FTC Opens Formal Antitrust Investigation of Intel

andy1307 writes to tell us that according to the New York Times, The Federal Trade Commission has opened a formal antitrust investigation of Intel. Reversing the decision of former FTC chairperson Deborah P. Majoras, the new chair William E. Kovacic is pushing the investigation to look into Intel's pricing policies. "Since it will almost certainly be many months before the commission decides whether to make a case against Intel, as European and Asian regulators have already done, the investigation could mark an important early test for the next administration on antitrust and competition policy."

Comments

Never understood....

[thtrgremlin]

Not that I have ever had a problem with Intel (though I have always bought AMD), but I never understood how why Microsoft gets ALL the blunt of the anti-trust stuff. Intel made a killing with their "Intel inside" campaign, but was it THAT great? I think more architectures for home PCs would be a major benefit to open source software, and a big hit to the stranglehold M$ has had over the sheeple for a long time. I have wanted to get a sparq for a long time, but it has felt a bit to risky to just make a statement. I really hope something comes of this investigation, if Intel was really playing unfair.

Re:Never understood....

[timeOday]

I don't believe Intel and Microsoft are at all comparable. I can buy an AMD processor that runs all the same software, heck I wouldn't even know the difference without opening the box. The same cannot be said for the OS.

I still resent Intel for gouging me all through the 90s, but let's face it they are the best and AMD have largely kept Intel in check.

That said, if their pricing strategy is illegal, well I guess they should get sued.

Re:Never understood....

[dbcad7]

I think this is more about practices with vendors that were similar to Microsoft tactics.. How long did Dell refuse to use AMD processors even when performance exceeded Intel's ? .. but there are extenuating circumstances, so I don't think much is going to happen.. mainly that vendors claimed that AMD didn't have the capacity to supply in the volumes they required.. which is why Macs are also Intel... If you can't deliver "production wise" then you can't really complain if you don't get the business.

I'm an AMD guy, from forever.. and I still don't think Intel is wrong in this situation.

Re:Intel is a monopoly?

[Anarke_Incarnate]

Monopolies, in markets like this, are not meant in such that there are 0 competitors. However, when a company becomes so large that it can sway the market on its whims, then it becomes abusive, and therefor detrimental to consumers and competition.

Intel has been using their size, money and influence to keep competitors out of use in their customer's systems. This is anti competitive, and when on a scale of this size, is considered monopolistic. Intel owns over 80% of the microprocessor market, plus they design specs for systems, such as their PCI spec.

If Intel is guilty of keeping other processors out of machines by being anti competitive, they are going to see some sanctions and fines.

Re:Intel is a monopoly?

[3p1ph4ny]

I'd say so:

Intel...controls 80 to 90 percent of the microprocessor market.

Also, for those of you (like me) who were wondering what exactly they did:

A.M.D. has asserted that Intel offers rebates and discounts that, in effect, result in its chips being sold at prices below the cost of production, a practice that some courts in cases involving other companies have said can be a violation of antitrust law.

Intel denies that its discounts and rebates drive its prices below cost, or at predatory levels. Intel has said that it offered legitimate discounts based on the volume of chips that have been purchased by companies, and that consumers benefit when personal computer manufacturers â" using the discounts â" are able to lower the cost of making their products.

Re:Intel is a monopoly?

[Enderandrew]

You don't have to have a monopoly to comit illegal business practices. Conversely, you can have a legal monopoly that doesn't violate antitrust laws.

Intel violated the concept of competition by threatening companies unless they only carried Intel products. They threatened to hold off shipments of paid products, etc. etc.

They've already been found guilty of antitrust in other countries. AMD claimed to have a mountain of evidence, and several companies willing to testify. I'm shocked it has taken this long to even really open the case in the US. The sad thing is that it almost worked out for Intel, that by breaking the law, they almost drove AMD out of business. At that point, a fine doesn't matter because they would have total market share.

Let the evidence gathering begin...

[mandark1967]

I can definately see the reasoning behind AMDs push to get this investigation underway.

I used Intel when they were fastest and AMD when they were, and now I am using Intel Chips again.

If Intel used its position to force vendor lock-in and exclude AMD, and AMD can prove they lost a healthy chunk of market for the Athlon 64 that, most likely, would have went to resolve the teething problems with Phenom so that it made its original launch date and frequency...then Intel is going to have to break out the checkbook and make sure they got a lotta ink in the pen, cause it's gonna cost them a LOT.

