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Government Brings Antitrust Actions Against Rambus, Micron
A Happy Plague writes "I work at a hedge fund and one of the nice ammenities are real time news tickers. At 11:34 EDT, a nice red line scrolled on my screen.."FTC Alleges Rambus Violates Antitrust Laws". The headlines followed..."...Anticompetitive Acts... Deceived standard setting organization...never acknowledged patents... deceptive conduct..."
Too bad it takes a long time fo bureacracies to work, but they usually come around. Yahoo News has the story." Of course all rambus has to do now is buy a president to get out from under this. In related news, Tricot writes "Over at Salon, there is a newswire article claiming that the justice department is investigating memory chip maker Micron for anti-competitive practices. Wow, if it's a monopoly, then it certainly hasn't hurt prices."
Wow, if it's a monopoly, then it certainly hasn't hurt prices.
How do you know this? You have no way of knowing what prices might be were this not a monopoly (if it is ruled a monoopoly). You might consider the prices "fair" now, but who's to say they couldn't be better with competition?
So, I rememebr hearing about all this what, two years ago? When Rambus was going to the "the" definitive memory solutions. While DDR is certainly very successful, Rambus is still the premier memory technology. Now, it's always been clear to me that they've done this illegally.
I wonder, if they persued this earlier if we wouldn't see Rambus out right now. DDR, IMHO, is the better, cheaper solution. A small push against Rambus two years ago might have been enough to force them from the market.
Moderation: Put your hand inside the puppet head!
Anyone who hides patents and patent applications in order to deceive their fellow members, "working" with them to create a new memory standard, just to throw their weight several years down the line claiming everybody is infringing on those patents, deserves such a huge fine that the only memory they will be able to afford will be Post-it notes stuck to their PCs.
Tongue-tied and twisted, just an earth-bound misfit, I
Learning to fly, Pink Floyd.
By allegedly concealing this information, in violation of JEDEC's operating rules and procedures, and through other alleged bad-faith, deceptive conduct, the complaint charges that Rambus snookered JEDEC into the "misleading impression that it had no relevant intellectual property rights."
Same old story of patents & intellectual property, monopolies, predatory business practices and crooks (dreaming of) pocketing everybody else money.
The good news in their case, is that the memory prices isn't so bad at the moment. _pfew_
Micron consistantly lobbies Congress to increase the tarriffs on foreign RAM memories makers. Do you know why?
Because Micron can't produce their ram as cheaply as their foreign competitors. So they get Congress to increase the tarriffs to a point where foreign produced ram costs about the same or slightly higher to purchase then Micron ram.
I say boo fucking hoo to Micron. If they can't produce it as cheap as everyone else then they should get out of the business.
How is this not a monopoly?
Does the name Pavlov ring a bell?
More editorial bullshit. What if this was about Chinese space technology? Would we see the same statement with a link to a negative Clinton story?
Sometimes slashdot.org is worse than the Yellow Times.
This is what they are saying Rambus's actions caused: (quoting the official FTC release) increases in the price - and/or reductions in the use or output - of SDRAM chips, as well as other products incorporating or using SDRAM technology
decreased incentives, on the part of memory manufacturers, to produce memory using SDRAM technology;
decreased incentives, on the part of memory manufacturers and others, to participate in JEDEC or other industry standard-setting organizations or activities;
and both within and outside the memory industry, decreased reliance, or willingness to rely, on standards established by industry standard- setting collaborations.
Moderation: Put your hand inside the puppet head!
I'll buy the Rambus claim, but what exactly would make Micron a monopoly? If Salon is correct and Micron is the only US based DRAM manufacturer, I guess by definition that's sort of a monopoly, but I've never seen Micron (well, Crucial) exploit that power in any way.
Does anyone have more solid information?
Micron sells great quality RAM directly to consumers at great prices. That is one monopoly I am willing to live with. Honestly, if they get fucked by this and they are unable to offer competitive RAM prices anymore... I'm gonna be pissed!
-ryan
Didn't know that. Thats certainly very interesting, and bad.
BTW, would you know why Micron wouldn't pull a Nike and just start purchasing ram from those foreign competitors, positioning itself as a memory brand rather than manufacturer? Or maybe their brand doesn't have enough value to allow them to compete in this fasion, as they'd just be middlemen? Or maybe there's very little value in brand in the memory market? That sounds plausible, but I'm curious to hear what you think.
