Intel Replies to AMD Antitrust Lawsuits

pr1000 writes "The New York Times is reporting today that Intel has replied sharply to AMD's lawsuit. This lawsuit sounds like it will be a bruiser." From the article: "The claims are factually incorrect and contradictory...The evidence will show that every failure and setback for which A.M.D. today seeks to blame Intel is actually a direct result of A.M.D.'s own actions or inactions."

Comments

A bruiser?

[BlackCobra43]

More like a playground argument.

"You did it!"
"No YOU did it!"
"No YOU did it!"
repeat ad nauseam

Re:A bruiser?

[Infonaut]

More like a playground argument.

Perhaps, but it's a playground argument with big ramifications for both companies (for AMD in particular). They've been at it in the courts for years, but not without some consequences. As the article notes, a settlement in 1995 gave AMD the right to develop chips based on the Intel x86 design.

What I find interesting is Balto's claim that Intel is taking this suit very seriously and that it could take three or four years to litigate. That's got to be a big distraction in money and effort for both companies.

Your PC is too cheap...

[penguinoid]

Intel's formal response came nine weeks after A.M.D. accused Intel of unfair pricing and rebates, and of coercing customers to prevent them from using A.M.D. microprocessors.

While I rather like AMD, I really can't argue against lower prices. Um, yay intel?

Re:Your PC is too cheap...

[Dachannien]

I'd rather have access to lower prices that arise from market forces rather than coercion. AMD asserts that Intel only gave the lower prices to companies that agreed not to install AMD chips in their machines.

With fair competition, prices would remain just as low, and people would be able to choose between an AMD processor or an Intel processor in their crappy new Dell. Lower prices + choice > lower prices.

Re:Your PC is too cheap...

[PsychicX]

Right, but there are rules about this sort of thing. In Japan, for example, Intel was found guilty of (or admitted to?) giving rebates on Intel processors based on how many AMD processors the OEM was buying. More AMD processors meant the Intel chips cost more. These are precisely the same tactics that MS was sued for, remember, and that slashdotters everywhere bemoan as being the cause of Linux's lack of adoption (whether that is true is a different discussion).

Re:Your PC is too cheap...

[DoofusOfDeath]

The problem with market forces is that, when unchecked, tend to lead to just one company being a monopoly and having pricing freedom, because it actually kills every competitor.

Here's an example: In the town where I grew up, there was a nice floral shop. Then in came a huge chain supermarket that offered lower prices on cut flowers. After a while, the local mom-and-pop florists died under price pressure. Once they were dead, the supermarket raised its prices on cut flowers.

So what you get is a temporary price reduction while the big company kills the little one. And perhaps whenever it needs to kill a competitor. But most of the time the prices stay high.

Re:Your PC is too cheap...

[Kjella]

While I rather like AMD, I really can't argue against lower prices. Um, yay intel?

You don't seem to understand how monopolistic pricing works. A typical example is to only offer a rebate if they don't use AMD chips. The post-rebate price is the "take it in the shorts" end user price. The pre-rebate price is the "drive stores carrying AMD out of business" price.

Let me make an example, let's assuming the marketing at Intel has figured out that 500$ is the optimal price point:

Fair play:
Intel chips cost 500$, regardless.
Store A sells 1000 Intel chips
Store B sells 800 Intel chips, 200 AMD chips.

"Rebate":
Intel chips cost 600$ but with 100$ rebate if exclusive.
Store A sells 1500 Intel chips @ 500$
Store B sells 300 Intel chips @ 600$, 200 AMD chips

Store B goes to hell, AMD is pushed out of the market place / to second tier manufacturers, Intel can push prices up higher. It's not a rebate to you, in fact it's not really a rebate at all. It's a penalty to all AMD-carrying stores.

Kjella

Reverting to the Microsoft defence...

[MosesJones]

MS/Intel: "We did nothing at all to try and impact our competition or operate in anyway unfairly"

Netscape/AMD: "So what about this memo where you say you are going to do everything to 'kill' us"

MS/Intel: "You made us do it, its your own fault"

Its going to be brusing but the key is going to be disclosure.

What would you expect?

[Slime-dogg]

Would you really expect Intel to say "Oh, we're sorry that we're monopolists. Please punish us!"