If it's proven that actions resulted in events like this, you can bet Intel will settle all allegations before a final finding of fact is ever released...and pay a healthy sum to AMD to just shut up.

I just hope that, if these allegations are true, they are forced to pay an equitable amount to AMD and not fight it for years because these two companies vying for my business keep prices low enough for us to get some great gear these days...

Wait a Minute....

[mpapet]

Why is this happening now instead of years ago? The harm Intel has created is egregious and has been obvious for a long time.

Did someone at the White House get up on the wrong side of bed one morning? Maybe the White House didn't like what the Executives were doing with their political action funds?

Why now?

Re:Intel is a monopoly?

[Dogtanian]

If Intel is guilty of keeping other processors out of machines by being anti competitive, they are going to see some sanctions and fines. If the senior management were likely to get thrown in prison, could we make jokes about "Intel Inside"?

Sorry... :(

And we care why?

[nurb432]

Lets say they do get declared a monopoly. What happens to them? From the record of late, nothing. They walk away with a token slap, while they keep their market share.

And we tax payers got to foot the bill.

Re:Intel is a monopoly?

[Anarke_Incarnate]

Yeah. They would be shown some new backdoors and have their interfaces expanded to accept all sorts of new peripherals.

Re:Intel is a monopoly?

[bsDaemon]

So, Intel does the R&D on a product that everyone needs and wants, then gets rich because of their invention.

Thne along come some other people, who make clones of Intel's chips. No one wants to buy the chips from the competitors, because they have no significant cost savings, no significant performance increase, and lack the feeling of being a "genuine" article.

So, all these companies that are trying to ride the coat-tails of Intel, and failing, get together and complain to the government that its not fair?

Maybe they should have tried coming up with their own ideas and hoping that people would want to buy them instead of just trying to hop on a bandwagon and complaining that they got there too late and there is too little space.

no one is saying you have to buy an x86 cpu. SPARC and PPC work and do a good job. If Intel has solidified a market dominance that's pushed out OTHER architectures, that's more to do with Microsoft than it is to do with Intel.

Re:Intel is a monopoly?

[morgan_greywolf]

no one is saying you have to buy an x86 cpu. SPARC and PPC work and do a good job. If Intel has solidified a market dominance that's pushed out OTHER architectures, that's more to do with Microsoft than it is to do with Intel.

Hey! Stop ruining our Intel-bashfest with such irrelevant things as "facts" and "common sense"!

Major buzzkill, man.

How the monopoly might be construed

[Stonent1]

It used to be you got the Intel chip, chipset by whoever, a video card and a NIC. Now buy an Intel based computer and you get an Intel processor, Intel chipset, Intel video, and Intel NIC. So with the bundling you save a lot of money but it in effect shuts out a lot of other companies.

But personally I never have any problems with Intel chip + Intel chipset... It always just works. It seems any time I have problems it is when I use some other chipset.

Re:How the monopoly might be construed

[WiglyWorm]

Really? Because I have an Intel processor, an nVidia chipset, and an nVidia graphics card. The reason for this anti-trust case isn't entirely because of a monopoly. It's because of a monopoly + noncompetitive practices made to artificially keep AMD's market share low. Intel fan boy, AMD fanboy, it doesn't matter. There is 0 debate in the fact that AMD's Athlon core was a much superior product to Intel's Netburst. However, their market share has not reflected that. AMD alleges that that's because Intel has been offering $37 million worth of discounts to OEMs, but only if they keep AMD at or below 20% of their products sold. Intel says that these are not unfair or anticompetitive at all. That's where the anti-trust stuff comes in. Abusing dominant position in the market place to keep others off your turf.

Re:How the monopoly might be construed

[SBrach]

For the time being I haven't and won't buy anything but an intel board and proccessor. I used to run AMD's and still run a couple but they have not been without their problems. You can buy a Intel mobo with X3500, Gigabit nic, 7.1 sound and a Core2Duo 3.0ghz for $250 to $300 and everything will, like you said, just work. Now you might be able to build something comparable with AMD for a similar price but is anyone really arguing that the Core2Duo isn't better than AMD's offerings. I like having the graphics card, nic, and sound integrated on my office machine not to mention it saves me money. Should I really have to buy those things seperate just to make life easier for AMD. Are they incapable of producing AMD brand boards with their own AMD brand chipset and integrated graphics, nic and sound. I thought we were supposed to protect the consumer not the underdog corporation.

