FTC Sues Intel, Another Antitrust Bomb

Last Updated Dec 16, 2009 10:40 AM EST

The Federal Trade Commission filed suit against Intel (INTC) today, "charging that the company has illegally used its dominant market position for a decade to stifle competition and strengthen its monopoly." This is just the latest addition to a worldwide regulatory pile-on that threatens to distract management and to create an atmosphere that can only help a long line of competitors, including AMD (AMD), Nvidia (NVDA), and Via (2388.TW).

The FTC complaint alleges a number of things that probably won't sound unfamiliar to those who have been following how the EU and New York State have taken their own legal actions against Intel:
  • unfair methods of competition and unfair acts or practices starting in 1999 and continuing until the present
  • conduct designed to maintain a monopolistic position in CPUs and to establish one in GPUs
  • activities to block or slow down adoption of competitive products, notably from AMD and Via
  • anticompetitive arrangements with OEMs, including, for those sourcing nearly 100 percent of their chips from Intel, "guarantees of supply during shortages, indemnification from intellectual property litigation, or extra monies to be used in bidding situations against OEMs offering a non-Intel product"
  • using positions in complementary markets to increase advantage, like redesigning compiler and library software in 2003 to reduce performance of competing CPUs
  • inducing vendors of complementary hardware and software products to cut or limit support for non-Intel chips
  • engaging in deceptive actions, including not disclosing how changing libraries and compilers affected non-Intel CPUs, that misled consumers
  • pressuring software vendors to label products as Intel compatible and not to list competing chip vendors, although the software was compatible with those CPUs as well
  • current unfair competition in GPU markets, where Intel's technology is behind its competitors, as was the case in the CPU market in the early 2000s
  • a pattern of activities to prevent competitors from allowing their GPUs to interoperate with Intel CPUs, a sharp reversal from previous dealings with GPU vendors
The claims about Intel's current behavior in the GPU market are interesting, as the FTC is claiming that Intel basically strung along Nvidia and others until they were locked in to working with the CPU giant's strategy, and then suddenly changed its position to hurt competition. It's a more explicit and nuanced position than the EU took, when it fined Intel $1.44 billion for anticompetitive activity from 2002 to 2007.

This also offers a perhaps alternative explanation of why Intel scrapped its Larrabee GPU for the time being. This would let it claim that, at least for now, it's out of the graphics chip market, even though that seems about as likely as the company turning itself into a registered non-profit. And it offers another reason why AMD can continue laughing after agreeing to the $1.25 billion payment that it is to receive from Intel to settle all lawsuits between he two companies. Why continue the cost of civil action yourself when the government, which had to be undertaking an investigation and talking to companies like AMD, is willing to foot the bill for you?

Make no mistake, this is a huge business problem for Intel. Not that it will suddenly lose its dominant position, but major regulatory cases are highly distracting to management, and when you have so many major industrial customers that really don't want to get accused yet again of colluding in antitrust activities. If anything, this is going to push the major PC manufacturers to embrace other vendors just to prove to any regulator who might ask that they're not one of the "bad guys." And that's where Intel is going to feel the biggest kick in the wallet.

Image via Flickr user HarshLight, CC 2.0.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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