EU rejects Intel's example of Apple in antitrust dispute

Apple's switch to Intel CPUs doesn't prove competition exists, regulators say

European Union (EU) antitrust regulators dismissed Intel's argument that Apple's 2006 switch to Intel processors showed that a free market in microprocessors existed, according to a ruling made public yesterday.

On Monday, the European Commission released a nonconfidential version of its ruling against Intel in May, when it found the American chip giant guilty of trying to squeeze rival AMD out of the market. The commission also fined Intel $1.44 billion.

Yesterday's release of the ruling came less than a week after Intel appealed the decision to the Court of First Instance, the EU's lowest-level appellate court. In that appeal, Intel accused the commission of multiple errors in interpreting the law and of conducting sloppy analysis, as well as denying it the right to a fair defense.

Along with the e-mails to top-ranking computer makers such as Dell and Hewlett-Packard that the commission said represent a "smoking gun" showing Intel's antitrust violations, the agency brushed off the chip maker's argument that Apple's case demonstrated that true competition existed in the CPU market.

In its case against Intel, the commission said surveys proved computer makers were not interested in changing processor architectures, something that made it extremely difficult for a rival to compete once Intel had locked up the market with its x86 microprocessors.

Intel countered by using Apple's shift from PowerPC processors to Intel's x86 line as an example where a computer manufacturer did switch processor architecture.

But the commission said the Apple argument was nothing more than a red herring.

"The outcome of the Commission's market test, is, however, clear ... the OEMs that responded unanimously stated that they would not consider switching from CPUs based on the x86 architecture to CPUs based on the non-x86 architecture," said the commission in its 517-page ruling. "Pointing to one instance of a change of architecture does not alter this conclusion. Furthermore, Apple's change of architecture was to the x86 architecture and not a move away from x86.

"Consequently, Apple's ability to carry out this move is not relevant to the fact that it is difficult to move away from the x86 architecture, which in itself, relates inter alia to very significant investments that have been made in x86 compatible software and data," the commission concluded.

EU regulators said that OEMs cited Microsoft's Windows' dominance in the operating system market and the resulting x86 applications as barriers to switching from that architecture to non-x86 platforms.

Apple announced its intention to abandon IBM's PowerPC processors for Intel's CPUs in June 2005, and introduced the first Macs with Intel's chips seven months later, in January 2006.

Apple addressed the change to x86 chips by rewriting its Mac OS operating system, and ceded Windows' place as the No. 1 operating system by including Boot Camp, a utility that lets users run Windows and its applications on an Intel-based Mac, in 2007's Mac OS 10.5. Apple has also touted virtualization software, such as VMware's Fusion and Parallels' Parallels Desktop.

The California-based computer maker's newest operating system, Snow Leopard, runs only on Intel-powered Macs.

The EU's ruling can be downloaded from the commission's Web site (download PDF).

Copyright © 2009 IDG Communications, Inc.

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