Intel antitrust woes spread as FTC launches investigation

The Federal Trade Commission has launched an antitrust investigation against Intel. This marks a remarkably quick change in the FTC's stance vis-à-vis Intel; former FTC chairwoman Deborah P. Majoras refused to open a formal inquiry into Intel's behavior as recently as October 2007. Marjoras has since left the FTC, and her successor, William E. Kovacic, obviously views the matter differently.

This is good news for AMD, which has long lobbied for a formal investigation of Intel's behavior and alleged abuses. The company's calls for an inquiry have recently been backed by prominent Democratic Senator Charles Schumer of New York, though he admitted that his interest in the issue was partly pragmatic; AMD intends to build a fabrication plant in the state of New York.

Marjoras may have shied away from opening a full-bore investigation of the Santa Clara chip giant, but the FTC has conducted an informal inquiry into Intel's actions within the market since 2006. The two organizations have locked horns on several occasions, the most significant being an antitrust lawsuit the FTC brought against Intel in June of 1998 (the case was settled before trial).

The FTC's findings, whatever they may be, will have a definite impact on the ongoing AMD-Intel lawsuit. To date, AMD has been barred from introducing any foreign decisions against Intel's business practices as evidence in its own US-based antitrust lawsuit. Domestic investigations, however, are a different matter, and AMD will argue strenuously for the right to introduce any of the FTC's findings that support its accusations. Intel will undoubtedly pursue its own version of that strategy, which could make the FTC's own ruling crucially important to the outcome of AMD's lawsuit. It's anyone's guess which of these two events will actually conclude first. Government inquiries aren't generally known for speed, but the start date for the Intel-AMD antitrust lawsuit has been pushed back again, from April 2009 to February 2010.

Intel's response to the FTC decision notes that the company has cooperated with the FTC's informal inquiry since 2006, and states that "Intel will work cooperatively with the FTC staff to comply with the subpoena and continue providing information." As is to be expected, the company steadfastly maintains that its business practices are "well within US law" and that the industry is "fiercely competitive and working...When competitors perform and execute the market rewards them. When they falter and under-perform the market responds accordingly."

That last statement is a perfect summary of Intel's response to AMD's antitrust allegations, but it hasn't found much traction yet. Japan and Korea have both rejected Intel's argument—Korea's FTC fined the company ~$26 million yesterday—while both the EU and the state of New York have launched their own investigations into the company's business practices. Given its current situation, Intel may need to try out a few different lines—and fast.