Who knows. Maybe Intel is right, maybe not. Court will decide.

Re:What would you expect?

[penguinoid]

A.M.D.'s lawsuit on June 27 came after the Japanese Fair Trade Commission concluded in March that Intel had stifled competition there by offering rebates to five computer companies, including Toshiba and Sony, in exchange for their agreeing to limit purchases from A.M.D. or Transmeta, another Intel rival.

Apparently AMD does have a case. Much as I like intel's low prices, that won't last if they become a monopoly. I wonder if apple got an offer of this sort from intel?

Re:What would you expect?

[IpalindromeI]

Would you really expect Intel to say "Oh, we're sorry that we're monopolists. Please punish us!"

Having a monopoly is not a crime. Using that monopoly unfairly to stamp out competition is the crime. Maybe you meant to write: Would you really expect Intel to say "Oh, we've employed anti-competitive business practices. Please punish us!"

Re:What would you expect?

[ifwm]

"Practically speaking it's always a crime because common business practices are illegal if you're a monopoly"

What the hell are you talking about. A mom and pop shop that's the only one in town has a monopoly, but there's nothing illegal about them doing business.

Re:What would you expect?

[supabeast!]

"Much as I like intel's low prices, that won't last if they become a monopoly."

And that's the huge flaw in AMD's case. Intel isn't manipulating prices because it has a monopoly, but does so because it wants to maintain market share in the face of competitors like AMD, VIA, and formerly Transmeta. With Chinese x86 CPUs bound to appear within the next few years, intel has to keep doing stuff like this to compete. What intel is doing isn't a monopolist abusing its status, it's a market leader fighting to hold on to the top spot.

AMD already has a response, btw...

[Kid Zero]

http://www.amd.com/us-en/Corporate/VirtualPressRoo m/0,,51_104_543~100845,00.html

I still think this is more of a playground argument. Nothing we haven't seen before.

My test

[Epistax]

Has Company A ever offered any sort of incentives to Company B to NOT sell or buy products by Company C. (Note: I did not say incentives to buy/sell Company A, I said incentives to NOT buy/sell company C.)

If this is the case, the company has committed a crime. If this isn't a crime, then what the fuck is?

Intel's full response

[brajesh]

Intel's official press release and text of filing(.pdf)

Took them nine weeks?

[kihjin]

Intel's formal response came nine weeks after A.M.D. accused Intel of unfair pricing and rebates, and of coercing customers to prevent them from using A.M.D. microprocessors. At 63 pages, the Intel rebuttal was 15 pages longer than the lawsuit itself.

... time for an upgrade?

Blah blah blah

[SpazAttak]

Intel is right to an extent. AMD has always had trouble with production and all that. But that doesn't really address AMD's assertion of Intel's anti-competative practices in the least. They seem to be hoping everyone will be too busy saying 'oooooh snap' to realize that its all a bunch of double-talk.

Re:Blah blah blah

[Red Flayer]

Intel is also trying to limit their liability by disproving any claims for damages.

But, if AMD was not competitive due to internal problems, why would Intel need to bother strong-arming their clients?

Re:Blah blah blah

[drsmithy]

Intel is right to an extent. AMD has always had trouble with production and all that.

Historically, AMD's biggest problem has always been decent supporting hardware (ie: motherboards - in particular, VIA chipsets), especially at the higher end.

Ironically, there are now a lot of kick-arse high end Opteron motherboards available, but much of the market has moved towards many low-powered machines rather than a small number of high powered machines - and there aren't any decent low-end Opteron motherboards (for server use, ie: with multiple PCI buses, or even PCI-X).

Intel == Evil?

[putko]

I've gotten the impression that Intel is evil, and you don't want to mess with them.

Is AMD evil enough? Or is this just some P.R. campaign for them, where they hope to get some serious attention and maybe a bit of business based on their competitive offerings?

I wish AMD all the luck!

Obligatory Family Guy Quote

[Anonymous Coward]

El Dorado Executive - Listen Peter, the last thing we want is for kids to start smoking
Peter - Well, what about that graph that says "The first thing we want is for kids to start smoking" *points to said graph*
EDE - That? Oh that's just something my son made in art class
Peter - Oh yeah? Well what about that sign that says "The graph was NOT made in art class. We really DO want kids to start smoking" *points to said sign*

My response

[Anita Coney]

If I were Intel I'd respond by drastically lowering prices for a few years. By the time the lawsuit actually got to trial AMD would have long since went out of business.

Re:My response

[tomstdenis]

Eventually people will catch on that Intel processors are shit.

Even though my AMD dual core cost 2x that of my Intel dual-core 820 it was well worth it.

First off, the AMD dual core takes less power. Second, it's much more efficient in terms of IPC. I still clock a 3x improvement in bignum maht and both processors are 64-bit designs!!!

Sure that means little to the average consumer but it can only go on so far. People who need to do serious computing [e.g. servers, workstations, etc] can't use Intel processors because they're so f'ing wasteful.

Sure the PM may be good for laptops but so would a 1Ghz Crusoe...

Tom

Anti-Trust

[LegendOfLink]

I don't know if I actually believe anti-trust laws are a good thing. I mean, let's take a look at the market, Intel had the crown in the beginning for a long time; then AMD put out something better (Athlon) and for a while, people were flocking towards AMD (be it for the cheaper prices or the underdog appeal).

During those times when the cut-throat competition between Intel and AMD brought about great changes on processor speed and performance (remember how fast we went from 266Mhz to 1Ghz?) it seemed there wasn't any need for lawsuits.

Now innovation is getting pretty stale and all of a sudden, we're seeing the lawsuits. Don't get me wrong, I use AMD for all my rigs; but is there really a need for the anti-trust laws today? The next company to build the better processor will get their advantage, instead of just watching who will win the next lawsuit.

Re:Anti-Trust

[jim_v2000]

I use AMD for all my rigs; but is there really a need for the anti-trust laws today? The next company to build the better processor will get their advantage, instead of just watching who will win the next lawsuit.

You're looking at this from an I-Build-My-Own-Computer perspective. AMD doesn't care about selling to you. You're pocket change. AMD wants to sell to Dell, Compaq, HP, Gateway....the commercial market. And right now AMD is claiming that because of financial blackmail, Intel is keeping AMD from being able to compete in that market.

Re:Anti-Trust

[webwaster]

Actually, what you've stated shows the need for this kind of lawsuit. Intel on top for a long time. AMD comes around, develops a better CPU for less $$$. Intel counters. Heavy competition leads to great innovation and avancement for a while. So why the sudden lag in innovation?

Intel tires of putting so much time and money into chip development and tech advancement to protect their share of the pie, resources they'd much rather spend on marketing ("Intel Inside" - then those four little musical notes we ALL know so well). So...shift the strategy!

Lock out AMD by coercing, bullying and bribing all the major OEM's into not only using mainly Intel's product, but specifically NOT using any of AMD's. Hence Intel's large market share, hence AMD's decline in the same, hence lack of innovation, etc.

Even though MANY people would agree that AMD has been producing as good or better CPU's than Intel for years (look at the benchmarks) they just can't seem to get a break. This certainly would explain why. I, for one, welcome our hard-working, CPU making underdog and their already precedented lawsuit!

Re:Anti-Trust

[Chris Burke]

I don't know if I actually believe anti-trust laws are a good thing. I mean, let's take a look at the market ... it seemed there wasn't any need for lawsuits.

Yes, because Intel's actions were greatly limited by anti-trust law!

Intel is alleged to have anti-competitive practices by basing their prices to OEMs on how many AMD parts they sold, as a direct financial incentive to not buy AMD, and supposedly several major OEMs caputilated entirely and dropped AMD from their lines. Yay market?

And that's with Intel being afraid of anti-trust action (and I assure you they are). If there were no anti-trust laws, what do you think they would do? Let me give you a hint: Intel makes more profit in a quarter than AMD sees gross revenue. They could easily cut their prices to almost nil and provide whatever cash incentives it took to get OEMs to sign contracts stating they would not buy AMD parts for N years, where N is long enough for any holdouts to feel the pain and long enough for AMD to be unable to pay the upkeep on their fabs.

Once AMD lost its fab, and Intel was the only game in town, how much do you think your precious market would set the price of processors at?

That's extreme, but not impossible, especially back in the days before Athlon when AMD was even smaller and weaker.

Anti-trust laws are there for a very good reason. Free markets are not fair markets, and a company that is vastly larger and has vastly more marketshare and cash than their competitors has a huge advantage regardless of the quality of their processors. Anti-trust is there to put a reasonable restriction on that advantage, such as, oh, not punishing your customers for buying from a competitor.

Those laws being in place are the only reason that great competitive race in the late nineties occured at all. You have to realize that.

Damages

[Red Flayer]

I'm not sure that Intel is disputing that they took unfair trade actions. They are disputing whether any damages resulted.

Intel is saying that AMD shot themselves in the foot by not having enough production capacity, and even if Intel leveraged their weight against AMD, there were no damages as a result of it.

If the court finds in favor of AMD, it'll add up to a small fine and some bad press... unless AMD can prove damages and make Intel pay.

AMD (and any other plaintiffs, should the cases be consolidated) has a hell of a battle in front of them.

The reason for the lawsuit

[vojtech]

It's just pure speculation, but I guess the real reason for the antitrust lawsuit by AMD is the Turion® mobile CPU.

AMD can't sell the Turions in the white-box market, where most of its CPUs are being sold, and must rely on bigger players in the PC industry, like Dell or HP to include it in their notebooks.

After all, who builds his notebook himself at home?

Now just the fact of the existence of the lawsuit will force Intel to tone down on their rebate practices, and this may open a window for AMD to sell the chips in quantities larger than the bare usually allowed by Intel's rebate system.

Good luck, AMD!

Surely thats no defense.

[malsdavis]

"The evidence will show that every failure and setback for which A.M.D. today seeks to blame Intel is actually a direct result of A.M.D.'s own actions or inactions."

So basically their saying that AMD also had the oppurtunity to act as deceitfully as Intel do, but because they didn't it's their own fault?
Sounds like an admission of guilt to me.

None of this is "all of a sudden"

[fireboy1919]

Your history is a little off. People didn't just "flock" to AMD. AMD fought tooth-and-nail with prices nearly half those of Intels starting around the same time Intel release the Pentium.

Athlons came much, much later.

Maybe they're starting to get frustrated that they don't have more marketshare than Intel already?
They're usually cheaper, and they usually outperform.

It can take a while for an engineering company to realize that their competition is being underhanded. Today, it's certainly late enough in the game for them to realize this. "All of a sudden" has actually been a long time coming.

Too much Kool-Aid around here!

[goldspider]

0mg wtf? Intel is t3h sux0r!

Seriously people, a lot of you need to start looking at things more objectively. Maybe Intel illegally leverages its market power. Maybe poor planning and management have hindered AMD's growth.

But to dismiss either side purely on ideology doesn't speak highly of your ability (or willingness) to comprehensively consider issues like this.

Let's wait for the facts to come out, and then we can start making our judgements.

Re:Too much Kool-Aid around here!

[KagatoLNX]

I've always pitied AMD because they seem to have a better engineered product (certain K6s and K6-2s excepted) but never seem to get anywhere because the right people don't adopt their product. Until fairly recently, I couldn't get a SuperMicro server with an AMD in it. Even now you can supposedly get an Opteron, but can't fit it in all of their rackmount options and they don't even list it on their web site!

It's the deals like this that make it really tough for AMD. Admittedly, as a customer, I can't find a vendor that satisfies my need for an inexpensive, reliable, AMD-based server. Looking a their pricing, this isn't AMDs fault and I don't really believe it's a technical issue either.

Similarly you'll note the dearth of 4+ processor AMD systems. This is important. Their MP model makes it easy to scale this high and it shows in the custom market (many 32/64 proc Opteron options if you're buying a custom-built supercomputer). However, the low end ones are not being built and its only because Intel puts a lot of pressure on its technology partners to insure that they can't afford to build a sub-$800 8-processor Opteron board. Either you lose your processor pricing or you'll get exciting new "patent-licensing" deals.

