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AMD's Hector Ruiz tells what it's like to compete against an "abusive monopolist"

AMD CEO Hector Ruiz took center stage at the American Antitrust Institute National Conference in Washington, D.C. to express his disdain for Intel’s business practices.

“I want to give you an idea of what it’s like to do business day in and day out when you are competing against an abusive monopolist,” Ruiz told attendees. “How it makes no difference whether you are just as efficient – or even more efficient – than they are.”

“I do not need my fortune teller hat to tell you one truth about which I am absolutely certain,” said Ruiz. “There is no proper or defensible place for illegal monopolies in the 21st century global marketplace... My purpose is not to argue for competitive advantage - we know how to compete. My purpose is to lay out the facts so that law and economics can do their job to protect consumers."

Ruiz did not immediate call out Intel, but rather stated his case first by naming several related companies made possible by the allowance of new entrants. “Google, Microsoft, and computer manufacturers like HP and Dell all owe their existence to the simple fact that competition replaced forced exclusivity and allowed a variety of players to compete and succeed,” he said.

The AMD boss then called out its arch rival, boldly stating, “Intel uses illegal tactics explicitly aimed at preventing customers from doing business with AMD.”

AMD has been battling with Intel in the U.S. courts over what it believes to be anticompetitive practices. Ruiz presented the example of his company’s efforts with HP, where the systems builder feared retribution by Intel if it chose to use AMD processors.

Dell is facing a class action lawsuit from its own investors over “secret and likely illegal” kickbacks by Intel to ensure the exclusive use of its chips inside Dell computers. “Computer manufacturers are dependent upon Intel's ‘rebates’ for a large portion of their razor-thin operating margins and must sacrifice their brand in favor of promoting Intel,” Ruiz adds.

“The IT industry is being held hostage by Intel – a fact that has detrimental effects across the board, and it has gone on for too long,” continues Ruiz. “Customers get hit by less choice and PC manufacturers depend on rebates and "must sacrifice their brand in favour of promoting Intel.”

“I think that is a vision we share, as business leaders, regulators, economists, lawyers, and others dedicated to ensuring fair and open competition in the market. And I believe it is our responsibility – not just to the global economy, but to society as a whole – to make that happen.” Ruiz later concludes, “In an IT industry without an abusive monopoly, computer manufacturers are empowered to flourish because innovation and differentiation are rewarded – rather than be obligated to a single supplier. The benefits are passed on to consumers through lower prices and greater choice in the marketplace.”

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I've seen this first hand
By 91TTZ on 6/25/2007 12:47:30 PM , Rating: 5
I used to work at a motherboard manufacturer about 10 years ago. Intel was doing it then, too. The motherboard market is extremely competitive with very thin profit margins. If you can't get a board out the door in a timely fashion, your business goes out the window.

During this time, we made Socket 7 motherboards. We had to include AMD and Cyrix CPU support as an "undocumented feature" because if we advertised the fact that the board supports Intel's competitors, Intel would play VERY dirty. They'd run into "chipset shortages" and withhold shipments of chipsets to your company while your (Intel-loyal) competitors get their chipsets and ship product out the door. They'd also be late in delivering specifications for reference boards to you while your competitors get theirs on time and get a jump on engineering new boards while you have to wait.

This was an open secret at the time, so it's not really going to surprise anybody in the know. Intel broke the law and they should pay. Their size and clout should not buy justice.




RE: I've seen this first hand
By bldckstark on 6/25/2007 12:56:17 PM , Rating: 5
Just a minor point, but rarely is justice bought. Usually IN-justice is bought.


RE: I've seen this first hand
By Polynikes on 6/25/2007 1:22:09 PM , Rating: 5
I think this is the point some people on here are missing. Intel has played very dirty. It's not about AMD's lack of competitive products at the moment.


RE: I've seen this first hand
By RogueSpear on 6/25/07, Rating: 0
RE: I've seen this first hand
By omnicronx on 6/25/2007 2:05:10 PM , Rating: 5
AMD never made anyone buy the FX models that were 'overpriced'
The Fx was the enthusiast model with an unlocked multiplier etc... etc.. I have always found the price of AMD products really good, heck i bought my opteron 170 for 300 bucks over a year ago before the price drops and it was still cheaper than a so called equivalent Intel cpu that did not perform at the same level.

i am not an fanboy of any chip manufacturer btw, i always buy a cpu that has the best for buck, and in the past 10 years.. this happens to usually be AMD


RE: I've seen this first hand
By TomZ on 6/25/07, Rating: 0
RE: I've seen this first hand
By Spoelie on 6/25/2007 5:00:51 PM , Rating: 5
Setting the price as high as possible for all the volume you can sell is NOT abusing your market position, at least if you're not a monopoly. In fact, in a capitalist market, it's stupid not to do so.

Coercing partners into other terms and agreements that have nothing to do with trading goods, in order to trade those goods, that my friend, is abusing your market position, and forbidden by law.

AMD and Intel are both 'guilty' of the first one, but this is only 'annoying' for us, not illegal. Intel at least is supposed to be guilty of the second point.

Also, the accusations and lawsuit are in regard to past and current(?) behaviour, not to any declining market share. In fact, market share has nothing to do with it. If AMD's market share were not particularly held back during those actions (which would be kind of illogical, but suppose), Intel would still be held liable for those actions.


RE: I've seen this first hand
By TomZ on 6/25/07, Rating: 0
RE: I've seen this first hand
By Oregonian2 on 6/25/2007 6:31:04 PM , Rating: 4
Even when AMD's products were both better and lower priced, Intel still had at the deep depths of their marketshare something over 70 percent. Not exactly a minority share during bad times, and it's now going back up.


