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The FTC announced Friday that it will formally examine whether Intel abused its dominant position

Somewhere at the headquarters of AMD, there must have been a cheer that went up on Friday.  After months of losing ground to Intel, employee layoffs, and under the shadow of Intel's looming Nehalem architecture, the company finally had some good news to be happy about.

It’s no small mystery that AMD these days simply seems incapable of outcompeting Intel.  Intel argues that this is due to its superior products.  AMD, however, has long maintained that Intel was deploying anticompetitive processes, which it says are digging it into a hole from which it cannot escape.  However, despite a passionate ad campaign and lengthy discussions with antitrust officials in the U.S., AMD has seemingly had a tough time selling its idea that Intel was cheating in the microprocessor war.

The U.S. Federal Trade Commission (FTC), which supervises free trade in the U.S., announced that it was launching a formal antitrust investigation against Intel.  The stakes are high for both Intel and AMD; the total market for microprocessors racked up $225 billion in sales last year. 

Both Intel and AMD realize what’s at stake and have spent tens of millions in legal expenses and on public relations campaigns.  AMD had previous success in Europe, Korea, and Japan -- all of which have investigated Intel or threatened it with possible fines.  However, the biggest victory -- a U.S. antitrust investigation -- seemed out of reach until this week.

State authorities and federal appointees from the Bush administration have been taking a more lenient approach to antitrust that their European counterparts.  However, the major decision Friday marked a sharp new shift in policy. 

The new investigation originated with the new blood -- William E. Kovacic, the new chairman of the trade commission.  With the backing of his fellow commissioners, he reversed the decision of Deborah P. Majoras, the previous chair, who had been blocking the investigation for months to the frustration of those on Capitol Hill.  Majoras was a more lenient appointee, and helped work out the antitrust settlement in 2001 with Microsoft.

It will take months before formal charges against Intel might be made, so the upcoming administration’s stance will greatly factor into the case.  AMD is relying on the federal case as only one state -- New York, at the behest of attorney general Andrew M. Cuomo -- has agreed to investigate Intel on a state level.  California attorney general Jerry Brown denied AMD's pleas, derisively commenting that he was "not barking at every truck that comes down the street."

D. Bruce Sewell, Intel’s senior vice president and general counsel, says that the U.S. antitrust laws are different than European ones, and it will not be charged.  Intel is planning on racking up its Capitol Hill efforts, though, likely in the form of lobbyist dollars.

The first signs of the upcoming bad news for Intel appeared when chip manufacturers began to get subpoenaed by the FTC.  The FTC is working with Europe and other foreign governments to obtain evidence to use against Intel in a possible case.  Mr. Sewell said that he was working amiably with the FTC on a less formal review since 2006 and that Intel would remain cooperative.

AMD's top executives expressed their pleasure over the Commission's decision.  Tom McCoy, executive vice president for legal affairs at AMD, stated, "Intel must now answer to the Federal Trade Commission, which is the appropriate way to determine the impact of Intel practices on U.S. consumers and technology businesses.  In every country around the world where Intel’s business practices have been investigated, including the decision by South Korea this week, antitrust regulators have taken action."

The largest U.S. antitrust investigation since the Microsoft one of the 90s came the same week as more good news for AMD; Korean officials slammed Intel with a $25 million fine for violating its fair trade laws.  The Korean officials discovered that Intel illegally paid Samsung Electronics and the Trigem Company $37 million in payments between 2002 and 2005 to not buy AMD processors.  The European Union's European Commission (EC), which charged Intel with "the aim of excluding its main rival from the market" is expected to expand its charges this year.

Intel currently owns somewhere between 80 to 90 percent of the worldwide microprocessor market.  Many U.S. citizens do not realize that U.S. laws do allow monopolies, unlike elsewhere, but forbid companies with a monopoly from using its dominance to restrict competition.

With mounting evidence worldwide, Intel faces a tough case before the FTC.  However, it will likely do what it takes, or perhaps more aptly write the lobbyist checks needed to prevent it from becoming the next Microsoft.  Meanwhile, AMD will also likely step up its efforts in hopes that it can stop its downhill slide by a court victory over Intel.

