Intel settles with FTC

[Phynaz]

Cliff notes:

Must continue current patent agreements for six years.
Must continue to use PCI for six years.
Must disclose any Intel specific optimizations in its compilers.
Can't retaliate against customers for using AMD, Nvidia or Via products.

Settlement is here:
http://download.intel.com/pressroom/legal/ftc/FTC_Final_Executed_Agreement.pdf

 

[Acanthus]

Nothing about them cancelling ALL of their competitors i7 and atom chipset agreements?

No fines for obviously violating the law?

 

[ViRGE]

The fact that the press didn't pick up on this pretty much says it all. There's nothing in here that Intel didn't already agree to with AMD separately: nothing is being done about the chipsets and buses, all Intel is doing is agreeing to not strong-arm OEMs in to using their CPUs.

 

[jvroig]

Like an option in the thread in VC&G that is similar to this one predicts, all Intel gets is a slap on the wrist. With AMD already settled way before this one, there's really no more loaded gun to threaten Intel regarding the FTC suit.

 

[Phynaz]

Nothing about them cancelling ALL of their competitors i7 and atom chipset agreements?

No fines for obviously violating the law?

Apparently the US government doesn't think it's so obvious that Intel violated the law.

 

[jvroig]

Article about the settlement.

 

[Acanthus]

Apparently the US government doesn't think it's so obvious that Intel violated the law.

http://www.law.cornell.edu/uscode/html/uscode15/usc_sec_15_00000001----000-.html

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.

and

http://topics.law.cornell.edu/wex/Antitrust

Exclusive dealing agreements require a retailer or distributor to purchase exclusively from the manufacturer. These arrangements make it difficult for new sellers to enter the market and find prospective buyers, thus depressing competition. However, because companies widely-use requirements contracts, which essentially are exclusive dealing agreements, for purposes that promote competition, exclusive dealing arrangements only face rule of reason scrutiny.

 

[jvroig]

They settled out of court, so Intel is "innocent" (not guilty, not convicted).

Since they settled, the FTC must have thought either:
A.) they could not win against Intel now that AMD "forgot" about the whole thing, or;
B.) they sincerely thought that the agreements Intel ceded to (which ended up in this final settlement) were enough reparations for all the harm they may have done which caused the suit in the first place.

Personally, I'd say it's A.

 

[Scotteq]

However, because companies widely-use requirements contracts, which essentially are exclusive dealing agreements, for purposes that promote competition, exclusive dealing arrangements only face rule of reason scrutiny.

This, apparently, is the key phrase: If the agreements we all know are/were in place aren't/werent egregious enough in the (US, in this case), then legally, the FTC can't nail Intel on it. BUT, there was clearly enough there for the FTC to step in and give Intel the legal equivalent of a Yellow Flag on the play.

The referees from the EU haven't ruled yet. But there's enough historical precidence to suggest the EU may well be more interested in lining their own pocketbooks, rather than settling matters administratively. I doubt INTC will walk away from that particular inquiry without writing a great big cheque.

 

[extra]

lols, yeah...i voted for slap on the wrist. Looks like all those that did were correct. I almost feel bad for nvidia...almost..lol

 

[senseamp]

No fine? Looks like more money left for the Europeans to collect.

 

[Acanthus]

This, apparently, is the key phrase: If the agreements we all know are/were in place aren't/werent egregious enough in the (US, in this case), then legally, the FTC can't nail Intel on it. BUT, there was clearly enough there for the FTC to step in and give Intel the legal equivalent of a Yellow Flag on the play.

The referees from the EU haven't ruled yet. But there's enough historical precidence to suggest the EU may well be more interested in lining their own pocketbooks, rather than settling matters administratively. I doubt INTC will walk away from that particular inquiry without writing a great big cheque.

I disagree that locking AMD out of Dell during Dell's prime was not that damaging. Nvidia is obviously suffering but this does open up the doors for an Nvidia - VIA merger with the joint company producing x86 CPUs.

 

[jvroig]

I disagree that locking AMD out of Dell during Dell's prime was not that damaging.

Sure, but even if it were (and it probably is), AMD is not cooperating with the FTC anymore. AMD settled already. If AMD didn't settle and instead won in court, the FTC would practically have an automatic win. But it didn't happen that way. With AMD now chummy with Intel, what else can FTC do? How can they push and win a case about AMD being damaged by Intel/Dell when AMD itself won't cooperate?