"Old man yells at systemd"
However, as companies begin to lower their ethical standards and sink to the level of Enron, Anderson, and Rambus, the citizens of this fine nation need to stand up and demand accountability. Rambus should be a rallying cry, and it should be the pilot case for testing the resurrection of the corporate death penalty. Why?
- Rambus produces nothing. The Rambus technology was licensed
(albeit in a very unethical manner) from several other companies.
Rambus has never employed a single engineer. They exist only to
facilitate the creation and maintenance of an artificial monopoly.
- Rambus is a threat to other businesses and consumers. Rambus
has attempted to assert patent rights on several key, widely deployed
technologies, such as SDRAM. This is a textbook example of extortion.
Rambus did not create these technologies; they manipulated the sale of them
so that they would be able to prosecute their competitors in court. An
individual would rot in jail for doing something similar.
- Rambus does not support alternative operating systems. Thus
far, Rambus has refused to cooperate with the Linux developers who are
trying to optimize performance on machines with RDRAM. This gives
Microsoft an unfair advantage and again hurts the consumer by inhibiting
choice.
The list goes on, but the point is clear: Rambus deserves to get the corporate death penalty.Micron Technology Inc., one of the nation's biggest maker of computer memory chips, said it, and other companies, are being investigated by the Department of Justice for alleged "anticompetitive practices."
the key part is "it, and other companies" I firmly belive that micron will not be involved as a defendant, but as a witness and support of the FTC seeing how they pretty much told RAMBUS to eat their shorts and got the FTC involved in the first place.
I am a fan of capitalism. Yet, it seems the folks in the wheelhouses of our fleet are lost at sea. Competition = capitalism. Squelching competition = fascism.
Suggestion to corporate officers who would listen: forget the quarter to quarter BS, figure out what your companies are in business to do, lay out a plan to do that well for no less than a couple of years, and do only that. In the end you may not be the titan you dreamed of, but you sure as hell won't be testifying before a Congressional committee or holding penny stocks either.
I'd be curious to see what trade agreements the US has with these foreign countries.
.. some other guy says Micro lobbies the government to raise tarrifs on foreign produced RAM. Could it be that if these foreign companies were gearing up to launch suit against the US government for violating some trade pact stipulations, that the US government decided it'd be better to go after Micron before they come under legal scrutiny from Microns competitors? It looks like Micron sought to buy out one of those foreign competitors, this could have just been the spark for a larger situation?
Given how foreign investor clauses in trade agreements allow foreign companies to seek reperations and damages in other foreign markets when they feel theyre ability to turna profit is being hurt by governmental regulations (at least this is in NAFTA and WTO agreements)
"Old man yells at systemd"
You are behind the times. Micron was using that tack a couple years ago, now their production costs are among the lowest in the industry and they are driving foreign competition out of the market, and some of them are crying to their governments about it, just like Micron in the past in the US.
Of course, if Micron drives enough other companies out of business (like Hynix, which is now in bankruptcy) they will be able to raise their prices since there won't be a surplus of DRAM as is currently the case. The weak PC market has hurt them all, but Micron's low production costs and low debt have them in a better position than some of the competition.
How does this affect my rights online? This is a business practices investigation, not an MP3-downloading court case.
- A.P.
"Remember when the U.S. had a drug problem, and then we declared a War On Drugs, and now you can't buy drugs anymore?"
How is this not a monopoly?
:)
It's not a monopoly because there are still many competitors in the market. But yes, it is anti-competitive -- an unfair way to pursue an advantage over those competitors. I guess you could say they've been using unfair practices to keep their uncompetitive RAM manufacturing business afloat.
I'm still wondering why Microsoft's trick of forcing the PC manfacturers to collect the tarrif on non-MS operating systems instead of lobbying the govt. to do it was not anti-competitive, myself...
Of course all rambus has to do now is buy a president to get out from under this.
/. geek would prefer that he did?
Isn't it a tad irresponsible to accuse Bush of being "bought" by Microsoft because his administration is hesitant to interfere with market forces -- even when your typical
Republicans are normally slower to jump on the antitrust bandwagon. Accusations of impropriety are just way out of line, though.
Why are you letting these clowns ruin our country?
I see the slashdot editors are in true form, never missing the opportunity to show their anti-republican bias by suggesting that President Bush was "bought" by Microsoft.
A quick check of fecinfo.com's donor search shows that Bill Gates has donated generously to MANY democrats. In fact, in this 2002 election cycle, all of the donations shown are to democrats. But overall, Microsoft has given to both main parties and even some independent parties.
Any idiot should be able to figure out that a republican president will be "pro business". Note that microsoft didn't buy a pardon, like some common criminals did from Clinton.....
Oh, I forgot, this is slashdot, so microsoft and republicans are always evil.....
...thier pride lies in thier stock price. Which used to be over $120/share, is now a mere $4/share.
Someone high up has to make a state of the organization address to some REALLY unhappy investors that were hoping that the $120-$16 run would come bouncing back.
Too many falls like this may prove fatal.
If you think education is expensive, you should try ignorance -- Derek Bok, president of Harvard
Rambus has been pulling some rather blatant violations of anti trust laws especially with the whole JDEC thing... doesn't their upper management see that? It just seems so silly of them to pull this kind of stuff when they could continue their revenue growth based on the strength of legitimate business practices. Ethics issues aside, doesn't it make more sense to play right rather than take the risk of losing your Intellectual property and losing your money in court? They took a significant risk and lost with their legal strategy starting to crack.
Is it a sign of a greater ethics issue in the industry or is it high level management who can't figure out how to solve a problem other than to pursue a costly and risky legal battle? I think its both, and investors should be wary about putting any more money into this company.
Of course all rambus has to do now is buy a president
What is that supposed to mean? Gates gave tons of money to Gore but not Bush. Every time Bush does something that helps a company you all act like he was paid off. Here is the truth. He is a republican and as one believes that companies should be left alone by the government. A good republican, and libertarians to, shoul alway fight for the repel of laws that inhibit fair business. Most non-techies don't understand that M$ is evil they just see another business.
Thus Republican + Nontechie = doesn't worry about M$. For better or worse that is the way it is.
Capitalism: unequal distribution of wealth
Socialism: equal distribution of poverty
I'm a card-carrying Libertarian and pretty much despise Bush as much as I despised Clinton, but even that "buy the President" crack was a little much for me. As if Microsoft was ever in any danger whatsoever from any government agency or lawsuit. Even if they could "buy themselves a President", they wouldn't have to.
Some people just need a soapbox to stand on I guess. I'm betting we'll hear whining about the Bush/Gore election for many years to come... -B
Ash and Hickory, straight-grained and true, make excellent bludgeons, dandy for the cudgeling of vegetarians.
You can find the actual FTC Administrative Complaint here.
"Wow, if it's a monopoly, then it certainly hasn't hurt prices."
Not only monopolies are guilty of anticompetive acts. Basically, any action that is "in restraint of trade" or "deceptive" by businesses are illegal.
There is nothig in US law that says a monopoly is illegal. What is illegal is to use the advantage of a monopoly harm other businesses.
If you make a great product and everyone only buys that, there's nothing illegal about it.
Moderation: Put your hand inside the puppet head!
>>Because Micron can't produce their ram as cheaply as their foreign competitors. I say boo fucking hoo to Micron. If they can't produce it as cheap as everyone else then they should get out of the business
Yes there is a minimum wage here in the US, in addition to insurance, taxes, safety, and other concerns that you ob. I am happy that they actually do make some of their RAM here in the states, instead of offloading it to China of Tiawan where they can pay someone 1/3 as much and work them so much harder.
>> So they get Congress to increase the tarriffs to a point where foreign produced ram costs about the same or slightly higher to purchase then Micron ram.
You really want to say Boo-Hoo to Micron... And while you say that your employer will be outsourcing your Perl hacking job to 3 people in India who he can get for half the salary that he is paying you with. So Boo-Hoo to you. That is what Tarriffs are for. It isn't what it is always used for, but this is actual intent of having them. It is protectionary.
At least they still make some microprocessors here. Not to say that AMD hasn't made factory's in Ireland simply because the Tax write-offs and other benifits outweigh dealing with OSHA and other parts of the federal government.
Basically, Take Buisness 101, since is painfully obvious you haven't taken it.
Blah Blah Blah.
