backtop


Print 109 comment(s) - last by aebiv.. on Jun 15 at 6:52 PM

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.



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

Bad memory gone wild
By gochichi on 6/8/2008 6:15:55 PM , Rating: 3
Intel did have inferior products, and DELL for one, sure as heck wanted to offer AMD products but could not do so at the expense of its primary supplier. Dell would have had to basically switch 100% to AMD.

The Pentium 4 was an underperformer. AMD was first to market with dual-core, first to market with 64-bit as well.

I think we tend to think of Intel today when we think about "crappy or not" products. Their new products are very good and very well priced. They should have focused on that from the very beginning rather than wasting efforts stalling progress for which I'm sure they'll pay (at least partly). Paying a huge company $37 million for exclusivity means that not only is AMD getting screwed but that large OEMs are being placed in an above and beyond advantage (they are already in a natural advantage to begin with)... Zinxiu electronics has to pay Intel full price for stuff and gets no pay out for exclusivity. Zinxiu stays small or dissappears due to unfair practices. So Intel's illegal practices not only hurts its direct competitor but Samsungs competitor as well. If we trully believe that this is "OK" then we are saying that a small club of priviledged companies have the right to make electronics while others simply have no right.

I am surprised that the ruling wasn't more like a $25 million dollar fine, plus a $100 million dollar in damages to AMD. If Intel had $37 mill to give away, $25 mill seems like a slap on the rist.

I am hoping for AMD getting some cash from Intel from their previous bad practices. I think it's what would be best for the long term. I think Intel is now a big boy, playing more fairly and with better products than ever. I think AMD is getting there, and a positive settlement would allow them to end their infancy and polish up like Intel has. These two companies could be very good competition with each other, and I don't doubt that VIA could make great products in the future as well (I too remember terrible VIA chipsets, though I'm sure I use many tiny VIA chips on a day to day basis).

Intel stalled progress for 5 years or more, locking themselves down to "Moore's law" (meaning slowing progress to not surpass it) and playing clocking games rather than improving actual performance.




"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." -- Sony BMG attorney Jennifer Pariser














botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki