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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 Connoisseur on 12/16/2009 12:26:59 PM , Rating: 2
So you're providing a political comment completely un-related to the main point of the article? To me, it appeared that you were commenting on how the FTC filing an anti-trust suit is "anti-business". Instead it was just an Obama administration bash. Fair enough.

Ignoring the political commentary, your other comments are NOT a moot point. As I mentioned, many of these litigations focus on practices in the last 10 or so years. Who's to say that, in a fair market environment, demand for other competitor's products wouldn't have gone up? Thus, profits would go up and they would have invested more in manufacturing capacity to be further competitive/meet demand. From what i've seen, estimating damages is more of an art rather than a science. It involves a lot of charts, graphs and regression analysis. Granted, i'm no expert in anti-trust cases but I can assume damages will be calculated based on what COULD have been rather than what IS at the present.

Finally, I have no idea why you're linking certain people on this thread to fanboyism. If Intel is shown to have broken FTC rules and regs, then they acted illegally and should be accordingly penalized. Fanboyism has nothing to do with it. Enjoy your Core 2 Duo. Who's to say that these alleged practices didn't stifle AMD (or any other competitors therein) from investing additional R&D to develop an even better chip?


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