WRT to the market forces involved, the assumption is that, barring bad management, a good product at the right price should prevail. While Intel can complain about AMD's management, I think the problem is that they never have the money to operate correctly because of Intel's influence. The effective choice is that your management can hinder the company to match the amount of business the monopolist lets you have or it can operate with an aggressive but realistic business plan that falls on its face because of illegal practices. In short, Intel says, "your management should have planned for the material damages from our illegal activities" and AMD should very much answer "damages are damages, it may not have been really good business to not account well for them, but that doesn't dimish your responsibility for the damage".

And as for "waiting for the facts to come out", this is a court room. I'm sure any facts involved will be mangled beyond all recognition once they finally "come out".

Re:Great idea.

[Dun Malg]

I thought AMD was a european company?

it's not. AMD Headquarters One AMD Place Sunnyvale, California 94088-3453 (408) 749-4000 They have fabs in Germany, but they're a US company.

This reminds me of 3Dfx v/s nVidia

[PinkX]

You know, all those lawsuits coming and going between the (then) 3D graphics giant and pioneer 3Dfx and the newcomer nVidia.

Then, to the surprise of all of us, nVidia bought 3Dfx, dismissing all the mutual lawsuits and absorbing (or ditching, if you want) all of its technology.

However, any similarities are just that.

Regards,

AMD Admits capacity restriaint - NOT suffering

[Anonymous Coward]

Everyone here should note that AMD admits that they are "capacity restrained", meaning they sell EVERY SINGLE PIECE of product they manufacture, and at the end of the day they don't even have enough capacity to satisfy all their orders.

SO, how can AMD argue that they are under the thumb of a vicious monopoly when they themselves are responsible for their own lacking ability to truley attack the marketplace? Is Intel to blaim for their unwillingness to invest in adequate production to meet the demands of a growing market?

Someone correct me if I'm wrong on this point, but AMD really does appear to be the whining baby, while Intel appears to actually care about their business models, production capcity and business ethics.

Tortious interference

[Brian Stretch]

It's called tortious interference. Near as I can tell, Intel is guilty as hell. This lawsuit was a long time coming. AMD is now just strong enough that chip customers are willing to take a chance and cooperate with the investigation. If Intel retaliates it won't hurt as much anymore.

Re:AMD doesn't do business with

[japhmi]

A.M.D.'s suit also alleges that Intel used illegal tactics to persuade dozens of companies - including Dell, Sony and Toshiba - not to use A.M.D. chips. In its response on Thursday, Intel called A.M.D.'s claims contradictory, since A.M.D. currently does business with many of those same companies.

Doesn't do business with many of those same companies, eh? I though that was one of the major points of the lawsuit

Go back and read again, especially the part where it says "AMD currently DOES buisiness..."

I believe the best defense is in the response, where Intel says that they've gained market share in the server buisness because of the Opteron. From the response:

"After dedicating a significant portion of its capacity to producing its recent Opteron processors, AMD has seen gains in its share of microprocessor sales in the profitable server market segment. This is precisely what one would expect in a truly competitive industry. In part because if this increased penetration of the server segment, AMD has been able to increase its average selling prices and profits from the sale of microprocessors."

I.E. When AMD does something right, they do better.

Re:So what's an incentive?

[default luser]

Intel says: "If you buy AMD chips for your notebooks you'll just get a chip. You'll still have to go and part out motherboards, wireless chips, video cards, everything. On the other hand, you go with Intel, we'll give you an integrated motherboard with everything. You get the whole ball of wax from us, cheap! And if you want, you can pay us for a license to the Centrino brand name, too."

That's an incentive to buy Intel. It's also a disincentive against buying AMD. It also sounds like good business sense to me, not any kind of crime

Except that this is not quite the case. Intel's Centrino platform is not completely integrated: it uses a MiniPCI card for wireless, and is required for a platform to carry the Centrino name. The catch? The ONLY MiniPCI card allowed is the Intel Pro/Wireless card.

Manufacturers were very pissed off that they couldn't offer a Pentium M system without
wireless and still sell it under Centrino, let alone provide a different wireless card.

You could get exactly the same level of integration on the AMD side for years (VIA and SiS offered integrated video chipsets for years) for less, with the possibility of including an even better wireless MiniPCI card. But Intel plastered the Centrino name all over the media, basically telling manufacturers that if they ignored Centrino, they would be left behind.

It's not illegal, but it is very underhanded.