Re:How the monopoly might be construed

[mitgib]

I have about 100 servers for my small hosting business, 100% AMD, and I can think of only 1 machine that has an AMD chipset on it, and it still has Broadcom nic's and some not well know video on the board, a Tyan dual opteron board, so not some cheap desktop equipment either.

I recently compared a Dell dual quad opteron and a like Dell dual quad Xeon, and wound up buying a few Tyan barebone dual quad's with adaptec raid cards and double the ram and still saved a couple bucks over anything Dell could do for me. And since Dell was right there in line like a good puppy to the Intel overlords, I've avoided their products since the P3.

I have always felt AMD has been beat down unfairly, and other than the K6 stuff, have always bought their products since the 386's

Re:Intel is a monopoly?

[plasmacutter]

If Intel is guilty of keeping other processors out of machines by being anti competitive, they are going to see some sanctions and fines.

back in the good old days, the FTC and courts actually did their jobs and broke up abusive monopolies.

Not anymore

I guess that means we need new laws to compel the executive and judicial brances to actually enforce the law? or maybe establish a saddam-esque paranoid circle jerk of watchers watching watchers?

Re:Intel is a monopoly?

[Anarke_Incarnate]

Except that's not how it worked or works.

Intel was a single source supplier for CPUs. IBM wanted a second source or they would not deal with Intel. Intel then sourced production of pre 486 CPUs to AMD. However, they did not restrict AMD from selling them as their own, which they did. Then, AMD was developing their own chips based on the instruction set and specification that intel developed. Intel sued for trademark infringement, knowing that AMD had the license to produce likewise chips. The courts in the US ruled that Intel could not trademark a number, which is why there was no 586, but rather the "Pentium" with the 5 prefix Pent. This is a trade-markable name.

Being more agile than Intel, and being willing to accept thinner margins than Intel, AMD and competitors were pricing very attractively to OEMs. Intel, however, looked disfavorably on this. They punished their customers with "shortages" of their chips and chipsets, knowing it would allow their customer's competitors, also their customers, to gain an upper hand. They also offered special pricing, not for volume, but for "loyalty." They would give their customers a break if they were 100% intel customers and not "Buy 10,000 units and get 200 free, which would likely have been legal.

The issue is not substandardness nor the inability to compete. Instead, it was that after the original Athlon, AMD was able to out maneuver the challenges that intel through in its way and was able to out innovate them in many areas. The FSB that intel still uses can cause memory bottlenecks as well as poor scaling to multiple sockets and cores, but that is a topic for another discussion. Intel was abusing their customers, their competitors, and consumers with their methods of market manipulation. But, to quell your intent to show that AMD et al were simply riding on Intel's coat tails, ask yourself "Who built the spec to extend x86 to 64bits with extended register counts?"

Re:Intel is a monopoly?

[AcidPenguin9873]

I think you need a history lesson. When AMD released the original Opteron in late 2003/early 2004, it had numerous desirable, innovative features that Intel's offerings at the time did not have:

• 64 bit support in the form of AMD64
• An on-die memory controller
• HyperTransport point-to-point interconnect for non-coherent I/O links and coherent socket-to-socket links
• Better power numbers than P4
• Better performance than P4

AMD has alleged that Intel used its monopoly position to exclude Opteron and other K8 derivatives (Athlon64) from major OEMs for 2 years, from its release in late 03 until sometime in 2005, when the antitrust allegations were filed. During that time, the problem was not poorer, "cloned" products which offered no advantages over Intel's. Basically, anyone who followed the x86 processor market during that time knew that Opteron/Athlon64 was better than P4, for a competitive price.

Re:Not just Anti-trust

[Anonymous Coward]

I can't help but notice that your comment makes no sense at all.

This like most of the techno anti-trust cases is plain old Bullshit and reeks of nothing more than more bashing on big guys, which our government appears to like to do more and more.

And they wonder why more and more businesses are starting to locate outside of the USA. You do realize, as the article says, that the US was one of the last countries/organizations to investigate Intel, right? The EU has already opened an investigation, and just recently, South Korean fined Intel $25 million. So yes, more businesses should locate outside the US, so that they will be under the jurisdiction of sane government entities who aren't pussies and will actually investigate companies for antitrust violations.

