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Thursday January 14, 2010
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Intel has responded to the Federal Trade Commission's antitrust investigation, unsurprisingly challenging the FTC's allegations as well as criticizing the agency for what the company calls an attempt "to turn Intel into a public utility".
The motion is a response to the FTC's December announcement of a lawsuit brought by the FTC, accusing Intel of anticompetitive practices.
The motion, filed on Dec. 31 before the hubbub of the Consumer Electronics Show, comes out swinging, with an inflammatory quote by AMD's then-vice president of sales, Henri Richard. "If you look at it, with an objective set of eyes, you would never buy AMD," Richard is quoted as saying, "internally". "I certainly would never buy AMD for a personal system if I wasn't working here."
Richard also adds that AMD has a reputation of "we're cheap, less reliable, lower quality consumer type product."
Richard's quote attempts to prove that Intel was acknowledged, even by
its chief rival, that it was the uncontested leader in microprocessor
technology. That argument is Intel's first of three; the company goes
on to argue that it neither dominates the graphics market nor hinders
competition; finally, Intel attacks the substance of the FTC's lengthy
proposed remedies, or what the FTC will seek at trial. There, Intel
argues that the FTC is stifling innovation, a mantra that Microsoft
also employed during its battles with the Department of Justice.
Intel also goes on to provide a paragraph-by-paragraph rebuttal of the FTC's complaint and proposed remedy, although most of the company's response seems designed to promote the impression that those that failed failed on their own.
Intel also has its own interpretation of the "invective" that the FTC
uses in its complaint: "For example, the Complaint alleges that Intel
'threatened' OEMs with the loss of discounts if they increased
purchases from Intel competitors. But these alleged 'threats' are
nothing more than an inherent implication of procompetitive price
competition: a supplier offers a better price for more volume when
negotiating with a customer that demands greater discounts by
threatening to take some or all of the business at issue to another
supplier."
In other words, according to Intel, the customers were the ones who made the threats.
"The Complaint seeks -- by using words such as 'threats' and
'exclusionary' to transform procompetitive, above-cost price reductions
aimed at winning additional sales into something sinister," Intel adds.
But if the discounting was above cost, it's lawful, Intel claims. (The
FTC, however, asserted that the use of 'bid buckets' and other tactics
effectively discounted the processors under cost.)
Intel also claims that it never degraded the performance of AMD's
processors via its compiler software, and never used unfair benchmark
data to compare its processors to those of AMD.
Intel also engages in a bit of hand-waving by claiming that it doesn't
carry a market share in graphics processors in excess of 50 percent,
because it doesn't sell discrete graphics chips. True, perhaps, but
Intel's integrated business controls the bulk of the market. Intel
rightly points out that both AMD and Intel are also shifting toward a
business model where graphics become integrated into the CPU; however,
it's unclear whether the FTC's administrative law judge will see that
as a separate, distinct and untapped market, or as an extension of
Intel's original business.
Intel has reserved the bulk of its outrage, however, for Proposal 17 of the remedy: "Requiring Intel to make available technology
(including whatever is necessary to interoperate with Intel's CPUs or
chipsets) to others, via licensing or other means, upon such terms and
conditions as the Commission may order, including but not limited to
extensions of terms of current licenses."
In Intel's view, this would "create a scheme under which the
Government, and not the market, would decide who can use Intel's
inventions," Intel's complaint reads.
"The only evident reason is the Commissioners' desire to alter
marketplace outcomes to their own liking and to the detriment of
competition and consumers," Intel sums up.
If nothing else, the rebuttal serves as a preface of sorts to Intel's
legal stance: by establishing that there was little to competition to
begin with from AMD, Intel can try and undermine the FTC's basic
premise of anticompetitive action. So far, I'm not sure it has. But the
FTC has set the bar high with its assertion that Intel's technology
licenses must be overseen by the government. Under a Republican
laissez-faire administration, I can't see that argument succeeding. But
under an Obama administration that has already tried to leash Wall
Street? Very possibly.
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