Intel Lashes Out at FTC, NY Anticompetition Lawsuits

Intel Corp. today blasted the antitrust suits filed late last year by the Federal Trade Commission (FTC) and the State of New York -- taking both sharply to task for what it says are wildly inaccurate claims.

In a partially redacted response (available here in PDF format) to the lawsuits, Intel (NASDAQ: INTC) said the FTC suit is "misguided" and "bears little resemblance to reality." It also said the complaint relies on "invective to paint ordinary and desirable competitive conduct as anticompetitive exclusion."

Additionally, Intel claims the FTC's suit is based largely on claims that the FTC added at the last minute and has not investigated.

"It is explicitly not based on existing law but is instead intended to make new rules for regulating business conduct," the chipmaker said in its response. "These new rules would harm consumers by reducing innovation and raising prices."

New York filed its antitrust suit just days before Intel settled its long-running antitrust case with rival AMD. The feds filed shortly after the settlement.

Says AMD Caused Its Own Troubles

The company also contends that AMD's woes in the marketplace -- which formed the crux of regulators' and AMD's own complaints against Intel -- were not caused by Intel's anticompetitive malfeasance, but through AMD's (NYSE: AMD) own failures.

Intel also didn't shy away from offering some examples to prove its point.

Former AMD sales chief Henri Richard is quoted in a 2004 internal communication as saying, "If you look at it, with an objective set of eyes, you would never buy AMD. I certainly would never buy AMD for a personal system if I wasn't working here." He said AMD is "pathetic" for "selling processors rather than platforms [as Intel did] and exposing a partial story, particularly in the commercial segment, that is clearly inferior to Intel's."

Richard has since left AMD and is now with Marvell. AMD has since adopted the platform strategy he said it needed, called AMD Vision.

The document also details former AMD Chairman Hector Ruiz's admission as being "late with a competitive product in the mobile space" and claims that in picking up Dell as a customer in 2006, AMD became unable to meet demand for any of its customers and "alienated loyal customers, prompting them to switch business to Intel."

Intel also lets the FTC have it in particular, noting: "The Commission did not even conduct a thorough investigation as to graphics and told Intel that -- in the manner of a private plaintiffs' attorney -- it need not do so because it can learn the facts through post-Complaint discovery."

The FTC complaint asserts that Intel has a GPU market share in excess of 50 percent and that it threatens to monopolize the market, but Intel notes it does not produce or sell discrete GPUs (although it had wanted to, with its now-shelved "Larrabee" project -- something Intel doesn't mention in the filing). Intel's graphics business is limited to integrated chipsets, not discrete platforms like those Nvidia and AMD offer.

The chipmaker also blasted federal regulators' claims that Intel degraded the interconnection between its microprocessors and discrete GPUs in an attempt to forestall a challenge to microprocessor-centric computing -- calling the claims "groundless" -- and noted that discrete GPUs connect to the CPU through a PCI Express bus, which is an industry standard Intel can't control or degrade.

Intel also said that the proposed remedies from the FTC would impose "a regulatory regime" on the firm, essentially trying to "turn Intel into a public utility" with the FTC taking on the role of "a central planner of the microprocessor industry."

Criticizes "Political" New York Lawsuit

Intel's response to New York Attorney General Andrew Cuomo is no less of a return volley than the one fired at the FTC. Intel said Cuomo's complaint is "grounded more in rhetoric and politics than fact and law," and is "deliberately inflammatory, apparently made for the political purpose of providing sound bites for media attention."

The chipmaker took particular umbrage to Cuomo's repeated use of the legal term "bribery" to characterize Intel's discounting, calling his use of the term "an outrageous hijacking of the meaning of language."

Intel said a bribe is a payment to induce an employee of a company to breach a fiduciary duty to his or her employer, not a discount offered to the company to win more business.

"When a person goes to the store and is offered a lower price, no one considers that a bribe," the company said in its response. "Yet, that's what the [New York attorney general] is attempting to argue in its case."

Intel's trial with the FTC is set for September. FTC rules require that a trial be nine months after the suit is filed. No date has been set for the New York case.

Andy Patrizio is a senior editor with InternetNews.com, the news service of the Internet.com network.