but today it is subject to the rule of reason.

> As for Wharton's making statements elsewhere: it's my recollection that he had. I haven't looked for them ... and no, don't see anything that's a specific match, though you can certainly place Wharton at Intel and having met with Gates while there.

It's certainly ironic that you don't provide a citation for this, when you're so aggressive about demanding citations from other people.

Conspiring to create a monopoly, however, is.

One of the reasons Intel refused the offer was that Andy Grove had established a goal: that the company would seek a monopoly position, but would do so by legal means. It's a philosophy which didn't entirely survive his departure from the company as you may recall Intel reached a settlement with the DoJ over anticompetitive monopolistic practices (though in fairness: the company did settle and fairly quickly).

The conspiracy and means Gates proposed, along with many, many other actions of Microsoft, did in fact constitute illegal monopolization, as Judge Thomas Penfield Jackson's findings of fact established: http://www.justice.gov/atr/cases/f3800/msjudgex.htm

As George Hoar, one of the authors of the Sherman Antitrust Act stated: "... [a person] who merely by superior skill and intelligence...got the whole business because nobody could do it as well as he could was not a monopolist..(but was if) it involved something like the use of means which made it impossible for other persons to engage in fair competition."

And in particular, the statute itself states: "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."

So, while your hypothetical has certain merits, in the particulars of this situation, it rather markedly fails to apply, as established by both the relevant statute and legal findings.

Conspiracy to create a monopoly is also up to government discretion, ie purely subjective. It's only conspiracy if the Feds pursue it and prove it.

If I pursue a monopoly intentionally, the government can choose not to care about that fact at all. We can see the real nature of this subjectivism at play in how the Bush White House and the Clinton White House each dealt with Microsoft (and also in how IBM was dealt with across different presidencies). Selective enforcement, and selective consequences.

Ultimately a violation is what the government says it is, even with the case history. The ground rules for all of this have been constantly shifting for a century. They'll change from one DOJ to the next. What constitutes conspiracy? Ask the next DOJ, they'll have a different opinion than the last one.

Conspiracy to create a monopoly is ... purely subjective

You've asserted that twice. To the extent that a law not prosecuted is a law that doesn't exist, you're correct, however I've provided the statutory citation which states that "every" contract, etc., in restraint of trade, "is declared to be illegal".

I'm afraid the burden rests on you to provide some level of documentary proof of your assertions, which at present, stand on nothing.

http://blog.garrytan.com/grahams-hierarchy-of-disagreement-h...

> To the extent that a law not prosecuted is a law that doesn't exist, you're correct, however I've provided the statutory citation which states that "every" contract, etc., in restraint of trade, "is declared to be illegal".

Laws are not interpreted de novo, to mean whatever you think they mean. In our common-law system, laws are interpreted by the courts, over a long period of jurisprudence. In the case of the Sherman Act, we have over a hundred years of case history to guide us.

The courts say that it must be an "unreasonable" restraint of trade. After all, every contract is a restraint of trade! If a grocery store signs a contract with a farm to buy all of their lettuce, then the grocery store isn't going to the central produce market, where everyone has a chance to compete. If Apple signs an agreement with Samsung to source its ARM CPUs, that means that Nvidia doesn't get a chance to compete for the duration of the contract.

But that's completely ridiculous, right? They got the chance to compete for the contract. And that's exactly why it's not an antitrust violation. It's a restraint of trade, but it's very much reasonable.

Note that the word "unreasonable" doesn't actually appear in the Sherman Act. It just says "restraint of trade." The Courts added this test because they felt it would be counterproductive to interpret the Sherman Act literally. As you're doing.

Laws are not interpreted de novo

I'm not contesting that. Nor was I born yesterday.

I've asked you to provide references. You haven't.

> I've asked you to provide references. You haven't.

Google.

I even gave you the phrase to Google for: "unreasonable restraint of trade." In fact, add the term "every contract," and you'll find thousands of relevant hits, including Supreme Court cases going back a century.

If you don't like Googling, then I recommend picking up a good textbook on antitrust law -- "unreasonable" will be in the index. It's just such a fundamental concept to antitrust law. Rivers of ink have been spilled debating what kind of behavior is reasonable and what is unreasonable.

What you've just done is the antitrust equivalent of demanding a citation for the sky being blue. I give up. There's no way I can have a productive conversation about antitrust law with someone who aggressively demands citations for even the most basic of concepts. It shows that the primary motive is not to understand the topic at hand, but simply to argue.

P.S. Since you like to accuse people of violating the rules of debate, this isn't an "appeal to authority." It's a suggestion that you get a better background in antitrust law before arguing with people about it.

I even gave you the phrase to Google

Sure, I can Google. But if you're not talking out of your ass, then you've got specific legal gloss, case history, and decisions you can point to. You're not. Lazy or intellectually dishonest? Hard to tell.

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