Intel Settles With the FTC
by Ryan Smith on August 5, 2010 11:48 AM ESTWhat the FTC Didn’t Get
Going in to this suit, the FTC asked for a number of things, and while they got many of those things in the settlement they didn’t get all of them. The following is our list of things the FTC asked for from our earlier article, and whether they got that item under the terms of the settlement or not.
|
FTC/Intel Lawsuit Requested Remedies |
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| Request | Result |
| For Intel to be barred from paying OEMs to not use AMD processors | Intel is barred from offering rebates, kickbacks and some forms of volume discounts |
| For Intel to be barred from threatening OEMs in to not using AMD processors | Intel is barred from witholding advertising money, technical support, or chips from OEMs using AMD CPUs |
| For Intel to be barred from selling products below cost | Intel is not allowed to sell CPUs or chipsets below the product cost |
| For Intel to be barred from designing or selling products that inhibit 3rd party GPU performance | Intel is not allowed to make design choices that reduce GPU performance unless they can prove doing so improves CPU performance |
| For Intel to make reparations to customers who used their compiler not knowing that it may discriminate against non-Intel CPUs | Intel is required to set up a $10 million fund to pay for customers who were mislead and wish to switch to another compiler |
| For Intel to to be barred from making misleading statements about their compiler and its performance | Intel is required to disclose that their compiler may discriminate against non-Intel CPUs, and is not allowed to claim that their compiler is faster for non-Intel CPUs when it is not |
| For Intel to license the QPI and DMI buses to third party chipset manufacturers. | The FTC did not get this; Intel is under no obligation to license QPI or DMI |
| For Intel to allow AMD and Via to outsource their x86 CPU fabrication to third party fabs | Intel is required to allow AMD and Via to outsource their x86 CPU production to third party fabs so long as those fabs uphold certain IP protection requirements |
| For Intel to stop badmouthing competing products unless they have solid scientific evidence (primarily in the GPU space) |
Compilers: Yes GPUs: No |
| For Intel to pay for the independent organization (Technical Consultants) that will monitor their compliance | Intel is required to pay up to $2 million over 10 years for the Technical Consultants to monitor their compliance |
The FTC got the vast majority of what they requested. Intel is barred from engaging in a number of anti-competitive practices, including benefits for OEMs to only use Intel CPUs, punishments for OEMs using non-Intel CPUs, from designing products to reduce GPU performance, from outright denying the transfer of an x86 license should a current holder be purchased, and from making misleading statements about their compiler.
In fact there’s really only two things on the FTC’s list that they didn’t get: they didn’t get chipset licenses, and they didn’t get stronger protections for AMD and NVIDIA’s GPU divisions. It’s probably not a coincidence that both of these issues were primarily of importance for NVIDIA, as AMD does not make Intel chipsets and AMD is not currently locking horns with Intel over high performance computing using GPUs. For as much as the FTC got out of this settlement, it’s interesting that they did not get these last two items. It may very well be that NVIDIA has truly given up on making a DMI/QPI chipset, in which case the chipset requests would be rendered moot. But NVIDIA has claimed loudly to the FTC that Intel is hurting their business by making false claims about CPU and Larrabee performance versus GPGPU performance, and there’s nothing in this settlement about that.
It’s worth noting that NVIDIA did not release an official response to this settlement even though it has directly impacted them. There are a number of ways to interpret this, but the most likely interpretation is that the two companies are going to continue butting heads unabated. AMD and Intel may have peace, but right now it’s a safe bet that NVIDIA and Intel do not.
Final Thoughts
Wrapping things up, we’ve looked at what the FTC’s complaints were, what they asked for, and what they’re getting out of this settlement. What remains however is probably the most important question for computer buyers reading this article: how will it impact you?
The short answer is that it won’t. Computers won’t become cheaper, new Intel-compatible chipsets won’t be introduced, the forthcoming fusion of the CPU won’t be changing schedule, etc. In reality most of the things Intel is being barred from doing are things that they discontinued doing long ago if they did them at all (note that this settlement is not an admission of guilt on Intel’s part). The FTC calls these measures corrective, but outside of the compiler requirements these measures would better be described as preventative. This settlement is structured as a list of things Intel can and can’t do, and almost all of the measures are things they already have or have not been doing.
The most unexpected measure to come out of this settlement is without a doubt the “change of control” requirements. This opens the door to another company taking over one of the two non-Intel x86 licenses from either AMD or Via by buying them out, but this is by no means a given. It’s something worth keeping an eye on for now, but it doesn’t appear to be something that is going to be acted upon any time soon.
