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FTC accuses Intel of numerous violations, including writing software to sabotage its competitors' hardware

Intel holds a dominant position in the computer industry, with over 79.1 percent market share in the microprocessor market, according to iSuppli reports from the summer (these reports included by x86 architecture microprocessors as well as alternatives like ARM).  In May 2009 the European Union's antitrust regulators fined the chipmaker $1.45B USD -- about a fourth of the company's 2008 net income ($5.292B USD) -- for allegedly using discounts and OEM payoffs to push its smaller competitor Advanced Micro Devices out of the market.  That ruling is currently being appealed.

In the U.S. the Federal Trade Commission has investigated similar claims.  The State of New York has filed suit against the Santa Clara, Calif.-based company for antitrust violations, but thus far no federal litigation had been filed.  That all changed today with the FTC suing Intel, citing numerous antitrust violations.

The landmark case comes on the heels of Intel's $1.25B USD settlement with AMD over similar claims.  Under that agreement AMD agreed to drop all pending and present litigation against its rival.  According to the FTC's lawsuit filing, Intel is depriving customers of free choice and is stifling the progress of the computer industry.  The filing says that Intel employed a carrot-and-stick sort of approach, using both threats and rewards to keep OEMs from using its competitors' products.  Reportedly Intel used such targets on Dell Inc., Hewlett-Packard Co., and IBM Corp.

One of the more interesting aspects of the case is that the FTC claims to have evidence that Intel wrote compiler software (Intel makes one of the more commonly used commercial C++ code compilers, the Intel C++ Compiler) to sabotage the performance of its competitors' CPUs.  Little is known about this allegation at this point.

Richard Feinstein, director of the FTC's Bureau of Competition, says Intel's violations are blatant and alarming.  He states, "Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly.  It's been running roughshod over the principles of fair play and the laws protecting competition on the merits. The Commission's action today seeks to remedy the damage that Intel has done to competition, innovation, and, ultimately, the American consumer."

The FTC case looks to prevent Intel from employing "threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate the prices of its" CPUs.

Intel was recently fined $25M USD by the South Korean government for antitrust violations.  The FTC's investigation of Intel was first announced officially in June 2008.  Under the more pro-antitrust Obama administration the investigation has pushed ahead aggressively and now looks to place new fines or restrictions on the chipmaker.


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RE: All I can say is...
By quiksilvr on 12/16/2009 11:52:25 AM , Rating: 2
You need evidence from the US and not other countries. The most you can do is bring in witnesses that will testify if the FTC filed charges. But Intel most likely bribed people outside the country to avoid them from stepping in.

However, what is confusing me is that Intel paid AMD over a BILLION dollars to settle these anti-competitive lawsuits. I guess it wasn't enough.


RE: All I can say is...
By Motoman on 12/16/2009 11:58:53 AM , Rating: 5
That was between AMD and Intel. This is between Intel and the US gubbermint.


RE: All I can say is...
By MrDiSante on 12/16/2009 1:56:05 PM , Rating: 2
Yes and no. While that was between AMD and Intel a major perk that Intel got out of it is that AMD retracted all regulatory complaints against Intel. So, while the government may still go ahead and try to make a case against Intel, it gets a lot harder when your victim isn't about to testify.


RE: All I can say is...
By Ard on 12/16/2009 2:54:03 PM , Rating: 5
That's what the subpoena power is for. Aside from that, I'm guessing that while AMD may have been the loudest critic they certainly weren't the only one complaining. IIRC, NVIDIA still has quite a few complaints filed against Intel with the FTC and I wouldn't be surprised if ARM isn't involved at some level.


RE: All I can say is...
By lco45 on 12/16/2009 6:01:17 PM , Rating: 5
Classic example is nVidia's Ion chipset (ie. the bundled graphics and Atom CPU).

Intel, trying to protect its own horrible onboard graphics chipsets told nVidia they would charge an additional $20 for an Atom CPU if they were going to use it as part of their Ion chipset.

This directly damages the consumer, because we have now been waiting almost a year for Ion, which is a far superior netbook chipset, just so Intel can keep flogging their onboard graphics.

Luke


RE: All I can say is...
By knutjb on 12/16/2009 4:24:15 PM , Rating: 2
AMD wasn't the only victim and Intel broke many laws that don't require AMD to testify in order to prosecute. Dell and other manufacturers were also pressed into an illegal payoff scheme to only use Intel's products. Plus the AMD settlement can be used as evidence, even if AMD stays quiet. Sure it would be easier to have AMD on board but they still can be subpoenaed to testify in court regardless of Intel's deal.

