FTC Hits Intel with Formal Antitrust Complaint

Posted 12/16/2009 at 12:28pm | by Bart Salisbury

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For some of you out there this comes as no surprise. For others it’s about time. The Federal Trade Commission (FTC) has filed a lawsuit against Intel, the world’s largest maker of chips for computers, alleging a decade long practice of antitrust behavior intended to protect its dominant position in the market.

There are three main thrusts to the FTC’s complaint against Intel. The first is that Intel used its dominate position in the market to cow computer makers, such as Dell and Hewlett-Packard, to buy only Intel CPUs. Intel would either threaten to withhold product, or enter into exclusive deals with computer makers that prevented them from marketing computers built with chips from other makers, such as CPUs from Advanced Micro Devices (AMD).

Second, according to the FTC, Intel designed crucial software, which the FTC identifies as a “compiler”, so it deliberately hampered the performance of chips from competitors. Intel failed to disclose their tinkering with the software, thus deceived computer makers about the performance differences between Intel and its competitors.

Third, the FTC says that Intel is now engaging in these same tactics in the graphics processing market. The FTC argues that GPUs are becoming more powerful, lessening the need for sophisticated CPUs, which undermines Intel’s market dominance. To protect its position, Intel is waging its battle against the likes of Nvidia, over which it holds a substantial financial and market advantage.

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

Intel calls the FTC’s lawsuit “misguided.”

Also out for a piece of Intel’s hide for antitrust behavior: the European Union, which fined Intel $1.45 billion last May, and the state of New York.

Image Credit: Federal Trade Commission