Intel hit with the mother of all fines

[Mosesandstick]

That's a lot of money

[Sky]

"We would never pay for any kind of obligation," Mr Sewell said. "We provide incentives to customers to buy our products."

[Daspied]

"We would never pay for any kind of obligation," Mr Sewell said. "We provide incentives to customers to buy our products."

Haha, that had to be the funniest quote from that entire article.

[Teleku]

I do find it rather hypocritical that they aren't going to fine all the PC Vendors and Retailers in Europe who accepted the bribes by Intel.

[schild]

I hate things like this. Mostly because even if it's anti-competitive, it locked out an inferior product. I "get" the Microsoft problems. That makes sense, there's superior web browsers to IE and for some things superior OSs.

But for chips? Nay, Intel, other than for a brief period in the late 90s, has made the best chips available on the market. Even implying that the customer was somehow harmed was bullshit. And the fact they continued to drop the price in a fashion as if still in competition (which this article implies was not the case), seems to point against anything like this.

Though, I have no doubt that many companies do exactly this and at the same time I fail to see how this is a bad thing. It's no different than Pepsi charging less than Coke to have in your restaurant as it tries to gain a bigger foothold in the soda wars.

Edit: Seriously though, I hope this doesn't hurt Intel because 1. I don't want prices to go up and 2. AMD was never an option anyway. If you can't beat'em, sue'em. Thanks World.

[Engels]

I haven't read the details, but I believe that the lock out of AMD from retailers such as Dell was occurring during AMD's heyday in the late 90s and early 2000s. Remember, AMD were the first on the street with 64 bit processors. All the way through 2002 they had a serious edge with their Athlon processors, and still, you had to go to small parties (relatively speaking) to get AMD chips in prebuilts. What are the chances that, given the revenue the sales of their chips to big names like Dell, they wouldn't have had the R&D funds to create a chip as good if not better than the Core2 line.

I'm not sure if Intel and only Intel should get punished, however.

[Triforcer]

So weird when real life work and f13 topics intersect.  Can't say much more than that except:  lawyers on big cases are always happy, whether they are with the winner or loser 

[Tale]

Either you're too stupid to be a lawyer, or I'm glad you're not mine.

[Tebonas]

I agree that Intel got fined, but I am not sure they got fined for the right thing.

Intel put pressure on motherboard vendors to not make AMD boards on pain of losing the rights to manufacture Intel boards as well. So in the heyday of AMD technological superiority there weren't boards available from some of the best manufacturers because they feared to lose the Intel market. Thats a fineable lockout if there ever was one.

And regarding this one topic you have a Memento-like memory, schild! Intels R&D and current excellency was driven by the threat of the AMD processors. Prior to that they weren' all that good.

[Triforcer]

Either you're too stupid to be a lawyer, or I'm glad you're not mine.

Cute!  I'll spare you the biography, but lets just say you should never judge intellect based on how somebody vents on a message board.  This place sees all of our more assy sides. 

[Jeff Kelly]

I hate things like this. Mostly because even if it's anti-competitive, it locked out an inferior product. I "get" the Microsoft problems. That makes sense, there's superior web browsers to IE and for some things superior OSs.

Though, I have no doubt that many companies do exactly this and at the same time I fail to see how this is a bad thing. It's no different than Pepsi charging less than Coke to have in your restaurant as it tries to gain a bigger foothold in the soda wars.

Charging less then your competitor (as in capitalism: supply and demand making the price) and paying stores to not sell your competitor's products, pressuring mainboard manufacturers to not build AMD boards and make deals with PC vendors to stop sell your competitor's products are two entirely different things.

If Intel had indeed the better products they wouldn't have needed to fuck over AMD in the first place.

