FTC sues Intel for illegal monopoly; Nvidia and AMD rejoice

The Federal Trade Commission has slapped Intel with a lawsuit, alleging it's an anti-competitive monopoly. Will the worlds of CPUs and GPUs ever be the same? In IT Blogwatch, bloggers watch with interest.

By Richi Jennings. December 17, 2009.

(INTC) (AMD) (NVDA)

Your humble blogwatcher selected these bloggy morsels for your enjoyment. Not to mention database oddities...

    Eric Savitz shows us, as ever, the, actual, money:

The [FTC] ... announced that it has sued Intel, alleging the chip maker has “used its dominant market position for a decade to stifle competition and strengthen its monopoly.” ... The complaint says Intel used threats and rewards to keep the world’s largest computer companies from using rival chips. ... [It] also contends Intel secretly designed compiler software to stunt the performance of rival chips.

...

The case alleges Intel violated Section 5 of the FTC Act, which prohibits unfair methods of competition and deceptive acts and practices. ... [It] also alleges “illegal monopolization.” ... The FTC seeks an order preventing Intel from using threats, bundled prices or other offers to encourage exclusive deals, hamper competition or unfairly manipulate prices. ... [And] said it also may seek an order barring Intel from making products that impair performance of non-Intel chips.
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Kim Hart has déjà vu:

In May, the European Commission fined Intel 1.06 billion euros (or $1.45 billion) for abusing its dominance in the computer chip market. Last month, New York Attorney General Andrew M. Cuomo filed a lawsuit against Intel for similar allegations, saying Intel engaged in activities that would stop computer makers from using competitor AMD's chips. Also last month, Intel and AMD settled a long-running legal dispute over competition and patent licensing. Intel agreed to pay AMD $1.25 billion.
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Douglas A. McIntyre is skeptical:

Intel ... has now been accused of monopolistic behavior in Europe, the State of New York, and the United States. ... Intel only has one real competitor, AMD, which nearly went out of business two years ago. AMD’s stock is higher today.

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The one part ... that seems completely implausible is that it says Intel repeated used “threats and rewards” to keep IBM, Hewlett-Packard, and Dell from using processors from other companies. ... Each has armies of lawyers. It would certainly been common knowledge among senior management. ... And, yet, these managers and their attorneys would have to have let this systematic behavior go on for years.
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And Nicholas Deleon flashes a colorful metaphor:

Looks like Intel is in a bit of Dutch. The [FTC] sued the company ... saying that 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." ... Not good, no. ... There’s not too much wiggle room in that statement.

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Of course, Intel has fired back and said that the FTC’s case is “misguided and unwarranted.” ... I wonder if Intel will ever develop the anti-competitive reputation that dogged Microsoft back in the day, if not to this day.
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Meanwhile, Harry McCracken spots something interesting:

The most interesting parts of the FTC’s list of complaints involve not CPUs but GPUs. Which is not a market that Intel controls in the least–Nvidia and AMD dominate discrete graphics, and Intel was recently forced to indefinitely delay its Larrabee GPU. But the FTC says that Intel makes it difficult for PC manufacturers to choose Nvidia or AMD graphics options by charging them higher prices for CPUs than if they opt for Intel’s less powerful integrated graphics.

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Intel ... says it was on the verge of a settlement with the FTC, and that it’s the victim of a rush to judgment.

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Consumers benefit when there are multiple healthy competitors in a category. If PC manufacturers make technology decisions based primarily on fear of Intel–which is what the FTC claims–it’s not good for anybody except Intel.
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John Paczkowski agrees:

A number of tech companies are rejoicing over the Federal Trade Commission’s complaint against Intel today, none more so than Nvidia. ... [It] stands to gain quite a bit from the FTC lawsuit, which will obviously undermine Intel’s (INTC) efforts to extend its monopoly into the GPU market. In an all-hands memo to employees, Nvidia CEO Jen Hsun Huang explained:

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This is an action the industry needs and one that consumers deserve. ... The facts are clear. ... The more successful we became, the bigger threat we were to Intel’s monopoly. Instead of creating competitive GPU solutions and competing on the merits of their products, Intel has resorted to unlawful acts to stop us.
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So what's your take?
Get involved: leave a comment.

 
 
And finally...

Richi Jennings, your humble blogwatcher
  Richi Jennings is an independent analyst/consultant, specializing in blogging, email, and security. A cross-functional IT geek since 1985, he is also an analyst at Ferris Research. You can follow him as @richi on Twitter, or richij on FriendFeed, pretend to be richij's friend on Facebook, or just use good old email: itblogwatch@richij.com.

 
 
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