New York Launches Intel Antitrust Investigation

Multiple users have notified us of reports that the Attorney General of New York has initiated an antitrust investigation of Intel. The EU served Intel with similar charges last July, and AMD has been battling Intel over antitrust issues for some time. Quoting the New York Times: "The subpoenas from Mr. Cuomo's office will seek internal memos, billing documents, and correspondence between Intel and its customers to determine whether the company engaged in a variety of anticompetitive practices, like penalized customers, primarily computer manufacturers, for purchasing processors from competitors or improperly paying customers to use Intel chips exclusively. Chuck Mulloy, a spokesman for Intel, said the company would comply with Mr. Cuomo's subpoena but denied any illegality."

Why can't.....

[bherman]

Intel pay a company to use Intel exclusively, but Blu-Ray or HD-DVD can?

This is patent infringement!

[CajunArson]

Andrew Cuomo is infringing on Elliot Spitzer's patented method of going after any big "bad" company (conveniently based OUTSIDE of New York to not rile up local interests) in order to get political credentials as "crusading for the people" while doing nothing to actually help anybody. Oh, and the planned Fab that AMD was going to build in New York (but is probably not going to because its market capitalization is less than the value of a new fab post-Barcelona) has absolutely nothing to do with his "heroic" interests in going after Intel.

Re:Intel is a monopoly, but it's a natural one

[downix]

Tell that to MIPS, Motorola, Zilog, MOS, Digital, Cyrix, Rockwell....

you know

[nomadic]

This is what happens when you have a rabidly anti-regulation administration in power at the federal level; the states have to take over some of those duties.

Re:Intel is a monopoly, but it's a natural one

[cheezedawg]

This is an incredibly naiive view to take- the industry is much more complicated than that. Here are 3 things that come to mind:

• At its heart, the semiconductor business is a manufacturing business. In many ways, a company's ability to manufacture the chips is more important than the features of the chip itself. When the larger OEMs announce that they will require 10 million units in the next quarter with DPM of less than 500, there are only a few companies that can meet that kind of demand. Intel has spent tens of billions of dollars to build their manufacturing capabilities and keep them at the leading edge. AMD, on the other hand, has made a series of strategic blunders in this regard over the past 15 years (remember the UMC debacle?). As a result, AMD's has never been able to produce the quantity and quality of product that the larger OEMs demand, and have shut themselves out of the bigger markets. You can't blame Intel for this.
  
• When the OEMs design products, there is a lot more involved than just picking the CPU. They need to build a whole platform, and problems anywhere in that supply chain will directly impact the OEMs ability to produce and sell that platform. So even if AMD had been able to supply the 10 million Athlon CPUs with the required defect rate to an OEM, would the OEM be able to get enough chipset components within the required defect rate as well? Once again, Intel took charge of its own destiny here as well by designing and making their own chipsets that are backed by the same manufacturing capabilities as their CPUs, and OEMs respond by using the Intel-branded chipsets 90% of the time.
  
• The supply of the product is one thing, but the quality is another. I'm not talking about the chip's performance, but functional bugs that cause stability issues or data corruption. Slashdot likes to joke about the Pentium FDIV bug, but the truth is that bug scared the crap out of Intel, so they throw enormous resources into their CPU and chipset validation. This translates to direct value to the OEMs in the form of faster time-to-market and lower support costs. If OEMs perceive that on company is validating their products more than the competition, they are going to be more likely to chose that company's design. Remember, this goes for any component of the platform (not just the CPU!), so a flaky northbridge from VIA or NVidia could cause an OEM to drop the AMD platform in favor of Intel as well.

In other words, even though AMD had a superior performance in the Athlon, there were other completely competitive reasons for an OEM to select Intel over AMD, and most of those are a direct result of choices that AMD made.

Re:Intel is a monopoly, but it's a natural one

[Anonymous Coward]

I am somewhat shocked that most Slashdot posters are actually defending Intel's business practices. Especially in light of the recent OLPC news. The two stories are related. In one case Intel wants to maintain its monopoly in the industrialized world, and in the other, it wants to block competition - of a non-profit group - in the developing world.

Intel's behavior is a textbook case of abuse of monopoly. And, yes, 90% of revenue and 75% of unit sales of a market is a monopoly.

Intel's "incentive" program effectively blocked AMD from getting the revenue from their superior Athlon chips in order to build the billion dollar fabs necessary to compete. Why buy 25% of your chips from AMD when Intel will basically give you the same number of chips for free via loyalty incentives if you buy the other 75% of your chips from them as well? Intel knows that it must keep AMD's processor prices to an average price of less than $65 each (wholesale) so that AMD will have poor margins and will be perpetually unable to compete. And without fair competition it means CPU prices will once again rise and development progress will slow down.

But luckily for the consumer this will soon change. Japan, EU, Korea and now New York state is wise to Intel's business practices.