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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: If this is what it takes, so be it.
By BansheeX on 6/8/2008 3:32:04 PM , Rating: 0
Once any company becomes a monopoly, it effectively lives outside of economic forces.

Only if they are being helped by government powers which don't exist in private industry. A monopoly is NOT self-sustaining. If you believe that, then you believe that Intel can suddenly make chips out of chocolate, sell them for $1000 a piece, and sustain that practice since they currently have no competition. Utter nonsense.

So follow me here, if a company is a monopoly and can control prices, HOW CAN A FREE MARKET APPROACH PROTECT A COMPETITOR WITH A BETTER PRODUCT??? The answer is it can't. We see it all around us... higher and higher gas prices, which from our last conversation, I'm still waiting for your free market theory to kick in and bring down the prices of energy since we have enough alternatives to fossil fuels in existence that something should be kicking in right about now dont'cha think?

A monopoly CAN'T control prices. You CANNOT be forced into a buying a product unless government dictates such with your money (subsidy). And if a company tries to price gouge, that by definition creates a profit window for someone else to come in and undercut them. It cannot be sustained.

Now you reference oil prices and energy and completely misattribute the problem. Nobody sets the price for a commodity like oil, you sound like Bill O'Reilly. It is a finite resource harvested and refined, then sold at a slight premium above cost to whoever in the world bids the most. Worldwide, people are demanding this product, it is a giant bidding contest. Since wealth is relative, and our currency is losing value relative to the rest of the world because of what socialist thinkers like yourself have done to it, people in manufacturing countries like China and India and the OPEC countries themselves are becoming wealthier relative to us and more able to outbid us. That's it.

Looking at that supply/demand issue further, why is this happening? Why is glorious America, the supposed engine of the world economy, suddenly getting outbid by the Chinese? I'll tell you. When we instituted a communist plank in the central bank, and then went off of gold-backed money, we essentially gave government a free ticket to spend money that we didn't have and to manipulate the official numbers to hide it, the inevitable result of which is the situation you see now: 60 trillion in welfare underfunding, trillions of debt from pointless preemptive wars like Iraq and Vietnam, a negative savings rate, and economy driven by foreign central banks being fooled into depreciating their own money to subsidize our "borrow and spend" engine. And this is all coming to a slow, cancerous end unless government finally allows a long-avoided and now severe recession followed by a natural realignment of services to manufacturing and exports, which is really the only thing that a weak currency is good for.

The "Utopian" charge against the free market has no historical basis and is truly stupid. Centralized decision making is what's utopian. Communally owned and distributed production is utopian. The free market is not responsible for blocking drilling and nuclear power the last thirty years. The free market is not responsible for centrally manipulated interest rates sending out false signals to investors and creating unsustainable bubbles. The free market is not responsible for your paper money losing value, or walking into a doctor's office and seeing no price list for basic workups. The free market is not responsible for ethanol subsidization, negating fuel savings with higher food prices and taking money from consumers that they otherwise would have spent buying or investing in better technologies.

RE: If this is what it takes, so be it.
By kc77 on 6/8/2008 4:57:24 PM , Rating: 1
A monopoly CAN'T control prices. You CANNOT be forced into a buying a product unless government dictates such with your money (subsidy).
Did you really just say that??? Somewhere in your post you make a comment that one of my statements was idiotic and you say this....WOW....OMG ..LOL LOL LOL LOL I was really going to go toe to toe with you on your post but to say something that refutes the Webster dictionary that takes a level of chutzpah that I really haven't seen in ages. Do you lobby for Microsoft or something??? Man...LOL
A monopoly CAN'T control prices.

There really isn't away to have reasonable dialog with you. I understand that now....I can't converse with someone who refutes the dictionary and often times bounces in and out of a metaphoric economic acid trip while eschewing reality only to shout "socialism" and "free market" and expect diminished sensibilities to constitute an acceptable form of reinforcement.

Man I was about to go into hedge markets, Enron and a whole host of things....
A monopoly CAN'T control prices.
LOL LOL LOL I mean how do you argue with that ??!?

By aebiv on 6/15/2008 6:52:43 PM , Rating: 2
Were you really born that blind to capitalism?

A monopoly will not survive in a free market society, but in this ever more regulated and socialistic economy we are building here in the United States, we keep thinking the government needs to come in and rule every aspect of our lives.

I'm sorry, America was not founded that way, and will face even worse atrophy if this is allowed to proceed.

Your post is about as intelligent as a 5th graders, and even that is a slam to some of the 5th graders I've known.

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis

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