Live

Watch CBSN Live

Intel Promises To Share Chips

The government said Wednesday that Intel Corp. promised in its antitrust settlement to share important technical details about its computer chips with other companies in all except rare circumstances.

But in a significant legal victory for Intel, the government didn't require the company to acknowledge that it holds monopoly power over the microprocessor market. An admission by Intel that it wields monopoly power could have been used against it in future lawsuits.

Intel is the industry's largest chip-maker. Its products run roughly 85 percent of the world's personal computers.

The Federal Trade Commission announced terms of the settlement Wednesday. Although the agreement with Intel was announced last week, details were so closely guarded at the time that it was unclear what concessions the government had won.

Under the settlement, Intel agrees to share important information about upcoming processors with other companies unless those firms don't pay Intel as agreed or unless they sue Intel and ask a judge to enjoin it from manufacturing its chips.

"The threat of an injunction would seem an extremely drastic threat to Intel, so the logic is, this gives them the ability to fight back," said William Kovacic, an antitrust expert at George Washington University.

Intel also will not be obligated to continue sharing information about its chips with businesses that broke promises to keep the details confidential, or with businesses that might use the information to design rival microprocessors.

The FTC's decision to settle the case is its most significant affecting the nation's burgeoning high-tech industry since it deadlocked 2-2 in 1993 and decided not to sue Microsoft Corp. over alleged antitrust violations.

"The heart of the commission's complaint against Intel was the principle that a monopolist cannot withhold products or information about products in order to retaliate against customers who find themselves in intellectual property disputes," FTC Chairman Robert Pitofsky said Wednesday.

He said the settlement will "fully resolve ... competitive concerns without interfering with Intel's legitimate business activities."

In its lawsuit, filed in June, the government had alleged that Intel illegally withheld from three companies advanced technical details about new chips to "extort" valuable technology that the companies had developed independently and for which they had secured patents.

"Giving up the right to seek an injunction isn't giving up very much," said Kevin Arquit, an antitrust lawyer in New York. "Companies want their intellectual property to be used. They just want to be paid for it."

Last week's settlement does not affect a broader investigation of Intel the FTC launched in September 1997. That probe is widely believed to be looking into Intel's business relating to computer motherboards and graphics technology.

In its original lawsuit, the FTC asked that Intel be ordered to stop discriminating against or threatening any company over the sale of its microprocessors or sharing information about its technology. It also wanted Intel to "take such other measures that are appropriate to correct or remedy, or prevent the recurrence of, [its] anti-competitive practices."

By Ted Bridis