By Larry Downes on December 17, 2009 at 5:26 pm
I write today on CNET News.com (see "FTC's new strategy: kick 'em when they're down") that the FTC’s decision yesterday to attack Intel seems oddly-timed.
Regular readers of this blog will recall that only a month ago, I wrote that Intel’s settlement of long-standing disputes with rival AMD (see "The Intel/AMD Settlement: Watch What Happens")) was likely to mean the end of government-sponsored litigation against Intel, or at least a toning down of the rhetoric. I was, clearly, wrong.
It’s hard to know the real background here, but piecing together bits and pieces it appears that the FTC and Intel were close to resolving issues related to how the company sells CPU chips for personal computers when, perhaps at the urging of Nvidia and other graphics processing unit makers, the FTC began looking at the GPU market as well. Intel flinched, the FTC got mad, and filed a complaint that recites all over again the issues that appear in most of the other litigation, plus the GPU complaints.
Hell hath no fury, it seems, like a regulator scorned.
Aside from the addition of GPU complaints, there are several important differences between the FTC’s action and the rest of the pending or already-completed litigation. Most disturbing is the proposed remedy. Instead of money damages and fines, the FTC is proposing, should it make its case, to dramatically redesign the way Intel–and therefore the rest of the semiconductor industry–does business. Some of the relief the agency is seeking is, truly, draconian. Intel would be essentially run by an outside monitor, and would need to pre-approve most transactions and even advertising with the FTC.
The FTC is charged with protecting consumers from fraudulent practices–false advertising, for example, or inadequate cigarette warnings, or misleading terms in credit card applications and the like. It’s hard to see how it has anything to offer here by way of expertise in the chip market, which only affects consumers after-the-fact. The likelihood that the agency’s actions will help consumers seems very very low.
Fore more, see "Protecting Consumers from Moore's Law"
Comments
Bill December 20, 2009 at 6:37 pm
PermalinkThanks for the eye-opener Larry. I was actually glad with the recent FTC regulations regarding use of testimonials and endorsements. But this seems pretty over-the-top. Long live the free markets ! ! !
blah December 18, 2009 at 8:28 pm
PermalinkThe FTC does more than investigate false advertising. It also has powers related to antitrust. Perhaps you are not aware of 15 USC §§ 45-47?
You don't need to know how to do 45nm lithography to spot anti-competitive practices, and Intel is the biggest player in a highly concentrated industry.
The FTC is protecting Moore's law from Intel. Intel should compete by building better/faster/cheaper products, not by strong-arming computer manufacturers to use only its products and none produced by its competitors. Competition in markets encourages MORE innovation and technological development, not less. Competition, that is, through building better products and letting consumers (in this case both OEMs and end users) freely choose.
Intel has made great progress on this front over the last half-decade. It had a powerful incentive to do so; AMD, for a while, had a better product. We all benefited. I'm sure Intel would rather have higher profits than higher R&D expenses. If it does so on the merits, GREAT! If it does this with market practices designed to suffocate its competitors, that's a problem. If there's evidence that's happening, the FTC SHOULD investigate. Either that or DOJ's antitrust division.
James Evans December 17, 2009 at 7:58 pm
PermalinkWhat do you think the FTC's purpose is in doing this? I'd like to read "Protecting Consumers from Moore's Law", but the link is broken.
Larry Downes December 18, 2009 at 3:42 pm
PermalinkLink is fixed.
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