Uh, excuse me? What does President George W. Bush have to with RAMBUS much less the Microsoft case from this link? President Bush appointed the first African American, Charles James, to head the antitrust division of the Justice Department. Assistant Attorney General Charles James never has said that Microsoft should get away scott free, he just disagrees with breaking up Microsoft into two monopolies from one. His solution is to penalize Microsoft and force them to adopt different business practices that would remove barriers to competition from outside companies on their operating system.
There is no need for these sort of comments on Slashdot story briefs. AAG Charles James has a long history of serving this country through its court system and to have a partisan sniper misrepresent his opinion in such a blatant fashion is repugnant. I don't know if its racism or just pure hatred towards the current administration that would allow this sort of misrepresentation to be published. It would be nice if Slashdot editors would review these submissions before they are posted and depolitise them.
Strange women lying in ponds distributing swords is no basis for a system of government.
Extreme Patents Bad
MPAA Bad
RIAA Bad
EFF Good
Free Speech Good
Video Games Good
Open Source Good
I am completely okay with you disagreeing with my analysis of the purchasability of George Bush, but to say that /. should be unbiased in it's coverage is to ignore the history and goals of slashdot. And to assume a default democratic bias is in my opinion unfounded, I mean, look at our criticism of Idiot Senator Hollings a senator so completely purchased that he must have a barcode tattooed on his forehead.
chrisd
Co-Editor, Open Sources
Open Source Program Manager, Google, Inc.
Some facts:
1. Rambus was part of the JEDEC.
2. JEDEC rules require disclosure of patents.
3. Rambus declosed no patents.
4. (while part of JEDEC) Rambus suggested certain methods employed in SDRAM and DDR (that they had patents on).
5. Now that SDR/DDR is well-entrenched, Rambus is suing for royalties.
The obvious (to me) solution is to take a closer look at numbers 2 and 3. Rambus was required to declare their patents. They did not do so. Thus, they have no patents on the technology incorporated into JEDEC standards. Don't mess around with antitrust laws, just invalidate the patents in question and let them try to make a living on the technology they've got legitimate claims to.
High-speed Road Trip (18.000KPH)
Yep, according to their stock chart, 11:34 looks right. 36% decline in one day? Yikes! Well, it couldn't have happened to a more arrogant group of SOBs.
"The question of whether a computer can think is no more interesting than that of whether a submarine can swim" -EWD
because his administration is hesitant to interfere with market forces
;)
Firstly, may I point out that the Bush administration's stance on steel tariffs and agricultural subsidies shows that it has no problem with interfering with market forces.
Secondly, may I point out that Microsoft has been found by the courts to be a Monopoly. This means that it has substantial market power and that "market forces"="Microsoft's will" in this particular market.
So what you are really saying is that the Bush administration is hesitant to interfere with Microsoft's will.
Well, I suppose that's accurate.
How many times do we have to see he truth before it becomes crystal clear. Companies pull this stuff because they know they can get away with it. White colloar criminals know that the worst they have to face is a slap on the wrist and maybe a little bad PR down the road. Even Milkin walked away a millionaire with boku job offers.
Most of the time the ringleaders are long-gone or retired before the dust even begins to leave the ground.
"God fights on the side with the best artillery." - Napoleon, Marshal of France - speaking truth to power
Call me crazy, but I find it kind of funny that 4 of the largest RAM players are being accused of anti-competition. Competitive anti-competition?
Yes, it's called "price-fixing", and it may even be the most common sort of anti-competitive behavior. Fortunately, it's also the least stable, as a single defector in an oligarchy can trigger a compensatory price-war. But a monopoly by a small group is no less dangerous in general than a monopoly by a single player.
Read the article at Salon. Micron is being investigated for anticompetitive practices. You don't have to be a monopoly to engage in those kinds of tactics. Coke can engage in anticompetitive practices against Pepsi.
BTW: Antitrust laws don't apply just to monopolies. They apply to any businesses that attempt to control markets in illegal ways. Oligopolies can violate antitrust laws just as well as monopolies. Specifically, they can do so by colluding to artificially raise prices or by agreeing not to compete in specific areas.
