AMD vs. Intel

HomunQlus

Artifical Lifeform
Thought this might be interesting for those who like Intel.

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AMD Files AntiTrust Lawsuit Against Intel in Federal Court
Tuesday, June 28 2005 @ 04:38 AM EDT

AMD has filed an antitrust lawsuit against Intel in US District Court for the District of Delaware. They allege in their complaint that "for over a decade, Intel has unlawfully maintained its monopoly by engaging in a relentless, worldwide campaign to coerce customers to refrain from dealing with AMD." They say that in the past several years, Intel's conduct has become "increasingly egregious" as AMD "has achieved technological leadership in critical aspects of the microprocessor architechture."

There will be an audio conference call at noon ET for analysts and the press. It will be available for 10 days thereafter on their website, if you use RealPlayer or Microsoft MediaPlayer. Speaking of monopolies. Here's an Open Letter from Hector Ruiz, AMD Chairman, President and CEO, and you can download the complaint [PDF] from that same page.

The press release says the European Commission "has stated that it is pursuing an investigation against Intel for similar possible antitrust violations" and is cooperating with the Japanese authorities, whose Fair Trade Commission of Japan (JFTC) recently ruled that Intel has "abused its monopoly power to exclude fair and open competition, violating Section 3 of Japan's Antimonopoly Act."

Here's the meat of the press release.

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AMD FILES ANTITRUST COMPLAINT AGAINST INTEL IN U.S. FEDERAL DISTRICT COURT

Complaint Details Worldwide Coercion of Computer-Makers, System-Builders, Distributors and Retailers from Dealing with AMD
Intel's Illegal Acts Inflate Computer Prices and Limit Choices for Businesses and Consumers -

SUNNYVALE, CA - June 28, 2005 - AMD (NYSE: AMD) announced today that it filed an antitrust complaint against Intel Corporation ("Intel") yesterday in U.S. federal district court for the district of Delaware under Section 2 of the Sherman Antitrust Act, Sections 4 and 16 of the Clayton Act, and the California Business and Professions Code. The 48-page complaint explains in detail how Intel has unlawfully maintained its monopoly in the x86 microprocessor market by engaging in worldwide coercion of customers from dealing with AMD. It identifies 38 companies that have been victims of coercion by Intel - including large scale computer-makers, small system-builders, wholesale distributors, and retailers, through seven types of illegality across three continents.

"Everywhere in the world, customers deserve freedom of choice and the benefits of innovation - and these are being stolen away in the microprocessor market," said Hector Ruiz, AMD chairman of the board, president and chief executive officer. "Whether through higher prices from monopoly profits, fewer choices in the marketplace or barriers to innovation - people from Osaka to Frankfurt to Chicago pay the price in cash every day for Intel's monopoly abuses."

x86 microprocessors run the Microsoft Windows(r), Solaris and Linux families of operating systems. Even Apple(r), a pioneer of the PC and one of the industry's enduring innovators, announced that it would switch exclusively to x86 processors to run Mac OS(r) software beginning in 2006. Intel's share of this critical market currently counts for about 80 percent of worldwide sales by unit volume and 90 percent by revenue, giving it entrenched monopoly ownership and super-dominant market power.

This litigation follows a recent ruling from the Fair Trade Commission of Japan (JFTC), which found that Intel abused its monopoly power to exclude fair and open competition, violating Section 3 of Japan's Antimonopoly Act. These findings reveal that Intel deliberately engaged in illegal business practices to stop AMD's increasing market share by imposing limitations on Japanese PC manufacturers. Intel did not contest these charges.

The European Commission has stated that it is pursuing an investigation against Intel for similar possible antitrust violations and is cooperating with the Japanese authorities.

"You don't have to take our word for it when it comes to Intel's abuses; the Japanese government condemned Intel for its exclusionary and illegal misconduct," said Thomas M. McCoy, AMD executive vice president, legal affairs and chief administrative officer. "We encourage regulators around the world to take a close look at the market failure and consumer harm Intel's business practices are causing in their nations. Intel maintains illegal monopoly profits at the expense of consumers and computer manufacturers, whose margins are razor thin. Now is the time for consumers and the industry worldwide to break free from the abusive Intel monopoly."