RE: I've seen this first hand
By Andrwken on 6/26/2007 2:31:56 AM , Rating: 5
But when AMD had the superior product, they did gain marketshare. Is there a rule that says the marketshare must become lower than your competitor just because your not the best choice. You are leaving out the mindshare advantage Intel had leveraged through the time when AMD was playing on top.


RE: I've seen this first hand
By dever on 6/26/2007 1:14:14 PM , Rating: 3
Plus Intel out-classed AMD on marketing exponentially. Marketing alone could account for the difference in market share.


RE: I've seen this first hand
By Oregonian2 on 6/26/2007 8:05:48 PM , Rating: 3
I'm sure all of those things that some folk are complaining about would just be called "superior marketing" by Intel.

Intel's biggest advantage isn't that though. It's their manufacturing that's a one or two years ahead of AMD as well as being tremendously larger. Their long years of huge capital investments pays off. When Intel came out with Conroe to turn around the tide, it was in 65nm rather than 90 which AMD was using. That undoubtedly was part of their product's superiority, not just a better design.


RE: I've seen this first hand
By KnightProdigy on 6/28/2007 8:46:52 PM , Rating: 2
When AMD had the better products at a better price(I still feel their architecture is far superior to Intel) Intel's marketshare was ONLY residual marketshare from the monopoly they created 20yrs ago.
The fact that AMD gained a lot of ground in the last 5 yrs shows MORE than what people are willing to admit to. The numbers may be somewhat small and many Intel fanbois will judge based on this, but they do not realize the older and saturated intel market that the "marketshare" numbers are pulled from. Not to mention, most of that is based on businesses that were polled. Not consumers or enthusiests that are able to make an educated decision.

Many new buyers are like sheep. I know and deal with many workers for computer companies and they all have the same stories... people goto dell because someone they know owns a dell. people use intel in their 10+yo desktop at work so they will buy intel.

The marketshare numbers are BS.
Sorry.


RE: I've seen this first hand
By Spoelie on 6/26/2007 11:50:57 AM , Rating: 2
You are severely oversimplifying matters, and using only 'logic' instead of any knowledge of actual laws.

The fact if Intel is a monopoly is entirely defined by its definition in law, so even during its lowest amount of market share, it could still be termed a monopoly if it fulfills all the requirements. The fact that AMD did have and improved market share, is no basis for discounting any monopoly accusation. I do not know the US law definition for a monopoly, so I cannot tell if Intel is considered as such.

Second is that the law that forbids those extra arrangements, as far as I know , does not state the requirement that the company doing them, is a monopoly. The company needs to be in a position where it can enforce those terms on its partners, that's all. Saying that Intel is not a monopoly and thus allowed to exert such practices, would, by my understanding of the law, be incorrect.

Also, the fact that AMD increased market share, is not a basis to completely discount the accusations. Intel could have used those practices on only one company, without severely impacting market share. As long as Intel did it, they can be sued for it.

Lastly, it could very well be that Intel didn't do those things during the K8 era. Intel can be sued as long as they did it once during any past time period where the crime hasn't legally "aged" yet.

AMD needs the evidence to support all those accusations of course.


RE: I've seen this first hand
By TomZ on 6/26/2007 2:43:51 PM , Rating: 1
quote:
You are severely oversimplifying matters, and using only 'logic' instead of any knowledge of actual laws. ... I do not know the US law definition for a monopoly

OK, so let me get this straight - you're saying I don't know and/or are not applying the law, and then you admit to now knowing the law yourself? That's priceless.

Anyway, I've never heard of tying being illegal for non-monopolists. In fact, tying is pretty common in all areas of commerce today, and it seems to pose no legal problems for anybody else. Maybe you can reference the law where you think it is generally prohibited?
quote:
Also, the fact that AMD increased market share, is not a basis to completely discount the accusations. Intel could have used those practices on only one company, without severely impacting market share.

You're missing the point. In order to go after a company for anti-trust violations, you have to show they are in fact operating a "monopoly." There are different definitions of "monopoly," and some of them involve marketshare, while others refer to having the ability to set prices in a market. During the time in question, AMDs marketshare went to between 20 to more than 50% marketshare, depending on the area you look at. In addition, AMD also deprived Intel of the ability to set prices how it wanted, since clearly they had to set prices based on AMD prices. Those two things, in my opinion, undermine an argument that Intel was operating as a monopolist. This, in my mind, undermines the credibility of Ruiz' complaints (whining).

No, I'm not an attorney - so that's the best I can do is to apply common sense and logic and see how far it gets me. Anyone with more knowledge (that excludes you, Spoelie!) please feel free to explain if I am wrong.


RE: I've seen this first hand
By Spoelie on 6/26/2007 3:17:57 PM , Rating: 3
quote:
OK, so let me get this straight - you're saying I don't know and/or are not applying the law, and then you admit to now knowing the law yourself? That's priceless.
Your statement is completely devoid of any logic. How does not knowing the precise formulations of a single law imply that I do not have any understanding on how (some) law(s) work(s). I never did claim to be a lawyer in this field, nor do I even live in the US, so even then it wouldn't interest me all that much. All I was saying was that your deductions are not based on laws, and the issue in this article is about legality, not about being fair or nice.
quote:
No, I'm not an attorney - so that's the best I can do is to apply common sense and logic and see how far it gets me. Anyone with more knowledge (that excludes you, Spoelie!) please feel free to explain if I am wrong.
Common sense and logic will get you nowhere in a court of law. Real mature, that personal comment.

Intel can commit illegal, anticompetitive acts from a "position of power". Whether YOU have heard of it or not is irrelevant.


RE: I've seen this first hand
By TomZ on 6/26/07, Rating: 0