FTC Makes Graphic Claim Against Intel

The Federal Trade Commission today sued Intel, claiming it abused its market power and cut competitors out of the marketplace — not merely with regard to rival AMD, but also as the graphics market heats up. It’s a filing that’s likely to make graphics chipmaker Nvidia dance with joy. The $1.25 billion settlement earlier this year between Intel and AMD apparently had little effect on the FTC, which accused Intel of “running roughshod over the principles of fair play.” From the FTC statement:

The FTC’s administrative complaint charges that Intel carried out its anti-competitive campaign using threats and rewards aimed at the world’s largest computer manufacturers, including Dell, Hewlett-Packard, and IBM, to coerce them not to buy rival computer CPU chips. Intel also used this practice, known as exclusive or restrictive dealing, to prevent computer makers from marketing any machines with non-Intel computer chips.

In addition, allegedly, Intel secretly redesigned key software, known as a compiler, in a way that deliberately stunted the performance of competitors’ CPU chips. Intel told its customers and the public that software performed better on Intel CPUs than on competitors’ CPUs, but the company deceived them by failing to disclose that these differences were due largely or entirely to Intel’s compiler design.

For Nvidia, which is fighting with Intel seeking to ensure that its graphics processors work with Intel’s next-generation chips, the investigation is a welcome one. Nvidia, a relatively new rival for Intel,  would like to make sure vendors can buy and use its Ion processors that accelerate graphics inside netbooks containing Intel’s Atom chips without paying a higher price for the Atom chip.

Intel responded to the suit predictably, but also said that the chipmaker and the FTC had been trying to settle this case for weeks. From its statement:

The FTC’s case is misguided. It is based largely on claims that the FTC added at the last minute and has not investigated. In addition, it is explicitly not based on existing law but is instead intended to make new rules for regulating business conduct. These new rules would harm consumers by reducing innovation and raising prices.

The chipmaker isn’t a stranger to these investigations. The EU fined Intel last year for anti-competitive behavior. Much of the FTC complaint centers around Intel’s alleged attempts to destroy innovation in the graphics market where ironically the company just experienced a huge setback when it delayed its Larrabee graphics processor.

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