Question

Intel made large loyalty payments to HP in exchange for HP buying most of their chips from Intel instead of rival AMD. AMD sued Intel under the antitrust laws, and Intel settled the case by paying $1.25 billion to AMD.

What incentive conflict was being controlled by these loyalty payments?

What advice did Intel ignore when they adopted this practice?

Why did they ignore it?

Answer 1

Answer)
The promotional exception of HP and Intel has been skipped.Intel was offering a large amount of loyalty to HM to exclude competitors like AMD.This action by Intel is illegal because competitors who enter the chip market are more expensive.This type of vertical contract is illegal in the US, therefore violating antitrust laws.The advice Intel failed to follow was: If you have important power in the market then you should think about the impact it will have on competitors.Because Intel itself has already established itself in the computer market, it was decided to reward loyalty to HP and the HP decision to opt out of the chip job was affected.