 

[Idontcare]

I disagree that locking AMD out of Dell during Dell's prime was not that damaging. Nvidia is obviously suffering but this does open up the doors for an Nvidia - VIA merger with the joint company producing x86 CPUs.

That would be DELL that opted to lock AMD out...that decision was made entirely by DELL's decision makers.

History is only now finally showing just how crooked their management was in the period that Michael Dell himself stepped outside the business.

Is Intel locking AMD out of Apple? Or is Apple locking AMD out of Apple?

Not sure why this contract stuff bothers people so much. You know what I can't buy at an independently owned McDonald's franchise restaurant? A whopper! Can you believe that.

I walk into that McDonald's franchise and those poor folks can't sell me a Subway Sandwich or a BK Whopper! Want Pepsi instead of Coke? Oh the horrors!

So Dell sold only Intel kit. And? I had no problem finding AMD chips then. Its not like Dell was the sole supplier to the world.

Can you buy Via from Dell? What about transmeta?

 

[lopri]

Lost opportunity. Crooked FTC. Power of Intel's lobby.

 

[TuxDave]

lols, yeah...i voted for slap on the wrist. Looks like all those that did were correct. I almost feel bad for nvidia...almost..lol

What happened to nVidia?

 

[tokie]

Interesting. The wording says that GPU-makers and other complementary products will have access to Intel's CPUs for the next 6 years.

Does this mean that Nvidia will be able to make chipsets using the DMI bus for the next 6 years? The wording is very general that I'm not sure...

 

[Phynaz]

Interesting. The wording says that GPU-makers and other complementary products will have access to Intel's CPUs for the next 6 years.

Does this mean that Nvidia will be able to make chipsets using the DMI bus for the next 6 years? The wording is very general that I'm not sure...

Nope. It means Intel must provide a PCI interface for six years, so Nvidia has something to plug its discreet cards into.

Nvidia has a DMI license and can make all the DMI chipsets it wants to, it just has chosen not to, just as they have decided to halt development on AMD chipsets. It's the QPI license they don't have. From what I can make out from the settlement, they will still not have a QPI license.

 

[Scotteq]

I disagree that locking AMD out of Dell during Dell's prime was not that damaging. Nvidia is obviously suffering but this does open up the doors for an Nvidia - VIA merger with the joint company producing x86 CPUs.

I never said it didn't hurt. But it also takes two to tango: DELL agreed to whatever it was that Intel put in the Honey Pot.

*****

Now - Having spent time in the industry, I know from personal experience that companies like Intel, Oracle, and IBM are absolutely *brutal* to compete against. Not in the sense that they actively stand in your way. But in the sense that their sales guys and gals are (and have been for years) on a first name basis with each and every member of their respective customer's Executive Staff, *and* probably their families too. How to you beat the guy who's wife picks up the CIO's kids from daycare while *he* is discussing, planning, and helping to specify his CIO/customer's roadmap for the next ten years??? 5 year long, multi multi million dollar "all you can eat, plus help learning how to eat better/more" deals don't get written by sales guys. They get written with the help "John Frusciante and his team at IBM, who have proven - each and every day for the last decade - they know how to help our company apply technology and make us money while doing it... Not to mention that John F. can pick up the phone and go straight to real industry heavyweights, like (Frank Kern), (Mike Daniels), and (Colleen Arnold), to make things HAPPEN..."

That's what the Sales Executives for Intel/Oracle/IBM *do*. That's the level of competition smaller corporations like AMD face. You want to beat INTC? You have to become what their Sales Execs are: the ghost writers for that RFP/RFQ you only think you have a chance to win.

Jerry Sanders (AMD Founder and former CEO) has been quoted as saying (something like) "You don't understand the meaning of the word 'competition' until you've gone up against Intel...". And having been there, I believe Mr Sanders' asessment is spot on.

Bottom line: You may sell trays of processors, or whatever. But you're not going to win in the long term until you can play that game better than (IBM/INTC/whoever)'s Executive Sales team.

****************

Now - Leaving the door open for something on the order of a Via/nVidia merger/aquisition/JV - (a stretch, for sure, but...) - is interesting indeed.

 

[Acanthus]

That would be DELL that opted to lock AMD out...that decision was made entirely by DELL's decision makers.

History is only now finally showing just how crooked their management was in the period that Michael Dell himself stepped outside the business.

Is Intel locking AMD out of Apple? Or is Apple locking AMD out of Apple?

