US Government sues Intel

Written by Alex Watson

December 17, 2009 | 10:03

Tags: #lawsuit #monopoly

Companies: #amd #ftc #intel #nvidia #us-government

Intel might have thought that paying $1.25 billion to AMD and settling its various legal issues with its rival would have spelled an end to legal troubles. Unfortunately, that's not the case, as yesterday the Federal Trade Commission (FTC) announced it was suing Intel.

The FTC is a US Governmental body that protects consumers from, amongst other things, the harmful effects of monopolies. In its suit, which is summarised on its website, the FTC alleges that "Intel has waged a systematic campaign to shut out rivals’ competing microchips by cutting off their access to the marketplace. In the process, Intel deprived consumers of choice and innovation in the microchips that comprise the computers’ central processing unit."

Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly,” said Richard A. Feinstein, Director of the FTC’s Bureau of Competition. “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.

If you've been following Intel's legal woes over the last few years - falling afoul of local FTCs (or their equivalents) in Japan, South Korea, and of course, the EU - then the details of the FTC's complaints won't be surprising. It alleges that Intel "carried out its anticompetitive campaign using threats and rewards aimed at the world’s largest computer manufacturers, including Dell, Hewlett-Packard, and IBM, to coerce them not to buy rival computer CPU chips. Intel also used this practice, known as exclusive or restrictive dealing, to prevent computer makers from marketing any machines with non-Intel computer chips.

"In addition, allegedly, Intel secretly redesigned key software, known as a compiler, in a way that deliberately stunted the performance of competitors’ CPU chips. Intel told its customers and the public that software performed better on Intel CPUs than on competitors’ CPUs, but the company deceived them by failing to disclose that these differences were due largely or entirely to Intel’s compiler design. "

Similar accusations were made in the suits filed in other countries, and ultimately landed Intel with a £948 million fine from the EU. Where the FTC's complaint becomes more interesting is when it mentions Nvidia, specifically that Intel is intending to use its monopoly to exert control over the market for GPUs.

Intel strongly denies the allegations, claiming that "its actions have benefitted consumers. The highly competitive microprocessor industry, of which Intel is a key part, has kept innovation robust and prices declining at a faster rate than any other industry. The FTC's case is misguided. It is based largely on claims that the FTC added at the last minute and has not investigated."

Nvidia's response, which came from CEO Jen-Hsun Huang, was aggressive and typifies the state of its recent relationship with Intel: "This is an action the industry needs and one that consumers deserve... The FTC believes that millions of consumers have paid more and received less quality in return–and that companies and their employees have been forced out of markets where Intel has been threatened... Intel is fully aware that great graphics have become one of the most important features for consumer PCs, the fastest-growing segment of the PC market.

"Even more alarming to Intel is the revolutionary parallel computing technology in our GPUs that is being adopted by software developers across the world. The more successful we became, the bigger threat we were to Intel’s monopoly. Instead of creating competitive GPU solutions and competing on the merits of their products, Intel has resorted to unlawful acts to stop us. The FTC announced today that this isn’t acceptable."

Do you think it's time Intel caught a break? Or is the firm getting its deserved comeuppance? Let us know your thoughts in the forums.
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