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RE: Maybe good, maybe bad....
By Master Kenobi on 6/8/2008 10:55:58 AM , Rating: 2
Intel has learned from Microsoft that you can beat the government at its own game. Just requires an ace legal team and lobbyists.

RE: Maybe good, maybe bad....
By JarredWalton on 6/8/2008 11:25:43 AM , Rating: 2
More to the point, consider some of the fines leveled against Intel. Korea hits them with a $25 million fine for paying companies $37 million to not buy AMD. Let's put it this way: unless the penalties move Intel into the red for the past four or five years, it really doesn't matter that they fine Intel. All they're really doing is saying, "Bad Intel... you forgot to pay us our share of the bribes!"

On a different note, does anyone REALLY think that the US is going to nail one of its more successful companies with major fines and penalties? That's why California does nothing, and why I would expect Washington to ignore complaints against Microsoft. The US isn't really leading in a lot of technology areas, but at least we still make the fastest CPUs. If they come down too hard on Intel, that could change - not overnight, but in a few years. And this is again why we'll see at best a slap on the wrist to Intel. I'd imagine that when all is said and done, Intel will pay more in legal fees than they'll pay directly to AMD.

By crystal clear on 6/9/2008 2:34:27 AM , Rating: 2
Intel will pay more in legal fees than they'll pay directly to AMD.

Point to note both the parties Intel/AMD are paying huge legal/expenses,but the difference being Intel can afford to live with it ,whilst AMD cannot afford such luxories.

Given the critical situation AMD is in - all these legal expenses come at the expense of R&D,profits etc

AMD without a huge R&D budget is a dead company !

Those well publicized dismissals/resignations of AMD employees from top to down are people who are abondoning a sinking ship,who leave AMD to seek a stable/profitable company to work for.

As for your quote about Intel paying AMD.......

The Intel/AMD case will take years to see any end to it.

Just an example-

For Release: March 17, 1999
FTC Accepts Settlement of Charges Against Intel
Agreement Would Resolve Commission's Complaint that World's Largest Microprocessor Manufacturer Cut Off Customers in Order to Stifle Competition and Impede Innovation

In this case the companies who filed the complaints against Intel are NO MORE in existance .

They have either gone bankcrupt or been taken over by other companies.

AMD will follow the same route like these companies above.

AMD will eventually be taken over either by a group of venture capitalist/investors/equity fund/technology company/etc.

These buyers motive being to strip AMD of its ASSETS

namely technology/patents/R&D work done/R&D personel/etc to

be used elsewhere.

Then this Intel/AMD case will become non relevant & be closed with some settlement not worth the mention.


AMD should seek a out of court settlement & close this case.

Focus its energies/money on what it does best... "technology" & "survive" !

Just remember-

High end lawyers come at an even/much more higher price !

Words of Wisdom-

Worth paying your R&D staff that money than those lawyers.

RE: Maybe good, maybe bad....
By Regs on 6/9/2008 9:56:56 AM , Rating: 2
You see, this was the mentality for some time now in this administration and ones long past. They think little or no government intervention helps stimulate a free market. I can't argue with that. However there are times when we have to keep a balance. Like Enron and World Com who had CEO's that were only human and broke the law. Government intervention took place, company executives prosecuted, and news laws made to protect the free market and restore confidence in the stock market.

We must fight for a free and balanced market everyday. If not then less small business will emerge, less competition with less choices, and ultimately less jobs to pay for that nice shiny new Q6600.

By crystal clear on 6/9/2008 3:15:31 AM , Rating: 2
Legal teams & lobbyist believe in -

Make yourself necessary to somebody."

How Intel/Microsoft deal with governments -

"They know enough who know how to learn."

In South Korea -

Honesty pays, but it don't seem to pay enough to suit a lot of people."


" The only way to get rid of a temptation is to yield to it."

In governments -

No man is really honest; none of us is above the influence of gain."

As for your & me -

"Honest men fear neither the light nor the dark."

"It looks like the iPhone 4 might be their Vista, and I'm okay with that." -- Microsoft COO Kevin Turner

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