The biggest impact from this settlement will be what does not happen, and that’s a repeat of the Athlon 64/Pentium 4 situation in 2003, with Intel using their marketing muscle and underhanded tactics to limit AMD’s progress at a time where they offered a superior CPU. Now that Intel has already been through this process and the FTC will be regularly monitoring their compliance, any kind of underhanded tactics against AMD would quickly get them in trouble with the FTC with little recourse to get out of it. In spite of the corrective nature of the settlement it probably doesn’t go far enough to completely undo the damage that AMD suffered if all of the FTC’s claims are true, but between this settlement and the private AMD settlement quite a lot of requirements have been hoisted onto Intel.
Ultimately, is this enough to prevent anti-competitive abuse in the future? The most optimistic response is that hopefully we never find out the answer to that.
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Hector2 - Friday, August 6, 2010 - link
I agree that it's hard to believe that Intel sells below costs. In fact, to be more plain, I just don't believe it. Intel's margins have been >50%. Even AMD's margins had been >40%. To sell below cost, especially for the tiny Atom when wafer costs are fixed, would mean selling it for <$10, I think. It's a lot smaller than standard CPUs. Chipsets are even cheaper than CPUs. The accusations (from NVidia) that Intel is selling some Atoms below cost are ridiculousAmdInside - Friday, August 6, 2010 - link
The point I believe is that Intel is giving away their chipsets essentially by selling them at below cost in order to move much higher margin CPUs. So NVIDIA can't complete with Intel because Intel is giving OEMs super cheap chipsets and NVIDIA doesn't have a CPU to bundle with. And as for Atom, Intel charges more for an Atom processor alone than it does for an Atom + chipset bundle.Calidore - Friday, August 6, 2010 - link
How many copies of gcc can you buy for $10 million?If AMD doesn't want to create their own compiler, maybe they could contribute tweaks to gcc, thus creating an AMD-friendly compiler that, unlike Intel's, is also free.
Quantumboredom - Friday, August 6, 2010 - link
AMD does have it's own compiler (a version of the Open64 compile), they just haven't bothered to support it on Windows yet.They currently have a poll where Windows support is on the list though, here: http://developer.amd.com/cpu/open64/Pages/default....
Roy2001 - Friday, August 6, 2010 - link
My whole feeling is, when AMD/Nvidia cannot compete with Intel, FTC steps in to help.Is there anything Intel did illegal? If it is, then we need to regulate many,. virtual all business area. When I was trying to find a guy to mow the lawn, the one mowering my neighbours told me that he could offer the service at a lower price since he will work on two house. It would be even lower if the whole street (8 families) switch to him.
When I tried to find a contractor to do wood floor and tile, the 2nd guy I interviewed said he can give me 15% discount if he got both jobs.
Do you think these practices are illegal?
HolKann - Sunday, August 8, 2010 - link
Perhaps you're not fully grasping the details of market functionality. Let me explain it this way - keeping in tune with the lawn mower analogy: You have 10 lawns, and each of them is a bit peculiar and requires a slightly different approach. Intel comes up to you and says: "I can do 9 of them, at a very good price, only if you don't let AMD do the 10th one, which I'm unable to mown. If you do let AMD do the tenth one, you'll pay double to me." Intel is frightened you'll like AMD, because then you might let AMD do the 4 lawns it offers you to do, leaving only 6 to Intel in the future. Ofcourse, this situation is not optimal, like say, let AMD do 2 lawns and Intel 8, having all lawns mown. No, in this situation one lawn will never be mown, because it can only be done by AMD.Each lawn is a market niche, and the lawns AMD can do better are for instance the "chipset+gpu+cpu" market, or the "cheap-ass quad core" market, or the "bang 4 bucks" market, or simply the "AMD-fanboy/Intel haters" market (which Intel will never be able to address). However, Intel abuses it's monopoly, because it forces OEM's to choose between Intel OR amd, while oem's would rather like Intel AND amd. And ofcourse, OEM's will choose Intel over AMD, because Intel has a de facto monopoly.
There's nothing wrong with offering discounts on large volumes, but there's something wrong with offering discounts to not sell other brands.
Wurmer - Monday, August 9, 2010 - link
''There's nothing wrong with offering discounts on large volumes, but there's something wrong with offering discounts to not sell other brands.''Indeed, couldn't agree more. I have both Intel and AMD machines and I like it that way, competition is good far all of us.
softdrinkviking - Saturday, August 7, 2010 - link
i noticed that intel closed their online store that sells their C++ compiler as of "JUNE 30th, 2010." hahaha. i wonder if this has anything to do with the new customer reimbursement fund?http://software.intel.com/en-us/articles/intel-sof...
softdrinkviking - Saturday, August 7, 2010 - link
http://software.intel.com/en-us/articles/buy-or-re...softdrinkviking - Saturday, August 7, 2010 - link
it was fun to read the comments from this 2003 article for the Athlon 64!http://www.anandtech.com/show/1164/17
I wonder what would have happened if Intel had not (allegedly) paid off the OEMs to shut AMD out of the business?
The 64 VS 32 compiling benchmark is especially interesting since we are just now seeing a wider adaptation of 64 bit OSs.