[Yegolev]

Intel would still be selling us Pentiums if AMD wasn't in the picture.  Monopolies are never good for anyone except the monopoly itself, which I recall is taught in colleges these days.  Personally, I think the fact that Intel chips suddenly became good -- or rather became just good enough to beat out AMD -- is great circumstantial evidence that they have been or even currently are holding back tech until it is required for business reasons.  I'd even suggest that if Intel was indeed a defacto monopoly, like MS, we would not now have any whiff of introducing a hypervisor to consumer PCs, nor multiple cores even.

[Koyasha]

I do find it rather hypocritical that they aren't going to fine all the PC Vendors and Retailers in Europe who accepted the bribes by Intel.

If the whole thing is true, this is one of my major problems with it right here.  If they're going to fine Intel for doing this, then they should also go after every single company that accepted their bribes.  Either everyone involved should get punished or nobody should.

[Yegolev]

While that is a fine and just idea, it is politically unfeasible given the names involved.

[Engels]

Not to mention, cases need this thing called 'evidence', and since I doubt Dell keeps a file cabinet labled 'Intel Bribes' by the receptionist desk, the prosecution probably needed the cooperation of the colluding companies to make their case at all.

[calapine]

Though, I have no doubt that many companies do exactly this and at the same time I fail to see how this is a bad thing

• Intel gave rebates to computer manufacturer A from December 2002 to December 2005 conditional on this manufacturer purchasing exclusively Intel CPUs
• sold AMD-based business desktops only via direct distribution channels (as opposed to through distributors) and
• postponed the launch of its first AMD-based business desktop in Europe by 6 months.

You think such practices good. I think they are bad. OK...different viewpoints.

But for chips? Nay, Intel, other than for a brief period in the late 90s, has made the best chips available on the market. Even implying that the customer was somehow harmed was bullshit.

But that's not really true. Most of the time they have been comparable or it was a back and forth. eg: Athlon > Pentium 4, later: Core Series >> Athlon.
Additionally, for most home user it doesn't matter who holds the performance crown at the moment, rather they need an affordable mid-range product with the best performance/value. That's (price) been an area AMD often used to attack at.

Edit: Seriously though, I hope this doesn't hurt Intel because 1. I don't want prices to go up and 2. AMD was never an option anyway. If you can't beat'em, sue'em. Thanks World.

It' won't hurt them. Intel Net Profit 2008: U$ 5.3 billion. They'll pay the fine with their small change and still sit on their 70% market share, but will be forced to tone down that rebate crap to legal levels. Customers will have more choice. Win-Win

Cala

[schild]

I may be a terrible person, but I don't see how those rebates aren't just good business. It's something you can offer that the competition can't. Isn't that the whole point of competition?

[Koyasha]

It would have been better (don't know if it would have been legal, but it would be fine in my eyes at least) if they had given the rebates conditional on the manufacturer(s) purchasing a specified number of Intel CPU's within a certain amount of time.  If that specified number roughly equals the number of computers they expected the manufacturer to sell, it would have accomplished the purpose, for the most part, without directly attacking the competition.

[Teleku]

I may be a terrible person, but I don't see how those rebates aren't just good business. It's something you can offer that the competition can't. Isn't that the whole point of competition?

No, competition is when two companies try to make better products than each other, and the consumer decides.  In this case, AMD was offering a far greater product than Intel could for many years.  To get around this, they said they would give retailers a bunch of money ("rebates") if they stopped selling the better product and only sold theirs.  And they did.

This is not competition.  Intel can get away with it because they have more money to throw around, but its not actual competition resulting in better products.  It actually resulted in consumers being forced to use an inferior product, and no competition.

Having said that, I think the size of the fine is just the EU being dicks to another big American company.  They deserve a reprimand, but the size of the fine, as well as the lack of reprimand to any of the companies that accepted Intels offer, leads me to believe this is more politics than justice.

[calapine]

I may be a terrible person

You aren't!  

but I don't see how those rebates aren't just good business. It's something you can offer that the competition can't. Isn't that the whole point of competition?

This is going the way personal oppion, but I thought competition is customer being offered a choice and the better product winning. Not Company A preventing products to be sold. What's next, trashing your competitions storefront?

