FTC sues Intel, aims to shape the GPU market

FTC sues Intel, aims to shape the GPU market

Summary: The Federal Trade Commission is suing Intel, alleging that the chip maker has "waged a systematic campaign to shut out rivals’ competing microchips."

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Updated: The Federal Trade Commission said Wednesday that it is suing Intel, alleging that the chip maker has "waged a systematic campaign to shut out rivals’ competing microchips." In addition, the FTC is looking to shape the future of the graphics processor market by keeping Intel in check.

In the complaint the FTC argues that Intel (statement, PDF, Techmeme):

  • Cut off rivals' access to the marketplace;
  • Deprived consumers of choice and innovation;
  • Was anticompetitive for a decade as it moved to shore up its monopoly;
  • And now is working to choke off rivals in graphics chips.

The FTC alleges that:

Intel’s anticompetitive tactics were designed to put the brakes on superior competitive products that threatened its monopoly in the CPU microchip market. Over the last decade, this strategy has succeeded in maintaining the Intel monopoly at the expense of consumers, who have been denied access to potentially superior, non-Intel CPU chips and lower prices.

Sound familiar? It is. The FTC argument is very similar to the EU's case against Intel. The FTC alleges that Intel used threats and rewards against PC giants like Dell, HP and IBM to "coerce them not to buy rival computer CPU chips." In addition, restrictive dealing kept PC makers from marketing non-Intel machines.

Intel in a statement said the FTC filed its suit without proper investigation. In addition, the two sides were about to settle but the FTC wanted to pursue "unprecedented remedies." Intel said that the FTC is looking to regulate the chip industry rather than enforce existing laws. Intel added:

Intel has competed fairly and lawfully. Its actions have benefited 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. In addition, it is explicitly not based on existing law but is instead intended to make new rules for regulating business conduct. These new rules would harm consumers by reducing innovation and raising prices.

The scrum is all about the future of the chip industry---GPUs. The FTC is arguing that Intel is falling behind the competition from graphics processing units, or GPUs. GPUs are currently the turf of Nvidia and AMD, but Intel represents a future threat. The FTC appears to be trying to head Intel off at the GPU pass. And if you believe that GPUs are the future, the FTC is being way proactive here.

To wit:

Intel has responded to this competitive challenge by embarking on a similar anticompetitive strategy, which aims to preserve its CPU monopoly by smothering potential competition from GPU chips such as those made by Nvidia, the FTC complaint charges. As part of this latest campaign, Intel misled and deceived potential competitors in order to protect its monopoly. The complaint alleges that there also is a dangerous probability that Intel’s unfair methods of competition could allow it to extend its monopoly into the GPU chip markets.

As for the remedies, the FTC is "seeking an order which includes provisions that would prevent Intel from using threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate the prices of its CPU or GPU chips." The FTC may also prohibit Intel from excluding the sale of rival CPU or GPU chips.

Also: Intel to pay AMD $1.25 billion as companies end litigation war; Is it a new chip era?

Among the key excerpts from the complaint:

For discrete GPUs, Intel has created several interoperability problems, including reductions of speed and encryption, that have had the effect of degrading the industry standard interconnection with Intel’s CPUs. Some of this conduct appears to have been specifically targeted at crippling GP GPU computing functionality.

And.

Intel sells its Atom CPU bundled with a graphics chipset. Some OEMs purchased the bundle from Intel, discarded Intel’s inferior graphics chipset and chose instead to use Intel’s Atom CPU with the Nvidia graphics chipset. To combat this competition, Intel charged those OEMs significantly higher prices because they used a non-Intel graphics chipset or GPU. Intel would offer the bundled pricing only to OEMs that would then use the Intel chipset in the end-product and not use a competitive product.

And.

Intel’s efforts to deny interoperability between competitors’ (e.g., Nvidia, AMD, and Via) GPUs and Intel’s newest CPUs reflect a significant departure from Intel’s previous course of dealing. Intel allowed, and indeed encouraged, other companies including Nvidia to develop products that interoperated in a nondiscriminatory manner with Intel’s CPUs (and its chipsets and related connections) for the last ten years. The interoperability of these complementary products, along with the innovation and intellectual property contributions made by these companies to Intel in exchange for such interoperability, made Intel’s CPUs more attractive to OEMs and customers. Indeed, Intel used other companies’ technologies to enhance Intel’s graphics capabilities and its monopoly power in CPUs.

Intel’s conduct and representations created a duty to deal and cooperate with its competitors, such as Nvidia, AMD, and Via, to enhance competition and innovation for the benefit of consumers. These companies’ reliance on Intel’s original representations was reasonable.

Once Nvidia and other companies committed to working with Intel, and in some cases granted significant intellectual property to Intel, and were thus locked into Intel’s strategy, Intel changed its position with these companies and used its power to harm competition.

Related:

Topics: Processors, CXO, Emerging Tech, Hardware, Intel

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184 comments
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  • I've been telling you people that Inhell is evil

    but the shills discounted my expert opinions and predictions.
    AMD might regret setteling with inhell given this new lawsuit.
    Linux Geek
    • You've been telling people a lot of things

      most of it fanboy crap.
      TheBottomLineIsAllThatMatters
      • Agreed

        Just type "Linux Geek" into the search box at the top of the ZDNet web page.
        dpatjhh
        • Don't do it;

          It's a trap!!!!
          satovey@...
    • You're awesome

      Can I be your friend?!

      I can't resist rubbing virtual elbows with the internet elite!
      o o
      < >< >
      || ||

      That's us rubbing elbows. Isn't it BEAUTIFUL?!
      tikigawd
  • The same charges can be raised against ...

