Intel settles with FTC

[Scotteq]

Nice, and well written example.

It does have a pretty big hole, though: Exclusivity agreements between individual corporations are not illegal. Tough on competitors? Absolutely. Really Tough on the poor competing sales guy who has Quota and a name on his target list (s)he knows will never sign? Ohhh Yeah! (...take your 6 months draw, and bail!!)

But in an Anti Trust world, it would have to be shown that such agreements as the one made with Dell were imposed upon (nearly) everyone and that INTC's customers were at least strongly pressured to sign one as a condition of doing business. So in order to prove anti trust, the agreements Intel had at the same time with other customers, such as Compaq, HP, IBM/Lenovo, Sony, (etc, etc, etc..) would have to have similar exclusivity clauses, and the inclusion of such a clause would be 'mandatory' to do business with INTC.

Establishing that pattern of business on a universal level is a much, much bigger (and more difficult) charge than the Dell example being used here.


To make a paralell to everyday life: If Mr Hunky Guy c*ck blocks you away from the Hotty Of All Hotties and he gains an "exclusivity agreement" with her, that's you getting beat. It is not that he has a Monopoly on Women.

If all the Women in the area are somehow forced to sleep only with Mr Hunky Guy, and other men were not permitted to compete for any of them, then that is a Monopoly.

So: AMD got c*ck blocked by Mr Hunky INTCguy for some of their customers. NOT A NICE THING for INTCguy to do. And INTCguy got hollered at for it. But not a monopoly.

 

[golem]

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.

This isn't illegal either. From your example, McDonald restaurants has to buy it's cola from Coke to the exclusion of Pepsi.

Hmmm Scotteq said it better above.

 

[epidemis]

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

No fines for obviously violating the law?

How about Nvidia has a little friendly talk over PhysX not working with ATI cards or "the way it's meant to be played"

 

[sonoran]

But why would Intel choose to engage in secret contracts...

Please show me some public AMD sales contracts with Dell, HP, etc. <sarcasm>They're *secret*? Why would AMD choose to engage in secret contracts? </sarcasm>

 

[piasabird]

PCI is dead already.

 

[piasabird]

How is this different than Microsoft and their exclusive Lower rates for large OEM?

 

[Acanthus]

How about Nvidia has a little friendly talk over PhysX not working with ATI cards or "the way it's meant to be played"

the way its meant to be played is just a marketing partnership.

also nvidia doesnt have 95% of the consumer graphics market so they don't have to watch out for anticompetitive laws.

 

[Phynaz]

the way its meant to be played is just a marketing partnership.

also nvidia doesnt have 95% of the consumer graphics market so they don't have to watch out for anticompetitive laws.

Are you implying that Intel has 95% of the consumer PC market?

 

[lopri]

I think most people would agree competition in general is beneficial to an economy based on free-market. But we at the same time learned long ago that certain things could not be left to the market itself. Corporations are never a friend of a free market. Given chance, they will do everything they can to be rid of competitions. (Disclaimer: I run a small business myself) It's not a coincidence in history you'd find a few giant conglomerates that parasites under a military dictatorship.

Even in a modern, developed free-market we still often run into dilemma. In the case of Intel suits we often hear things like exclusives, incentives, co-marketing, rebates, etc. One would think they are perfectly legitimate practices and s/he might be right in a perfect world. But things don't exist in vacuum, and even if we discount the monopoly status (and the market power that naturally comes with it), there still are issues that arise from the "totality of circumstances".

"Rebates" may not sound bad. But most would not think highly of "Bribery". When does rebates become bribes? Where do you draw the line?

"Incentives" are almost a necessity for progress, yet not many would like to be "coerced" under false pretense of "choice". And many would agree that a choice under coercion isn't really a choice at all.

"Co-marketing" does sound great, but most would be upset if they were duped by, say, price-fixing. After all, consumers are the one who ultimately pay for such corruptive practices.

