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The FTC Throws the Book at Intel

The US regulator claims Intel has waged a systematic campaign to shut out AMD’s rival processors

The Federal Trade Commission Wednesday morning charged Intel with illegally using its dominant market position for the last decade to stifle competition and strengthen its monopoly.

The US regulator claims Intel has waged a systematic campaign to shut out AMD’s rival processors by cutting off its access to the market. In the process, it says, consumers have been deprived of choice, potentially superior chips and lower prices.

According to the FTC’s administrative complaint, Intel’s anticompetitive tactics were designed to put the brakes on superior competitive products that threatened its monopoly.

In a harshly worded statement Richard Feinstein, director of the FTC’s Bureau of Competition said, “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. The Commission’s action today seeks to remedy the damage that Intel has done to competition, innovation, and, ultimately, the American consumer.”

Intel said it would have nothing to say until its lawyers had read the complaint but may whistle up a press conference later today.

Echoing the European Commission’s antitrust findings on Intel last May – which cost the company an historic $1.45 billion fine – the FTC’s complaint charges Intel with using threats and rewards to coerce box makers such as Dell, HP and IBM not to buy AMD MPUs. The agency labeled the practice “exclusive or restrictive dealing.”

The FTC also added another wrinkle. It claims Intel secretly tweaked its compiler to stunt the performance of AMD’s chips. It says Intel then told its customers and the public that software performed better on its chips, but deceived them by failing to disclose that the differences were due largely or entirely to its compiler design.

The complaint argues that Intel used its unfair advantage to catch up to AMD technically but now finds itself falling behind in GPUs, which lessen the need for CPUs and so threaten Intel’s monopoly.

The FTC claims Intel has embarked on a similar anticompetitive strategy to preserve its CPU monopoly by smothering potential competition from GPU chips such as Nvidia’s and that there’s a “dangerous probability” that Intel could extend its monopoly to the GPU market.

The agency is charging Intel with violating Section 5 of the FTC Act including illegal monopolization, attempted monopolization and monopoly maintenance. It explained that “unlike an antitrust violation, a violation of Section 5 cannot be used to establish liability for plaintiffs to seek triple damages in private litigation against the same defendant.”

AMD recently dropped its massive antitrust suit against Intel, which was scheduled to go to trial in March, but New York’s State Attorney General Andrew Cuomo lodged one of his own that is practically a replay of all of AMD’s allegations.

The FTC case, which now goes to an administrative law judge, won’t be heard until September 8, 2010.

The Commission vote approving the administrative complaint was 3-0, with Commissioner William E. Kovacic recused, and Commissioner J. Thomas Rosch issuing a separate statement in which he concurred in part and dissented in part from the vote.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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