[Big Gulp]

I may be a terrible person, but I don't see how those rebates aren't just good business. It's something you can offer that the competition can't. Isn't that the whole point of competition?

What part of anti-competitive don't you understand?  You're allowed to underbid your competition, and you're certainly allowed to give volume discounts.  You're not allowed to threaten or bribe your customers to the detriment of your competition.

Considering how long Intel has been up to these shenanigans I think they've gotten off light.  I don't like some of the EU's rulings (I think MS has every right to bundle IE with Windows), but I'm 100% behind them on this one.

[Yegolev]

That is kind of funny because it really is good business.  Not really textbook competition, but no one likes that.  In fact, it's too good.  Just like how the railroads before the Railway Labor Act were doing good business.  Very good!  Unless you were an employee.  I'd also say that bribing government officials is good business from that standpoint, but that shit is still illegal for a reason.

Also, did someone say shenanigans?

[Miguel]

AMD was offering a far greater product than Intel could for many years

That all depends on your particular definition of 'greater'.

Intel's got the market share that they do because of chipsets, not CPU's.  Intel always put pressure in the right places, with things like 'well, you COULD build AMD systems, but then you might suddenly find it hard to get the chipsets you need'.  AMD has NEVER had a good story on the chipset front:  relying on 3rd parties to do that particular engineering effort (with a few notable exceptions of course, I am speaking as a trend).

Say what you want about the CPU, but Intel has almost universally had a better story for building a computer, not just a CPU (Intel's market in Centrino products in particular).  This is where they had big PC makers (especially those who design their own motherboards) by the balls, and everyone knew it.

If you are a big PC manufacturer, and you are faced with two options, which one would you take?

1) Buy and Intel CPU.  They will give you a chipset to go with it.  Oh, and a complete design kit for said combination, already proven to work through reference designs.  It's as plug and play as you can get in this business.
2) Buy an AMD CPU.  They'll give you the phone numbers of VIA, NVidia, or SiS, and say 'well, they should be able to help you'.  Getting the combination to work reliably is a crap shoot.

[Teleku]

1.) I only really put it that way to troll Schild 

2.) None of what you said is actually involved in this case.  These are all companies that were happy to carry both (in effect, they took options 1 and 2 that you listed).  They obviously didn't have a problem dealing with AMD, until Intel tried to force/bribe them not to.  It didn't have anything to do with convenience or the merits of Intel.

[Daspied]

You have to love those lobbyists, He who can afford the most, can get away with the most.

On to the monopolies, It was funny that when Microsoft was getting sued, and apple was going under that they got a care package from Microsoft to stay aloft. Ok, not really funny, but more to the point. I can see Intel doing something like this to Amd in the future, as they haven't quite been able to come back. Unless they are planing on using super diamonds in the near future, I don't see it happening either. I could also see Intel trying to buy out Nvidia. I'm speaking out of my ass on that one though, as I don't know their current relation ship.

[Miguel]

1.) I only really put it that way to troll Schild 

2.) None of what you said is actually involved in this case.  These are all companies that were happy to carry both (in effect, they took options 1 and 2 that you listed).  They obviously didn't have a problem dealing with AMD, until Intel tried to force/bribe them not to.  It didn't have anything to do with convenience or the merits of Intel.

If all these companies were happy to carry both, and they didn't have a problem dealing with AMD, then what leverage would Intel have on any of them?  If the solutions were really at parity any of them could have told Intel to STFU and switched their lineup over to AMD.  But that never happened.

I guess what I was trying to address was the idea that Intel and AMD have been jockeying back and forth for dominance in the market, but in reality it's always been 80%+ Intel if you account for things other than the CPU.  If Intel switched off their production lines for a year, about 100 companies would go out of business.  Now that's leverage!

[Mrbloodworth]

You're not allowed to threaten or bribe your customers to the detriment of your competition.

I thought that was called a coupon, or an MVP card.

