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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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Selective Memory
By stngo1 on 12/16/2009 5:25:28 PM , Rating: 2
I read this as the FTC saying that Intel has an obligation to ensure that its compilers are optimized for both Intel and AMD CPUs. That is ridiculous. Also, I guess a lot of people seemed to have forgotten versions of compilers where AMD CPUs ran faster on the Intel compiler than their own version http://www.tomshardware.com/forum/59426-28-intel-c... (as well as other results on Google).

Also, it's amazing how a lot of people have forgotten how AMD has fallen short when they've tried to increase their market share by short changing the end customers in their "Channel Market" - a Google search on AMD CPU Shortage resulted in over 22,000 results http://www.google.com/search?hl=en&num=100&newwind... Many people came to these same forums to complain about how they couldn't get any good AMD CPUs since a lot of the allocations went to DELL first to fulfill a contractual comittment.

As for the rebates and charges of monopoly, how is that different than getting a factory and/or customer loyalty rebate from Ford, GM, Toyota when you buy their vehicles or mail in rebate from ASUS or Gigabyte when purchasing their motherboards or video cards? The only thing is that the Intel rebates happen at a higher level in the supply chain and in a lump sum instead to individual end users. Intel is actually doing consumers a favor by not making them submit rebates. Intel could sell CPUs to DELL, HP, etc. at higher prices and then let the "Dude I bought a DELL" end customers to send in customer rebate vouchers. I might suggest that to Intel management as they would save money since statistics show that over 90% of people never or improperly submit their rebates.




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