So at the end it all comes down to balancing. Some make it sound to be an easy matter, but I'm afraid not. Unless one's an extremist, s/he has no choice but to see the line drawing problem - between rebates and bribes, incentives and cocercion, cooperation and corruption, etc. And that's just a small part of what this suit is about.

 

[Acanthus]

Are you implying that Intel has 95% of the consumer PC market?

At the time in question, what was their share?

 

[DrMrLordX]

PCI is dead already.

The settlement refers to the broad set of PCI standards established by PCI-SIG. If you read the pdf, you'll see that it refers specifically to PCI-e 2.0 and 3.0. In other words, the settlement forces Intel to continue to support PCI-e for the next six years.

At no point does the settlement require Intel to continue supporting the original PCI bus.

 

[cbn]

The settlement refers to the broad set of PCI standards established by PCI-SIG. If you read the pdf, you'll see that it refers specifically to PCI-e 2.0 and 3.0. In other words, the settlement forces Intel to continue to support PCI-e for the next six years.

At no point does the settlement require Intel to continue supporting the original PCI bus.

I don't get it. You mean Intel was planning on getting rid of PCI-Express?

 

[Dadofamunky]

"...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. "

@Brybir: two big thumbs up here.

Fact is, Intel made massive financial subsidy payments to Dell every quarter. Michael Dell knew it and sanctioned it. Rollins, his lieutenant, warned him repeatedly that their company results were far too dependent on the continued flow of those 100+ million dollar payments every quarter, which were thinly disguised as marketing rebates. Mike Dell was able to report better results for many quarters in a row, artificially supporting the company's stock price, because of those Intel payments, which IIRC were contingent on a continued exclusivity regarding CPU buys. http://www.engadget.com/2010/06/14/dell-hit-by-intels-antitrust-aftershocks-prepares-for-100-mil/

The whole process can be considered investment fraud on the part of Dell and antitrust violations on the part of Intel, and I believe Mr. Dell is in fact being investigated for this very crime. If someone can amplify on or correct me on any of this I would be happy to see it. But this is simply not a case of poor McDonalds being forced to sell Whoppers to support the competition. This was a flat-out anti-trust violation by a company attempting to enforce a near-monopoly with an (at the time) inferior product line.

 

[DrMrLordX]

I don't get it. You mean Intel was planning on getting rid of PCI-Express?

I did a bit of a double-take when I saw that provision of the settlement, and I did another one when I found the pertinent part of the settlement in the .pdf. Once it was clear that the settlement referred to current PCI-SIG standards (rather than the old PCI bus), I started to ponder what advantages there might be for Intel to abandon PCI-e altogether, at least on some of their platforms.

Had Intel axed PCI-e from their systems with integrated graphics (think: H55 + Core i3/i5, Sandy Bridge, etc), Nvidia and AMD would have lost some discrete graphics card sales. Intel would be free to include some QPI-based slot on its systems instead, and as history has shown us, Intel is free to introduce patented physical interfaces without allowing anyone else to use or support them (Slot 1, successor to Socket 7, for example). Intel could then launch Larrabee 2 (or whatever) in a QPI slot form-factor and have the only graphics card in the world that would work on a majority of Intel systems. They would have been able to remove PCI-e support from their low-end systems rather comfortably since most home/OEM buyers rarely purchase PCI-e expansion cards that aren't somehow related to graphics. It's not like the old days when we bought Soundblasters and stuff.

Higher-end systems might still need PCI-e slots to support non-GPU devices released for that interface, but with time, there would probably be a move to QPI slot devices since anything interfacing directly with QPI would have lower latency and better bandwidth than the PCI-e bus could offer. All it would take is Intel making a QPI slot available, and the exodus would begin.

Nvidia would have no place to sell their standalone graphics cards, and AMD would lose most of their marketing opportunities for standalone graphics as well.

Someone in the FTC must have feared such an eventuality. Either that, or JHH did and convinced the FTC to take action on Nvidia's behalf.

