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: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...

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... :(

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.

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: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.