The 48-page complaint, drafted after an intensive investigation by AMD's lead outside counsel, Charles P. Diamond of O'Melveny & Myers LLP, details numerous examples of what Diamond describes as "a pervasive, global scheme to coerce Intel customers from freely dealing with AMD to the detriment of customers and consumers worldwide." According to the complaint, Intel has unlawfully maintained its monopoly by, among other things:

*Forcing major customers such as Dell, Sony, Toshiba, Gateway, and Hitachi into Intel-exclusive deals in return for outright cash payments, discriminatory pricing or marketing subsidies conditioned on the exclusion of AMD;

*According to industry reports, and as confirmed by the JFTC in Japan, Intel has paid Dell and Toshiba huge sums not to do business with AMD.

*Intel paid Sony millions for exclusivity. AMD's share of Sony's business went from 23 percent in '02 to 8% in '03, to 0%, where it remains today.

*Forcing other major customers such as NEC, Acer, and Fujitsu into partial exclusivity agreements by conditioning rebates, allowances and market development funds (MDF) on customers' agreement to severely limit or forego entirely purchases from AMD;

*Intel paid NEC several million dollars for caps on NEC's purchases from AMD. Those caps assured Intel at least 90% of NEC's business in Japan and imposed a worldwide cap on the amount of AMD business NEC could do.

*Establishing a system of discriminatory and retroactive incentives triggered by purchases at such high levels as to have the intended effect of denying customers the freedom to purchase any significant volume of processors from AMD;

When AMD succeeded in getting on the HP retail roadmap for mobile computers, and its products sold well, Intel responded by withholding HP's fourth quarter 2004 rebate check and refusing to waive HP's failure to achieve its targeted rebate goal; it allowed HP to make up the shortfall in succeeding quarters by promising Intel at least 90% of HP's mainstream retail business.

*Threatening retaliation against customers for introducing AMD computer platforms, particularly in strategic market segments such as commercial desktop;

*Then-Compaq CEO Michael Capellas said in 2000 that because of the volume of business given to AMD, Intel withheld delivery of critical server chips. Saying "he had a gun to his head," he told AMD he had to stop buying.

*According to Gateway executives, their company has paid a high price for even its limited AMD dealings. They claim that Intel has "beaten them into 'guacamole'" in retaliation.

*Establishing and enforcing quotas among key retailers such as Best Buy and Circuit City, effectively requiring them to stock overwhelmingly or exclusively, Intel computers, artificially limiting consumer choice;

*AMD has been entirely shut out from Media Markt, Europe's largest computer retailer, which accounts for 35 percent of Germany's retail sales.

*Office Depot declined to stock AMD-powered notebooks regardless of the amount of financial support AMD offered, citing the risk of retaliation.

*Forcing PC makers and tech partners to boycott AMD product launches or promotions;

*Then-Intel CEO Craig Barrett threatened Acer's Chairman with "severe consequences" for supporting the AMD Athlon 64(tm) launch. This coincided with an unexplained delay by Intel in providing $15-20M in market development funds owed to Acer. Acer withdrew from the launch in September 2003.

*Abusing its market power by forcing on the industry technical standards and products that have as their main purpose the handicapping of AMD in the marketplace.

*Intel denied AMD access to the highest level of membership for the Advanced DRAM technology consortium to limit AMD's participation in critical industry standard decisions that would affect its business.

*Intel designed its compilers, which translate software programs into machine-readable language, to degrade a program's performance if operated on a computer powered by an AMD microprocessor.
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Source: Groklaw
http://www.groklaw.net/article.php?story=20050628043815368
 

fryke

Moderator
Staff member
Mod
On the other hand, AMD _has_ (had?) IBM, Sun etc. - Now they're complaining that Dell etc. won't take the Opteron and stays with intel. Well, that's how the market works. If you have a choice, you choose. And despite AMD's advantage with Opteron, Dell's still doing fine with intel. Maybe AMD's just whining... I'm sure it's hard competing against the big intel.
 

Mikuro

Crotchety UI Nitpicker
It's not just a matter of companies choosing; it's a matter of companies not being able to choose. It's the same kind of bullshit MS pulled back in the mid-nineties (and probably still, but nobody's paying attention anymore): contracts with suppliers specifically designed to make it impossible (or at least ridiculously impractical) for that company to distribute any machines without Windows/Intel. That's definitely anticompetitive.
 