I see Intel trying to settle out of court with the government. After all they have a huge lead on patents for the next generation CPUs for 128 bit OSes. Was the gamble worth it?


RE: All I can say is...
By xaders on 12/16/09, Rating: 0
RE: All I can say is...
By weskurtz0081 on 12/16/2009 12:02:57 PM , Rating: 2
Intel paid AMD to drop the suits THEY filed against Intel. That is not the same as any suits the State brings against Intel for breaking anti trust law.


RE: All I can say is...
By invidious on 12/16/2009 12:26:27 PM , Rating: 4
I don't see why the government deserves money just because intel broke the law. 100% of the "profits" of this suit (minus the legal fees and such) should be immediately pumped back into the industry to intel's competators.

Otherwise they are just taking an industry that has become solely reliant on a single supplier and crippled that supplier. So everybody loses.


RE: All I can say is...
By weskurtz0081 on 12/16/2009 12:41:55 PM , Rating: 4
Not that I disagree with you, to a certain extent I do, but if you were to try and do that it would open up a whole other can of worms.


RE: All I can say is...
By Motoman on 12/16/2009 12:42:30 PM , Rating: 1
quote:
just because intel broke the law.


...so, what, you think they should put all of Intel in jail for a few months then?


RE: All I can say is...
By Azuroth on 12/16/2009 3:37:13 PM , Rating: 4
Intel didn't break the law, PEOPLE at Intel did, so yes, someone should go to jail when the law is broken.


RE: All I can say is...
By SPOOFE on 12/16/09, Rating: -1
RE: All I can say is...
By knutjb on 12/16/2009 4:41:09 PM , Rating: 4
Who do you think? Real people committed numerous crimes in the name of the company, and yes even the CEO because it happened on his watch. Jail is a better motivator than money alone. The share holders should be mad too because the value of their holdings has gone down with every fine paid.


RE: All I can say is...
By albundy2 on 12/16/2009 10:04:26 PM , Rating: 5
Leave me out of this.

BTW, it's custodian not janitor! Or if you preffer "Enviromental Technician".

Besides, everyone knows it was Frank in shipping.


RE: All I can say is...
By gmljosea on 12/16/2009 12:54:52 PM , Rating: 2
I'm not sure of this, but what about forcing Intel to give up their x86 rights and make it open for anyone? That could perhaps pump some competition into the market.


RE: All I can say is...
By Motoman on 12/16/2009 12:56:49 PM , Rating: 5
This isn't about patents or IP. It's about illegal business practices - threats, bribes, kickbacks, blackmail...all the fun stuff that the mob gets to do.


RE: All I can say is...
By ajfink on 12/16/2009 9:17:25 PM , Rating: 2
It's about punishment. There's got to be a threat against breaking the law, otherwise people would do it all the time.

Think of it is a massive speeding ticket.


RE: All I can say is...
By omnicronx on 12/17/2009 8:27:54 AM , Rating: 2
quote:
I don't see why the government deserves money just because intel broke the law. 100% of the "profits" of this suit (minus the legal fees and such) should be immediately pumped back into the industry to intel's competators.
Its really not about the money, its a deterrent, this should be pretty obvious..
quote:
Otherwise they are just taking an industry that has become solely reliant on a single supplier and crippled that supplier. So everybody loses.
No Intel loses, you would be hard pressed to name an industry in which opening up the doors to more competition would be a bad thing for consumers. Crippling Intel would do just that.. open up the doors..

Now on the other hand I can think of many situations in which a company that completely dominates a market is a bad thing for consumers..


RE: All I can say is...
By Reclaimer77 on 12/17/2009 10:47:01 AM , Rating: 2
quote:
Crippling Intel would do just that.. open up the doors..


Umm no. "Crippling Intel" doesn't magically make competition better. Why don't we have 20 companies making CPU's right now ? Because they are extremely expensive to develop, the manufacturing investment to make them is astronomical, and your profit margins are very low.

Hurting Intel isn't going to magically make AMD better or new CPU companies pop up and start competing.


RE: All I can say is...
By omnicronx on 12/17/2009 7:14:52 PM , Rating: 2
Intel single handedly holds the PC market as we know it by the balls. The world runs on x86, its just not possible for a smaller company to persuade people on a mass scale to switch. So why don't we have 20 cpu companies right now? Well for one Intel has put pretty much everyone out of business who has tried, and nobody else, even those that want to can get into the x86 market as Intel won't license x86.

I'm not some crying AMD fan, I'm just looking at the facts, the PC market will be a much better place when the bulk of Intel's patents expire, thats for sure...


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