    ... any company which dominates its market. Unless Intel is actually telling OEMs that they cannot use Intel ships if they use other peoples chips, then I have to wonder whether this is jsut because TODAY the Core i7 is the best performer out there.

    AMD and Intel have been playing leapfrog for years. Granted, I don't see AMD in many systems except entry-level systems but I am not searching for AMD either.

    As for GPUs. Other than integrated graphics, I see nothing from OEMs except ATI and nVidia GPUs so I don't see that Intel offers much competition in the GPU sector.

    If people are foregoing GPUs in favor of integrated graphics, well that's a different problem altogether. Maybe ATI and nVidia need to be seeking out motherboard makers to use their integrated solutions intead of Intel's.
    M Wagner
    • They were telling OEM's just that!

      Dell has just recently started shipping AMD systems. Why? Because Intel threatened to not give them the breaks they were getting if they shipped AMD systems. That is what the lawsuit is about.
      MrElectro
      • So?

        What's wrong with giving a better price to my
        better customers? The more you buy from me the
        cheaper I will sell them to you. Almost every
        business works that way and there is absolutely
        nothing wrong with that.
        66c10
        • wrong comparison

          <q>
          What's wrong with giving a better price to my
          better customers? The more you buy from me the
          cheaper I will sell them to you.
          </q>

          If that's all intel did, fine. Intel went further and threatened OEMs with a slowdown of availability if the OEM sold AMD chips
          CaptOska
        • Better Prices if you do not Sell AMD

          is more like it. Like the above poster said it was that they threatened higher prices and less availability and buying power if they used a competitor like AMD. If it were price based on purchase volume alone then there is no problem with that. But when they do things like putting conditions on their prices other than legal reasons then there is a problem.
          bobiroc
        • It should be illegal to tell OEM's what they "can't" sell

          It may be ok to have one exclusive deal for a limited time, but when you go to every OEM and try to get an exclusive deal with the threat of pulling out your supply, you are being anti-competitive. That should be illegal.

          Exclusive deals between two companies can be beneficial, but locking down the entire market with that is destructive.
          T1Oracle
          • It is illegal

            hence this lawsuit

            "The views expressed here are mine and do not reflect the official opinion of my employer or the organization through which the Internet was accessed."
            gnesterenko
          • Would not the OEMs be complicit?

            If the OEM say ok, which ever way you suck your noodle. Then, AMD would get to sale all the CPUs, no?
            eargasm
        • Anti-competitive practices are illegal in the US, and bad for consumers

          U.S. Monopoly laws prohibit exclusion of competitors when identifying costs.

          Anyone who has read or studied the 1870-1920 US History would understand where this law came from and why it is critical to you, the consumer.

          The key difference here is that a company can give you a discount, lower price, and any other deals (advertisements that you see in the Sunday paper), BUT cannot not tie that to prevention of selling their competitors products.

          The reason you didn't see AMD on the shelves in large volumes (allegedly in the US but proven in other countries) is because if a company sold AMD, Intel would jack up the prices on Intel products to the point that a company either went ALL Intel or ALL AMD which is not a good business model. Therefore, it is natural to revert to the larger market provider and therefore prevented you as a user to have the best product, AMD, for several years...enough time for Intel to regain dominance. The fact that DYI and hobbyist kept AMD in business only shows how dominate their product was for several years in performance but yet not a single CPU on most shelves. Defies logic...except Monopolistic practices.
          Rilesman
          • Especially since...

            AMD/ATI HDMI video for HDTVs is superior, and the only GPU designed out of the box for 7.1/5.1 surround sound HDMI pass through right out of the box.

            HP tried to replace my ATI card on warranty with an NVIDIA and just couldn't get it to work, I doubt Intell even has such a graphics card.

            Replacement description as follows:
            AMD Radeon RV6350 Pro (Skyraider) - 512MB memory
            JCitizen
        • Right on

          Companies do it every day, why they chose to pick Intel is because the have a lot of money to hand over to the government after the law suit is over.

          Fortune 500 companies offer so and so product every day to their best customers for a better price, as long as they use their products. Nothing is wrong with this way of doing business, that's how companies make money and gain loyalty. Something the government will never have; "loyalty".

          If a company doesn't like the deals they get then let them change providers, simple as that. When enough vendors start switching to AMD and other motherboard manufactuters, then Intel might decide to change the business model they use.

          Until then, this is but a waste of my tax payer money and is a bunch of hokey in my opinion.

          Also, since I don't agree with this law suit at all, I sent my representative, Senator Arlen Spector, a copy of everything and let him know what a waste this is and to put a stop to this. If you feel something isn't what it should be, do the same, contact your representative and let them know.
          bckerr
      • That is just so much bull

        Dell is trying to compete against HP and Acer who have low end entry systems using AMD chips, Dell's financial position required they either compete in this market or go under. Even in the high end, Dell has always overpriced their systems in comparison to other manufacturers and this has nothing to do with Intel, it is how Dell perceived themselves.
        Rndmacts
        • Dell Insider View

          Not true. I was a call center sales person for 3 years. Dell had an exclusivity contract with Intel. We were instructed to tell the customers that we couldn't sell AMD processors because they would cause the PC to breakdown and run slower on all applications and the internet.

          Dell only began selling AMD systems because the contract between Intel and Dell expired and business customers wanted AMD server systems. Once availablity of AMD process was seen by consumers, a demand by consumers forced AMD to sell consumer versions of PC also.
          Oregon_Polar
          • What?

            "Once availablity of AMD process was seen by consumers, a demand by consumers forced AMD to sell consumer versions of PC also."

            Your quote isn't making any sense here. AMD has always sold consumer processors. In fact, AMD, according to their site, was in the business at first to compete with Intels consumer CPU's. I'm not sure what you are getting at.
            bckerr