Skip the navigation

FTC's Intel lawsuit could prove a boon for rivals AMD, Nvidia

Intel fires back at FTC while analysts calculate the benefits for its chip-making rivals

December 16, 2009 03:50 PM ET

Computerworld - The antitrust lawsuit filed today by the U.S. Federal Trade Commission's against Intel Corp. could turn out to be a great Christmas present for Advanced Micro Devices Inc. and Nvidia Corp.

In the suit, the FTC charged that Intel, the world's largest chip maker, is basically holding the semiconductor industry hostage by the sheer force of its size and might. The government contends that Intel has illegally used its dominant market position to stifle competition and strengthen its monopoly for the past decade.

The FTC's complaint charged that "Intel's anticompetitive tactics were designed to put the brakes on superior competitive products that threatened its monopoly in the CPU microchip market." The commission is seeking an order to keep Intel from using threats, bundled prices or any other offers to manipulate prices or smother competition.

The FTC lawsuit comes just a month after Intel agreed pay AMD $1.25 billion to settle antitrust litigation. And just a week before that, the state of New York filed a federal suit alleging that Intel had threatened computer makers, made payoffs and engaged in a "worldwide, systematic campaign of illegal conduct."

"This is significant," said Rob Enderle, an industry analyst with the Enderle Group. "Intel was on a settlement path. The FTC really has thrown them one heck of a curve ball. This puts the focus back on them and they need to find something that approaches middle ground to get out from underneath this cloud."

In a statement, Intel countered that "Intel has competed fairly and lawfully. Its actions have benefited consumers. The highly competitive microprocessor industry, of which Intel is a key part, has kept innovation robust and prices declining at a faster rate than any other industry. The FTC's case is misguided."

Ezra Gottheil, an analyst with Business Technology Research, noted that despite the settlement with AMD, Intel should have expected an FTC lawsuit considering the heavier hand wielded by the administration of President Barack Obama's administration on antitrust issues.

"What you have here is a company that has always played hardball in an environment where the watchdogs were basically drugged for eight years," said Gottheil. "The Bush administration was not active in antitrust. It was very passive. So [Intel] became bolder. Intel has always been tough and then there [they hit a period] where there were no refs. The whistle never blew so they got tougher and tougher. This led to some chicanery. Now this administration is more active in the antitrust space and Intel is a clear object of scrutiny."

And while all of this is bad news for Intel, it's nothing short of a gift for competitors like AMD and Nvidia.



Our Commenting Policies
2015 Premier 100 nominations open
Premier 100

Computerworld has launched its annual search for outstanding IT leaders who align technology with business goals. Nominate a top IT executive for the 2015 Premier 100 IT Leaders awards now through July 18.