[Yegolev]

You're not allowed to threaten or bribe your customers to the detriment of your competition.

I thought that was called a coupon, or an MVP card.

It is if you give secret coupons to certain people who will stifle your competition for you.

[Teleku]

1.) I only really put it that way to troll Schild 

2.) None of what you said is actually involved in this case.  These are all companies that were happy to carry both (in effect, they took options 1 and 2 that you listed).  They obviously didn't have a problem dealing with AMD, until Intel tried to force/bribe them not to.  It didn't have anything to do with convenience or the merits of Intel.

If all these companies were happy to carry both, and they didn't have a problem dealing with AMD, then what leverage would Intel have on any of them?  If the solutions were really at parity any of them could have told Intel to STFU and switched their lineup over to AMD.  But that never happened.

The "leverage" was "we'll effectively give you a bunch of fucking money if you just stop carrying AMD products".  Also, the vendors can easily take this bribe because, as you mentioned, AMD carried a much smaller market share, so it wouldn't cause as big of a backlash as if they had done the reverse.  It actually wouldn't even be feasible.  Thats abuse of a monopolistic position.

I guess what I was trying to address was the idea that Intel and AMD have been jockeying back and forth for dominance in the market, but in reality it's always been 80%+ Intel if you account for things other than the CPU.  If Intel switched off their production lines for a year, about 100 companies would go out of business.  Now that's leverage!

Or, an abuse of a monopolistic position.     Its like if one day Bill Gates announces hes going to activate the secret code that will disable almost all the computers in the world (because almost all the computers in the world use Windows) unless the world governments pay him 100 Billion Dollars.  And say he's just using "leverage".

[Sir T]

You have to love those lobbyists, He who can afford the most, can get away with the most.

On to the monopolies, It was funny that when Microsoft was getting sued, and apple was going under that they got a care package from Microsoft to stay aloft. Ok, not really funny, but more to the point.

That because Bill Gates was effectively saying "Dance baby dance" to Steve Jobs. The 2 have a history that goes waaay back and they do NOT like one another. Gates was always jealous that Jobs was seen as the real genius. Which he was, he just has no business sense.

[Big Gulp]

Gates was always jealous that Jobs was seen as the real genius. Which he was, he just has no business sense.

Bit of a derail, but I've never understood the cultlike devotion to Jobs, who pretty much strikes me as a raging douchebag, while is Gates is portrayed as the Dark Lord of the Pacific Northwest, and he seems like a decent, geeky kind of guy.

On the one hand you've got a vegan hippy asshole notorious for abusing his employees, and on the other you've got an awkward dorky guy who has spent a sizeable chunk of his fortune trying to wipe out malaria.  Great, Jobs saved Apple.  Gates has saved how many lives and the dude can't catch a break.

[ahoythematey]

http://en.wikipedia.org/wiki/Cool_To_Hate

[Tebonas]

Personally I always liked Bill Gates and reserve my irrational hatred for Steve Ballmer.

[IainC]

http://en.wikipedia.org/wiki/Cool_To_Hate

"Cool To Hate" is the fifth track off the 1997 album Ixnay on the Hombre by the punk rock band The Offspring.

 

[UnSub]

I may be a terrible person, but I don't see how those rebates aren't just good business. It's something you can offer that the competition can't. Isn't that the whole point of competition?

Corruption has been shown to seriously skew the market and disadvantage other players.

That because Bill Gates was effectively saying "Dance baby dance" to Steve Jobs. The 2 have a history that goes waaay back and they do NOT like one another. Gates was always jealous that Jobs was seen as the real genius. Which he was, he just has no business sense.

The two of them have an interesting dynamic where they'd try to dominate areas the other couldn't (or their personality extensions, i.e. Apple and Microsoft). Apple gets iPods, Jobs gets Pixar and Disney. Gates becomes a humanitarian - something that Jobs would never think of doing - and retires a CEO who walked out, not thrown out. Microsoft dominates personal computing and has a games platform. And so on.