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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 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.


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
"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller

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