FTC, Intel Reach Settlement; Intel Banned From Anticompetitive Practices
August 4, 2010 1:45 PM
The FTC has banned Intel from paying off OEMs to exclusively carry its products or to NOT carry AMD products.
(Source: The New York Times)
Settlement also establishes $10M USD fund that could help OEMs switch to AMD or NVIDIA
Intel, like Microsoft, built a seemingly ironclad lead through a combination of great products and aggressive business maneuvering. Those maneuvers could be viewed as clever moves or destructive anticompetitive behavior -- it all depends on who you ask. However, in recent years Intel, like Microsoft, has come under increasing pressure to stop its more "creative" business tactics. Fined
$1.45B USD by the European Union
last year, Intel has just arrived at
with the U.S. Federal Trade Commission over numerous antitrust issues.
While the settlement is less painful fiscally than the EU ruling, it will have a major impact on the way Intel conducts its business. Intel is no longer allowed to pay off (either directly, or through unit discounts) OEMs to exclusively carry Intel CPUs or to not carry competitor Advanced Micro Devices' CPUs. Likewise, it can no longer retaliate against OEMs who opt to offer competitive products.
Intel is also banned from specifically redesigning its chips to harm its competitors. Specifically it will be forced to not limit the performance of rivals' GPU chips for at least the next six years. Also, it must publish clearly that its compiler discriminates against non-Intel processors (such as AMD's designs), not fully utilizing their features and producing inferior code.
The settlement concludes a suit
launched by the FTC
in December following an investigation. While it brings no major fines against Intel, it does require Intel to pay $10M USD to establish a fund to help business customers retool their software if they were misled by Intel to think the poor performance of Intel-compiled code on AMD chips was normal.
Intel’s general counsel, A. Douglas Melamed
, "[This settlement will] put an end to the expense and distraction of the FTC litigation. This agreement provides a framework that will allow us to continue to compete and to provide our customers the best possible products at the best prices."
The settlement removes a critical piece of the remaining U.S. litigation on Intel's plate. Previously, Intel had agreed to a
$1.25B USD payout
to settle a civil case with AMD last November. The only major remaining legal action against it now is a lawsuit from the state of New York, alleging illegal anticompetitive behavior.
While the antitrust litigation of the turn of the millenia did not derail Microsoft or significantly alter its PC operating system market share, the latest round -- this time against Intel -- could have a more serious impact. Unlike Microsoft, Intel has a very aggressive rival in its core business -- AMD. Last year AMD's CPU shipments
grew 17.7 percent
on a year-to-year basis, giving it a 19.4 percent market share. Intel, meanwhile, saw its lead shrink, posting an 80.5 percent market share.
From 2003 to 2006 AMD produced CPUs that were widely considered to outperform similarly priced Intel designs. While other issues also hampered AMD, it alleges that it largely failed to gain market share during this era thanks to Intel's questionable business practices -- and legal settlements seem to back up this claim.
revitalized once more
taken the discrete graphics sales crown
from NVIDIA, thanks to its head start with DirectX 11 GPUs. If it can duplicate this success on the CPU market, this time it may finally be able to see its hard work pay off with increased OEM adoption -- now that Intel can no longer pay off OEMs not to use its products. The ball is in AMD's court, as they say.
"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA
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