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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: Correction
By docawolff on 12/16/2009 12:03:38 PM , Rating: 2
Oh wow! It is "anti-business" to produce a fair and level playing field? It is, by that argument, "pro-business" to let one company dominate the market, not through better technology, but through bribes, threats, and anti-competitive code?

Are you nuts?

RE: Correction
By oxymojoe on 12/16/2009 12:09:28 PM , Rating: 1
It is well known our current administration has stifled small business growth and expanded the role of government in every facet of our lives. There is a big public image problem with Obama and this does help to strengthen his position he's for "the little guy".

Can you tell me how Microsoft has a fair and level playing field? How Wal-mart has a fair and level playing field?

This is smoke and mirrors.

RE: Correction
By mcnabney on 12/16/2009 12:21:59 PM , Rating: 2
[citation needed]

RE: Correction
By oxymojoe on 12/16/2009 12:45:11 PM , Rating: 2
Less than one half of 1% of the so called stimulus package was small business tax cuts. 82.9% of all jobs come from small business per Business Week. Anyone with their own business (such as several of my friends and myself) knows what Obama has done up to date. Nothing.

He wants people reliant on government for everything. You know who's seen job growth and pay increases? Government jobs.

Do your own research and get your own citations DB..I'm not some schoolboy and you dang sure aren't a teacher.

RE: Correction
By zsdersw on 12/16/2009 12:14:11 PM , Rating: 1
I don't know if he's nuts, but you clearly are. Your comment is nothing more than a field of strawmen.

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