Viro

Registered
Mikuro said:
It's not just a matter of companies choosing; it's a matter of companies not being able to choose. It's the same kind of bullshit MS pulled back in the mid-nineties (and probably still, but nobody's paying attention anymore): contracts with suppliers specifically designed to make it impossible (or at least ridiculously impractical) for that company to distribute any machines without Windows/Intel. That's definitely anticompetitive.
Just to elaborate on that, here's a quote from Wikipedia
http://en.wikipedia.org/wiki/United_States_v._Microsoft said:
During the antitrust case it was revealed that Microsoft had threatened PC manufacturers with revoking their license to distribute Windows if they removed the Internet Explorer icon from the initial desktop, something that Netscape had requested of its licensees.
Microsoft used strong arm tactics with OEMs. Most OEMs get Windows at ridiculously low prices, and MS uses this against them. If an OEM wanted to ship something other than Windows, MS has been known to threaten to jack up the price of the Windows licenses, effectively handicapping the OEM because that would mean their windows machines would now cost more than their competitor's similarly spec'ed machines.

The same thing has been reported to happen with Intel. If any company ships non-Intel (AMD, Transmeta, VIA, etc) chips, they fear retaliation from Intel in the form of price increases, or lower priority supply of chips.

This is what AMD is claiming is happening to stifle competition in the PC market.
 

fryke

Moderator
Staff member
Mod
Yes, but if AMD has the better solution, companies wouldn't have to fear a price increase for intel's products. They'd switch to AMD instead. Well... I guess we'll hear more about it in the future. I don't think that intel is a saint or anything, I just think that intel wasn't in exactly the same position as Microsoft to threaten computer makers.
 

Viro

Registered
The problem isn't so much whether a solution is better or not. It's whether AMD can supply enough chips (which it can't), and also the fact that many large corporations trust Intel. Thus when they buy in bulk, they buy computers with Intel processors mainly because AMD is seen as the new guy, and not really proven yet.

It's all about perceptions in the corporate market, and here is where Wintel is king. The prevalent attitude there is that "nobody ever got fired for buying Intel or Microsoft".
 

fryke

Moderator
Staff member
Mod
Also, this might be a little toooooooo off-topic for "_Apple_ News, Rumours and Discussion"...
 

Lt Major Burns

"Dicky" Charlteston-Burns
... amd biting the hand that feeds them...?

if it weren't for intel, amd would be no bigger than texas instruments, let alone the 2nd biggest PC processor manufacturer in the world. they want to be better than intel?

like man wanting to be better than their god...

(almost)
 

Viro

Registered
Lt Major Burns said:
... amd biting the hand that feeds them...?

if it weren't for intel, amd would be no bigger than texas instruments, let alone the 2nd biggest PC processor manufacturer in the world. they want to be better than intel?
(almost)
What do you mean?
 

DrM3M0RY

Registered
If it were just the case of companies "staying away" from the new guy, then AMD would not have formerly enjoyed a 20% stake in Sony's graces. The reason why anti-trust laws are in place is to allow companies to compete by fair means and keep the consumer market rich in choices and fair prices and that:
Such conglomerations of economic resources are thought to be injurious to the public and individuals because such trusts minimize, if not obliterate normal marketplace competition, and yield undesirable price controls. These, in turn, cause markets to stagnate and sap individual initiative.
Intel's practices, from the charges I see in that article posted earlier, are blatantly monopolistic, and should not be tolerated. As can be seen, they are clearly in violation of US Code Title 15,14:
It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States [...], or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.
In other words, YOU CAN'T PAY PEOPLE TO NOT USE YOUR COMPETITORS PRODUCTS. Again, blatantly monopolistic. Granted, Microsoft's tactics were considerably more fierce, but that does not excuse Intel one bit.
The point being, this development will hurt Intel's relationship with Apple, and it will be interesting to see how Steve Jobs responds to the situation--if it's anything like what major companies did when Microsoft got hit by anti-trust laws, then nothing (however, Apple's relationship with Intel is still very young by industry standards).

Quotes from Cornell Legal Information Institute Anti-Trust Law Records
 
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