Not sure why this contract stuff bothers people so much. You know what I can't buy at an independently owned McDonald's franchise restaurant? A whopper! Can you believe that.

I walk into that McDonald's franchise and those poor folks can't sell me a Subway Sandwich or a BK Whopper! Want Pepsi instead of Coke? Oh the horrors!

So Dell sold only Intel kit. And? I had no problem finding AMD chips then. Its not like Dell was the sole supplier to the world.

Can you buy Via from Dell? What about transmeta?

Err intel gave Dell volume discounts that could only be attained by excluding AMD entirely.

Apple is a completely different situation, they sell what is basically a uniform platform and selected Intel + Nvidia for that platform (although i've heard they are offering AMD graphics now)

 

[Acanthus]

What happened to nVidia?

http://www.nvidia.com/object/nv_ftc.html

 

[Phynaz]

Err intel gave Dell volume discounts that could only be attained by excluding AMD entirely.

So? Dell could have turned down those alleged discounts at any time.

 

[Phynaz]

http://www.nvidia.com/object/nv_ftc.html

How about something from a source that's a little bit more independent.

 

[brybir]

That would be DELL that opted to lock AMD out...that decision was made entirely by DELL's decision makers.

History is only now finally showing just how crooked their management was in the period that Michael Dell himself stepped outside the business.

Is Intel locking AMD out of Apple? Or is Apple locking AMD out of Apple?

Not sure why this contract stuff bothers people so much. You know what I can't buy at an independently owned McDonald's franchise restaurant? A whopper! Can you believe that?

I walk into that McDonald's franchise and those poor folks can't sell me a Subway Sandwich or a BK Whopper! Want Pepsi instead of Coke? Oh the horrors!

So Dell sold only Intel kit. And? I had no problem finding AMD chips then. It's not like Dell was the sole supplier to the world.

Can you buy Via from Dell? What about transmeta?

I think the difference here is that you are comparing laws that deal with franchising versus laws that deal with anti-trust. They are significantly different. Your analogy would be better if it were the case that all the fast food chains had to buy their food from two companies, and one company could exclude the food purchases of the other company, forcing each chain to buy food from only one food company to the exclusion of the other.

Presumably, Intel publishes prices for its CPU's and sells to anyone that can pay the price. They make no conditions about how Dell must operate their business because they have no legal relationship, as a seller of goods, to dictate to Dell how to run Dell's business. That is, unless Dell enters into an agreement with Intel such that Intel has a say in how Dell runs its business. So now we have two separate entities, with no legal duties to each other (in comparison to the McDonalds example above) deciding to deal exclusively with each other. So you have to ask, why would they do this? Normally it's to get most favorable terms, and it is easy to see why Dell would do this, it had billions of dollars at stake.

But why would Intel choose to engage in secret contracts resulting in locking its competitor out? Intel could have simply chosen to drop its prices in the market, or offered larger bulk discounts to Dell. Presumably, if it was a good competitor and not selling below costs, it would have done very well. Instead, it chooses to make secret contracts with Dell where it essentially offers a lower price (through its subsidies) but with the specific caveat that no AMD processors can be used in Dell systems. Do you see the difference here between the two? One is being a strong competitor and letting the marketplace do what it does (in which case Intel looses profits because everyone is now paying these lower prices). The other is an intentional market distortion that lets Intel keep its public prices high, which giving discounts to some only if they agree not to allow other market competitors to even come to the table. This is exactly what anti-trust laws are designed to prevent. They are designed to keep competitive markets functioning without a few big players coming in and manipulating the markets in their favor.

To me it seems like Intel should have just competed better, offered the lower prices to its OEM vendors and not engaged in the secret deals. They would have likely been very successful taking that path as well, but at least AMD would have had a chance to compete, but what Intel did was make sure AMD could not compete in the market even if they wanted to. That is the definition of what anti-trust laws are designed to protect and in this case, it appears, even if it was late to the game, they are doing their jobs.

 

[extra]

So? Dell could have turned down those alleged discounts at any time.

This is sarcasm, right? The alleged part? No one, not even Intel, is denying some of the crap they pulled. Also, I don't think anyone is saying that the deals didn't have two sides and that Dell wasn't at fault for the part they played, etc.

Or that AMD wouldn't have done exactly the same thing in Intel's position if they thought they could get away with it. Of course they would have, anyone saying otherwise is delusional imho.