Re:Intel is a monopoly?

[tygt]

I have only a minor technical complaint about your posting:

when a company becomes so large that it can sway the market on its whims, then it becomes abusive

Such large companies may be able to sway the market, but do not necessarily become abusive. Most likely they do, of course - power corrupts....

What about Microsoft?

[mollog]

Intel, shmintel. Who cares about Intel?

But Microsoft has to be watching this very, very closely. If the post-Bush FTC is willing to go after Intel, you have to think they're going to get after Microsoft, too.

Re:Not just Anti-trust

[Dragonslicer]

Not that my anecdotal experience is worth more than your anecdotal experience, but I remember the exact opposite. Several years ago, I had a problem with JPEG's not rendering correctly. I contacted my video card manufacturer's support, assuming it was a video card problem (some things would render fine, others wouldn't, so my first guess was the video card). I was told that it was a known manufacturing defect in some AMD CPU's. I contacted AMD, and they said that it was odd that the problem would show up after owning the CPU for about a year, but they had me send it to them to check out. I ended up getting a replacement that was a little faster than the old CPU.

Intel is Guilty

[byteherder]

The dirty little secret of the industry has been that Intel has been guilty of unfair business practices for a long time. Basically, they say to their customers, if you cut out AMD we will give you cut rate prices. If you don't we will only give you a limited supply of chips and your competitors will kill you on price and volume. They are like the mafia in business suits.

The European commission made a estimate of the damage Intel did to the market and it came to $60 billion. I would like to see that much given to AMD but I am not holding my breath.

Re:Intel is a monopoly?

[Anonymous Coward]

It's not really discounts, but "marketing support". Which is why nearly every ad for a PC has the Intel chimes/logo at the end.

This plan was really devious because not only does it encourage OEMs to use Intel, it also made "Intel Inside" into consumer religion.

Re:Intel is a monopoly?

[cyber-vandal]

And you can run your Windows-only bespoke apps on PPC and SPARC can you? Will libertarians ever stop pretending that one over-powerful company dominating a market is good for consumers and should be left alone until a competitor magically appears and isn't squished by all sorts of very difficult to compete against tactics.

Re:Intel is a monopoly?

[mitgib]

How exactly would you break up Intel in any way that makes sense?

How was AT&T broken up in any way that made sense?

Had AT&T been broken up by service layer instead of service area, we might actually have good telecommunications and true competition in the US

Re:Intel is a monopoly?

[Chris Burke]

Such large companies may be able to sway the market, but do not necessarily become abusive. Most likely they do, of course - power corrupts.... Indeed, that's a very good point, and it's equally worth pointing out that as long as the monopoly is not abusive, then it isn't breaking any laws.

Monopolies aren't "punished for success" as I heard a few thousand too many times during the MS anti-trust trial. Monopolies are punished for parlaying that success and resulting market power into back room deals designed to prevent any competition from getting a leg up.

This is why I've always used AMD

[Totenglocke]

Ever since my dad got an AMD processor when upgrading our PC in the early 90's, we've always been an AMD family. I know that right now the Core 2 Duo is better than the Athlon64 X2, but I want to keep giving AMD my business so I can do my part to help keep them from getting crushed by Intel due to Intel buying off companies like Dell.

While I know I'd be getting a better product, I'd rather make sure my money goes to a company I support instead of one who tries to force people out of business instead of JUST making better products and letting consumers decide what they like best.

Re:The apple deal may also be part of this as well

[TheRaven64]

It boils down to two things. First, Intel had the Pentium M, and were about to launch the Core (slightly improved Pentium M) and Core 2 (new, lower power, microarchitecture) lines. Apple were selling more laptops than desktop and this trend has continued. The Mac Pro is a tiny, tiny fraction of their turnover and profit - it's a showpiece, while the machine that actually sell are the laptops. AMD had nothing comparable in the mobile CPU and (importantly - one of the reasons for the switch was that Apple wanted to stop designing their own chipsets) chipset arena.

The other problem is volume. Motorola and IBM had both had problems supplying Apple. When they switched to Intel, they became responsible for about 5% of Intel's demand. If they had gone to AMD, they would have been responsible for 50%. If Apple double their market share, Intel needs to grow by 5% to accommodate them. AMD would need to grow by 50%. Which do you think is more likely to happen?