AMD antitrust response: Ruling will unseat Intel
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Dirk Meyer, AMD's president and chief executive, said that the ruling was an important step toward establishing a truly competitive market.
"AMD has consistently been a technology innovation leader, and we are looking forward to the move from a world in which Intel ruled to one which is ruled by customers," Meyer said in a statement on Wednesday.
In its ruling, the Commission found that Intel had used conditional rebates and other payments to dissuade PC manufacturers and retailers from using AMD's x86 CPUs.
Tom McCoy, AMD's executive vice president for legal affairs, said in the statement that the ruling would see the industry benefit from an end to Intel's "monopoly-inflated pricing" and that European consumers will enjoy greater choice, value and innovation.
Intel has said it will appeal the €1.06bn (£951m) fine, which is the largest antitrust penalty ever levied by the European Commission. Intel chief executive Paul Otellini said in a statement that his company's practices had resulted in "absolutely zero harm to consumers", and that the chipmaker did not believe it had violated EU law.
In its decision, the Commission said that Intel had made direct payments to Media Saturn Holding, owners of the giant European electronics retail chain Media Markt, to make sure the chain would stock only PCs that used Intel's x86 chips.
Speaking in a press conference following the Commission's ruling, Intel senior vice president Bruce Sewell "absolutely and categorically" denied that finding. "At no time has Intel ever paid money to a retailer or customer," Sewell said. "Intel provides discounts or incentives in the form of funds to launch marketing campaigns. At no time have there been any payments."
Sewell also said that Intel had at no time put any conditions on the rebates it offered to computer manufacturers, another part of the Commission's findings. "There is no requirement for a customer to buy from Intel," he said. "Customers may choose to only buy from Intel, but there is no condition that the customer only buy from Intel."
Media Saturn Holding was unable to give ZDNet UK any details of payments from Intel related to the Commission's findings. "As you can imagine, Intel is one of our major suppliers, so we can't comment," a spokesperson for Media Saturn Holding said.
ZDNet UK understands, however, that Media Markt was involved in the Commission investigation and worked closely with investigators and helped them to come to the investigator's conclusions.
Commission spokesman Jonathon Todd declined to say how much Intel had paid Media Markt, but told ZDNet UK the amount paid was "irrelevant". He rebutted Intel's denial of its findings regarding the German retailer. "Intel did pay Media Markt with a view to using [Intel]," Todd said.
The European commissioners are ready to counter Intel's assertions in the European Court of First Instance, where the appeal will be heard. "The Commission has worked long and hard on the decision, and we are confident [the decision] will withstand the scrutiny of the court," the spokesman said.
Intel has already come under antitrust scrutiny in South Korea, where regulators said in June that they would fine the company $25.4m for abusing its dominant position in the local chip market.
The European Commission decision comes a day after Otellini told investors that Intel, which controls almost 80 percent of the microprocessor market, has seen better second-quarter orders than expected. AMD has just started gaining ground on Intel, with its last quarter's market share showing 4.6 percent growth to 22.6 percent of the x86 market, following five quarters of decline.
The Commission's decision is unlikely to make any significant change in market conditions, Gartner vice president Martin Reynolds said in a statement.
"The Intel-AMD market share is likely to remain roughly aligned with manufacturing capacity, adjusted for technology capabilities," Reynolds said. "Intel will pay its fine and carefully inspect its sales relationships to protect against risky influence. AMD does not receive any money from the fine, which accrues to the EU tax budget. Intel's greatest challenge will remain market growth, not market share."
Reynolds added, however, that the Commission's ruling would pave the way for civil cases against Intel. "The main case [is] due to go to trial in Delaware in 2010," he said. AMD filed a private antitrust suit against Intel in US District Court in Delaware in 2005.
This article was originally posted on ZDNet UK.
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With Intel, the situattion is different. AMD CPUs are just as good or better then Intel CPUs at certain price levels. Sure Intel controls the performance segment, but in the value/mainstream, technologically and performance-wise, they are viable alternatives to one another. Neither product is clearly superior (arguable of course, but not to the average consumer - they don't care that one CPU may favor one app over another). So the anti-competitive practice by Intel was to actually directly influence what was being sold in stores.
I guess the difference is that with MS, a customer is more then likely already locked in to MS technology and isn't planning on switching. Where as with Intel, no such lock exists and so they violated some laws and paid some corp execs. And now people found out and are pissed.
In theory, the tactics are similar, but in effect, very very different. The scale of malicious intent of the practice is also very different. That is why this fine seems so severe relative to what was levied against MS.
Also, to top that off, I'm sure that the comission came up with that number fully aware that Intel would appeal and that the number would reduce in size significantly during the appeal process. Maybe they just tried to set the bar as high as possible.
If you're a business, you stand to lose on average 6 hours of billable cpu time using AMD hardware, and spend significantly more on power, both hardware and recurring cost-wise.
AMD processors also suffer the issue that they don't support multithreading and parallelism well at all. This isn't terribly important now, but in the next few years, as parallelism becomes more ubiquitous and easy to implement, existing Intel processors will begin to annihilate AMD chips in terms of 45-50%, as opposed to 20 as it stands. This is not including old technology like the core 2 duo line.
The truth is, that deeper pipeline means more instructions need to be backed out once a dependency is encountered. Business apps just aren't optimized for these deep pipelines nor are they optimized for multiple CPU's.
Your mileage may vary, but we sell lots of systems for business users. We've been 100% AMD for years and are quite happy with them, as I'm sure you are with Intel.
Consumers hurt? As if the CPU market isn't competitive in that a MIP today costs several orders of magnitude cheaper than not even 5 years ago.
The rebates are not only legal, they were public! This one company Media Holdings who does not provide any information was the sole basis for a $1B+ fine? Something is real fishy here.
Intel is the better company, but that was a stupid stupid move. Worth a billion dollars? I don't think so, but the EU is heavy handed with american companies.
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