Car manufacturers represent an oligopoly. There are relatively few competitors in an industry with a high barrier to entry. If car manufacturers all agree to make some option standard on all cars and raise prices accordingly, that's a violation of antitrust laws. The same thing applies if they all agree to stop offering some feature or option at all.
The Micron story: First, the DOJ did not bring an action against Micron today. Rather, they sent a subpoena to Micron, seeking information for an investigation into possible anti-competitive behavior in the DRAM market.
/. posts make it out to be. For one thing, Rambus claims that they didn't run afoul of the JEDEC policy requiring attendees to disclose relevant patents, because they did not yet have the patents which they later accused everyone of infringing. What makes the whole thing really complicated is that these "SDRAM patents" were not new patents either, but rather extensions of a previous Rambus patent on RDRAM, which Rambus did have at the time. Basically, patent law definitely allows you to file an extension of an old patent which makes clear that a new product infringes your original invention even if it may not infringe the original patent. How this intersects with the requirement to disclose patents to standards bodies is rather cloudy. As we know, Rambus got convicted of fraud for this--probably helped by documents at trial which pretty much proved Rambus had this plan in mind all along. However the issue is currently on appeal. IMO the Appeals Court's decision on this issue will determine what happens with this FTC claim filed today.
This has nothing to do with Micron (with global DRAM marketshare of ~18%) having a "monopoly" in the DRAM market; indeed, in addition to Micron, Infineon and Samsung (and probably others) recieved subpoenas today as well. While the DOJ has not made any public statements about this (that I've seen), it is extraordinarily obvious to anyone who has followed the DRAM industry over the past year or so that they are investigating allegations of dumping on the DRAM spot market. In particular, the spot price for DRAM (128 Mbit SDRAM chips in particular) declined by something like 75% last fall, in the absence of major new supply or significant shortfalls in demand. The resulting price was well below even the marginal cost of producing these chips.
When the price suddenly shot back up a few months ago with the announcement that Micron had reached a tentative deal to buy the already-bankrupt Hynix, it became quite clear that the spot market price was being kept artificially low in order to try to force the ailing Hynix out of business. (The Micron-Hynix deal was later rejected by Hynix's board, causing--wouldn't you know it--another DRAM price war.) The whole thing was made even more fishy by the fact that DRAM contract prices (that is, the DRAM sold in monthly contracts to OEMs like Dell, HP, etc.) stayed way way higher than the spot prices; Hynix was mostly limited to the spot market in its attempts to desperately sell off excess inventory to try to raise cash to pay off their creditors (after all, who wants to sign a contract with a company on the verge of bankruptcy??).
The obvious conclusion is that the other memory makers (Samsung and Micron are #1 and 2 in marketshare) dumped excess inventory on the spot market or even purposely sold at worse prices than they could otherwise get, in an effort to drive Hynix out of business sooner and thus reduce supply and cause prices to be higher than before. By itself, this is probably not illegal, because none of them has a monopoly. What would be illegal is if any of them colluded to keep the spot price artificially low. If they did that, they would be guilty of forming an illegal trust (that's why it's called anti-trust law, not "anti-monopoly") and engaging in illegal dumping or even price-fixing. Personally I would be surprised if this did not occur, but we'll see if the DOJ can find enough concrete evidence to bring a claim.
[For those wondering how the DRAM market turned out--spot prices are way down again across the board, although 128Mbit SDRAM is not nearly as low as it got last fall. (256Mbit and DDR chips are close to record lows, though.) The difference now is that contract prices have finally come down to near-spot levels (in a normal market, contract prices are lower than spot levels), and, considering the recent warnings by Intel and AMD, it looks as if low demand may actually be to blame, not price-fixing.]
The Rambus story: The short version of events posted here is more or less right: Rambus was a member of JEDEC while the SDRAM standard was being worked on; Rambus did not disclose any patents they had which read on the SDRAM design being discussed, nor did they disclose any intent to seek royalties on the standard; later, after SDRAM was standardized and became the mainstream DRAM type, Rambus sought royalties from anyone producing SDRAM or an SDRAM memory controller, which is to say almost the entire worldwide electronics industry. (Also DDR, which according to Rambus not only infringes their SDRAM patents but also a couple others on double-clocked operation in a DRAM.)
