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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: Kill the patents...
By weskurtz0081 on 12/16/2009 12:54:37 PM , Rating: 3
I keep seeing the word "Monopoly" getting thrown around here, but I have yet to see anyone prove that Intel is, by definition, a Monopoly.

RE: Kill the patents...
By Motoman on 12/16/2009 12:59:47 PM , Rating: 2
That's because they categorically are not a monopoly.

People here on DT regularly display a total misunderstanding of what a monopoly is. Having a majority marketshare, even if it was 99%, does not make you a monopoly...granted that there are other reasonable alternatives for your product that are easily accessible.

Like AMD, Nvidia, Via, blah blah blah. There is nothing that Intel makes that the industry can't do without - someone else is making an equivalent product elsewhere that is immediately accessible and does the same thing.

RE: Kill the patents...
By mcnabney on 12/16/2009 1:43:21 PM , Rating: 2
From the almighty Wiki:

In economics, a monopoly (from Greek monos / µ???? (alone or single) + polein / p??e?? (to sell)) exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it

Sounds like Intel to me. And the FTC suite is all about controlling access and product control.

RE: Kill the patents...
By weskurtz0081 on 12/16/2009 1:56:16 PM , Rating: 2
Wow, pretty selective reading you did there.

RE: Kill the patents...
By weskurtz0081 on 12/16/2009 1:59:02 PM , Rating: 2
Just so you understand what I meant when I mentioned selective reading.

Monopolies are thus characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.

Seems to me that Intel has competition, there are substitute goods being offered.

So, which is it?

RE: Kill the patents...
By Motoman on 12/16/2009 3:02:41 PM , Rating: 2
Yours is much more like what you'd get from an economist, or industry regulator. A fundamental lack of a reasonable alternative is needed to create a monopoly.

This is the reason, for example, why iTunes can never be a monopoly. Regardless of what their marketshare grows to, as long as *somebody* else is selling .mp3s on the internet, no monopoly is possible.

RE: Kill the patents...
By Ard on 12/16/2009 8:56:17 PM , Rating: 2
Intel isn't a monopoly by any stretch of the imagination. They exist in a duopoly with AMD.

RE: Kill the patents...
By Motoman on 12/18/2009 10:25:03 AM , Rating: 2
That is a true statement. I think the only other option at all now is Via, and they are effectively a non-participant these days.

"And boy have we patented it!" -- Steve Jobs, Macworld 2007

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