 

[ydnas7]

Having read the SEC fine on Dell comp. i get the distinct impression that Dell was the proactive party in the negotiations with Intel. Michael Dell personally was involved in the negotiations that effectively transferred $4.2billion dollars from Intel's profits to become Dell's profits. An excellent result for Dell's shareholders. Intel was careful to use Meet Competitor's Price which is legal justification for its actions. The $100m smack that Dell comp was given was basically for not explaining to the market the 'cost reduction initiatives' and 'declining component costs' actually meant Intel Rebates (there was also some cookie jar accounting used to smooth Dell's finances.
http://www.sec.gov/litigation/complaints/2010/comp21599.pdf

 

[IntelUser2000]

Had Intel axed PCI-e from their systems with integrated graphics (think: H55 + Core i3/i5, Sandy Bridge, etc), Nvidia and AMD would have lost some discrete graphics card sales. Intel would be free to include some QPI-based slot on its systems instead, and as history has shown us,

I don't know how this will work. Does QPI even support external interfaces? The FTC guys might be talking about something related to the optical research Intel is doing.

 

[ydnas7]

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

the stuff about compilers and rebates and discounts is water under the bridge for intel and AMD. this FTC settlement is really about Nvidia and Via. Effectively it says Intel must extend Via X86 license out, and that Intel can't stop anyone buying up Nvidia and Via. I got the impression that FTC wants Nvidia to buy Via (so to have its own x86 license) but can't say so publicly. (too bad, it'll probably be a bidding war between Samsung, ATIC, Chinese Academy of Science (Loongson creators) Fujitsu and Hitachi. Nvidia is by no means guaranteed to get Via, despite whatever the FTC thinks. (perhaps they expect Via and Nvidia to be eventually swallowed by the same entity)
I also got the feeling that this settlement is to discourage the use of QPI as an graphics interface. it also is meant to discourage the ability to use larrabee for discrete graphics.
effectively intel is free to pursue its own version of Fusion, but must tread very carefully if it is to offer discrete graphics.
Intel is also required on an annual basis to reveal its processor roadmaps and video linking requirements for the 6 years to each designated Intel Competitor (AMD/ATI, Nvidia and Via). As well as being required to maintain the ability to connect to Nvidia/ATI video cards.

 

[ydnas7]

if intel were to use larrabee as a graphics chip, connected by QPI to a Xeon or i3,5,i7 etc, then Nvidia and ATI would gain the automatic license to use QPI for their own purposes. Obviously Intel will try very hard to avoid this from happening

 

[Scotteq]

<Public Service Announcement> "The words in the following post reflect the highly sarcastic views - interspersed with some pointed commentary - of the writer. Those of a sensitive nature may be well served by keeping that in mind."

Having read the SEC fine on Dell comp. i get the distinct impression that Dell was the proactive party in the negotiations with Intel. Michael Dell personally was involved in the negotiations that effectively transferred $4.2billion dollars from Intel's profits to become Dell's profits. An excellent result for Dell's shareholders. Intel was careful to use Meet Competitor's Price which is legal justification for its actions. The $100m smack that Dell comp was given was basically for not explaining to the market the 'cost reduction initiatives' and 'declining component costs' actually meant Intel Rebates (there was also some cookie jar accounting used to smooth Dell's finances.
http://www.sec.gov/litigation/complaints/2010/comp21599.pdf

SSSSSSHHHHH!!!!

The conspiracy theorists who equate an agreement with one company as proof positive of worldwide monopoly request you cease and desist showing actual evidence that INTC <*spit*> weren't the sole responsible party. I mean, with actual SEC filings, it might even be possible to interpret it might even have been Michael Dell in the driver's seat on this one. After all, from a purchasing Point of View: If you have large volumes, then it's common practice to bend your suppliers over for whatever you can get out of them. The issue here is this kind of common sense thinking tends to refute the idea that the entire scheme was nothing more than an evil plan by INTC <*spit*> to besmirch the holy name of <Angels Singing> AMD </Angels Singing> and might even make conspiracy theorists look silly by giving them a dose of corporate reality.

No.

That Can't Be.