Some memory producers (including Samsung and Elpida) agreed; others (specifically Micron, Infineon and Hynix) refused and were taken to court. (The threatened legal action regarding SDRAM controllers never really happened because Rambus was focusing on memory producers first.) In the first such case to come to trial, in which Rambus sued Infineon in Virginia, not only did the judge rule that Rambus' patents don't actually cover SDRAM/DDR, but the jury found Rambus guilty of fraud for sitting on JEDEC and failing to disclose their intent to seek royalties on SDRAM--which is essentially what the FTC claim charges. (Unlike the DOJ investigation I talked about above, the FTC is past the investigating stage and today actually filed a claim against Rambus.)
However, it's not quite as simple as other
Allowing those artificial legal entities known as corporations is interference with market forces right from the get go. Income taxes are interference with market forces. Planning and zoning are interference.
Is it ok to interfere with the steel and farming industry market forces?
Get your prejudices lined up on the same side of the fence, you'll have less stress.
Infuriate left and right
The basis of the media reports I have seen on Micron et al are that they are being investigated for trying to lower prices in order to force out a competitor. This presumably relates to the Hynix situation last year. It is not about raising prices, but coordinated lowering. Specific allegatins will probably not be clear until any charges or suits are filed.
How is this not a monopoly?
How about "How *IS* this a monopoly?"
Micron is the 2nd-largest DRAM manufacturer. Thus, they don't monopolize the market. They are physically incapable of producing that much DRAM, even if they had bought Nanya's guts once the banks finish with them. If Micron lowered prices, they would gain a bit of market share but would lose money. If they raise prices, module makers will ignore them. They have no control over the DRAM market. By definition, a monopolist does. I don't understand what part of that is confusing to you.
High-speed Road Trip (18.000KPH)
You said: his administration is hesitant to interfere with market forces, which is patently false. The Bush administration, as was shown by example, has no problem with "interfering with market forces". If you think pointing this out is attacking a straw man, I suggest you stop building your arguments out of straw.
Remember when RAM prices nearly doubled? When 128MB of RAM went from $100 to like $185? Here's what happened, as I understand it.
;)
Micron is the only American memory maker. The rest are concentrated in southeast Asia. The governments of the countries those companies are in subsidize them like crazy. Our cheap RAM comes at the expense of Malaysian et al. taxpayers. Anyway, Micron, having to pay overpriced American labor and lacking any equivalent corporate welfare, was having trouble competing. So what else, they whined to the FTC. BAM! Gigantic punitive tariff slapped on RAM imports. And now they're being pursued for "anti-competitive" practices?
Of course, using the violence of government to support your inefficient uncompetitive business certainly *is* anti-competitive, but you wouldn't think the US government would be ready to admit that
Sorry to reply to my own post, but some additional news on the DOJ DRAM-industry investigation. First, since yesterday it's been announced that many other memory makers have recieved DOJ subpoenas, including Elpida, Toshiba, Nanya, Hynix, and even little Winbond. It's quite clear now that this has nothing to do with Micron in particular but rather the DRAM industry as a whole.
Second, it's been noted that, sad to say, the DOJ generally only undertakes antitrust investigations in response to a complaint by a US interest claiming to be hurt by the alleged anti-competitive behavior. Since the only major party (that I can think of) hurt by the DRAM price war was Hynix, a South Korean company, it's difficult to imagine on whose behalf the DOJ would be investigating.
Thus it has been suggested that instead the DOJ is investigating the jump in DRAM prices following the end of the price war (i.e. when the Hynix takeover was announced); Michael Dell in particular has publicly complained about high DRAM prices, so some have suggested Dell is behind the complaint.
IMO, if the investigation is focusing on the SDRAM spot prices which shot up after the price war ended, it's misguided. That jump in prices was, IMO, the natural consequence of both the end of an artificial price war and uncertainty on the demand side as Intel introduced its first DDR motherboards and the market had to be sure to have adequate inventory of both SDRAM and DDR to cover for the possibility of either a very successful DDR ramp or a slow one.
Now, if the complaint focuses on the rather outrageous gap between spot and contract prices which existed until it finally close in the last couple weeks, then it might get somewhere. On the one hand it's pretty clear that the pricing anomaly was that the spot price was artificially low, not that contract was artificially high. On the other, there was apparently good evidence that the major memory makers were indeed colluding to keep contract prices that high, so the DOJ might indeed find something to complain about...