No Way Michael Dell could have leveraged the millions of computers he sells as the means to get big rebates from Intel <*spit*> in a kind of "I Do You, You Do Me, We're An Interbred Famiiiily" financial agreement.


No Sir.

That Can Not Be.


We Must Realign Ourselves to The Source
<Mantra> OOOOOOOOOOOMMMMMMINTELAREEEEEVILOMMMMMMM </Mantra>

There. Now all is right with the world again.


</Sarcasm>

 

[sonoran]

"Rebates" may not sound bad. But most would not think highly of "Bribery". When does rebates become bribes? Where do you draw the line?

That line has been clearly defined by existing precedent. As long as you're selling above cost, it's legal.

 

[Idontcare]

That line has been clearly defined by existing precedent. As long as you're selling above cost, it's legal.

I agree with you but I have often wondered where the legal line falls when I can buy something for "free" with MIR.

I've done that on more than one occasion. Get that USB thumbdrive or CDR cake pack which is $15 or $10 at the store but comes with a $10 or $15 MIR so the effective price to the consumer is the sale tax you paid plus a stamp (gas and time or course).

I suppose it all comes down to the subjective versus the objective. We want cheaper (or free) but we want to dictate the terms in which the company selling us that product is allowed to make it cheaper or free.

To be sure the DELL computers that were sold ended up being sold at lower prices thanks to Intel's rebates than they would have been sold were DELL forced to mark them up in price as needed to stay profitable and keep paying their bills.

 

[DrMrLordX]

I don't know how this will work. Does QPI even support external interfaces? The FTC guys might be talking about something related to the optical research Intel is doing.

Possibly. It's difficult to know what's inside their heads. There was a lot of talk of a QPI slot for Larrabee in some circles, though it was all speculation if I recall. I've looked over the QPI specs briefly and have found no specific support for non-CPU interfaces (QPI slots or what have you), but the general feeling I think is that, if HT can support HTX slots, then QPI could probably support QPI slots. It looks like the potential is there for non-CPU QPI devices so long as they have their own memory controllers.

Given the bandwidth involved, the thought of LightsPeak-based video cards is an interesting one.

It's all really just speculation though.

 

[IntelUser2000]

The very early Larrabee board specifications called using QPI to connect to Xeons but that was for HPC purposes. The regular 3D-focused Larrabee had PCI Express connections.

 

[DrMrLordX]

I also got the feeling that this settlement is to discourage the use of QPI as an graphics interface. it also is meant to discourage the ability to use larrabee for discrete graphics.
effectively intel is free to pursue its own version of Fusion, but must tread very carefully if it is to offer discrete graphics.

I got the same basic impression . . .

if intel were to use larrabee as a graphics chip, connected by QPI to a Xeon or i3,5,i7 etc, then Nvidia and ATI would gain the automatic license to use QPI for their own purposes. Obviously Intel will try very hard to avoid this from happening

One thing to keep in mind is that AMD/ATi already has the ability to use QPI if they want (well, sort of) through cross-licensing. The sticker has always been physical interfaces, and this started back in 1996/1997 when Intel moved from sockets to slockets to prevent "cloner" companies like AMD and Cyrix from releasing chips for Intel boards. That's why AMD stuck with socket 7/super 7 until they could move to their own slocket (and then socket).

If Intel released a proprietary slot for QPI devices, they could probably patent-protect the slot itself and charge people a hefty royalty to include support for it in their designs without exposing themselves to any risk. Or, at least, that's my understanding of it. Anyone who has a cross-licensing agreement with Intel can use QPI but can't make devices for LGA1366, LGA1156, LGA155, LGA2011, etc.

The very early Larrabee board specifications called using QPI to connect to Xeons but that was for HPC purposes. The regular 3D-focused Larrabee had PCI Express connections.

Ah, so that at least indicates that it would be possible.

 

[sonoran]

I agree with you but I have often wondered where the legal line falls when I can buy something for "free" with MIR.

There's the difference - if you're not a monopoly you're free to make the price as low as you want - even free. If you have monopoly status, you cannot sell below cost.