The FTC Sues Intel Over CPU & GPU Competition
by Ryan Smith on December 16, 2009 12:00 AM EST- Posted in
- CPUs
Intel’s Response
Intel wasted no time in responding to the FTC’s suit. In their response, Intel has denied the accusations, and insisted that they have competed “fairly and lawfully,” noting that prices (ASPs) have been declining at a rate faster than any other industry.
Of particular note in Intel’s response is their claim that the FTC’s case “is based largely on claims that the FTC added at the last minute and has not investigated.” This we’re assuming means all of the GPU-related claims. You can read into this several ways, but our take is that Intel is more concerned with the GPU-related claims than the CPU-related claims at this moment.
Finally, Intel is understandably annoyed that this even reached the lawsuit stage. As we mentioned before Intel was already in settlement talks with the FTC, and believes that the issue should have been resolved there. In the failure of these talks, Intel has cited that the FTC “insisted on unprecedented remedies – including the restrictions on lawful price competition and enforcement of intellectual property rights set forth in the complaint.” As the FTC would not back down on their requested remedies and Intel would not accept them, this is what has lead to the case moving on to a lawsuit.
What the FTC Wants
So what does the FTC want? For one thing, not money. In their claims and requested remedies, they have not asked for any kind of fine, but rather are focusing exclusively on enforcing changes in the way Intel conducts business. This means their remedies are entirely corrective, rather than being a mix of corrective and punitive remedies such as what the EU has gone for.
What the FTC wants for Christmas: For Intel to license DMI
For their corrective remedies, here is what the FTC wants:
- For Intel to stop doing all of the things mentioned above.
- Intel cannot require OEMs to purchase only Intel CPUs and GPUs, purchase them in specific quantities, or to not purchase competitors GPUs and CPUs. This is effectively a stab at the rebates Intel has been offering for bulk purchasing, and the advertising help Intel has been offering to bulk purchasers.
- To stop prioritizing CPU shipments to loyal OEMs.
- To stop withholding technical support from disloyal OEMs.
- For Intel to be disallowed from producing/distributing any software or hardware that unreasonably excludes or inhibits the performance of competitors’ GPUs and CPUs.
- To stop selling things below cost. The FTC is defining this as being the average variable cost plus a “contribution to Intel’s fixed sunk costs in an appropriate multiple of that average variable cost.”
- For Intel to do a few different things about the versions of their compiler that put AMD at a disadvantage (which the FTC is calling the Defective Compiler): offer a substitute compiler to customers for free that is not a Defective Compiler, or to compensate customers in switching to another compiler, to provide notice to software buyers of products compiled using the Defective Compiler that they may need to replace their software.
- To stop Intel from making misleading statements.
- To prevent Intel from coercing benchmark organizations into adopting misleading benchmarks.
- For Intel to license the QPI and DMI buses to 3rd party chipset manufacturers.
- For Intel to not block the Global Foundries deal (AMD and Intel already settled this) or any similar deal that VIA might make.
- For Intel to stop badmouthing competing products unless they have solid scientific evidence.
- For Intel to foot the bill for the independent organization that will monitor this.
It’s a long list, but there’s nothing in it that’s particularly surprising. The FTC’s ultimate goal is to get Intel to stop engaging in all of the anti-competitive actions they have been engaging in for the last decade, and to have them directly monitored for an indefinite period of time in the future to make sure they do not resume these actions.
On an interesting note, the FTC chose an unusual way to go about this suit. Without getting into the nitty-gritty of anti-trust laws, the FTC has multiple sections of the FTC act to charge violators under. Normally when they engage in a lawsuit, they charge them under Section 2, which allows for harmed consumers to sue violators in private for triple damages. The FTC has decided that it’s in the best interest of everyone to not open Intel to that kind of liability or to take the risk that they’ll lose the suit based on that kind of liability, and instead charge them under Section 5. The big difference between the sections is that a Section 5 violation only leaves Intel open to the damages caused by their actions, and not to triple that price tag. Overall the use of Section 5 is very rare compared to Section 2, but the use of it is growing according to the FTC.
At this point we do not have any idea what the price tag would be on damages for Intel if they were to lose this suit, but it’s a reasonable expectation that it won’t be cheap, going into the billions of dollars. Triple damages would make that even higher. As triple damages were established as a punitive solution, this is consistent with the FTC’s position that they are not trying to enact a punitive remedy upon Intel.
Conclusion
So when does this battle royale kick-off? Not for a while, it seems. The case is currently scheduled to go before a judge on Wednesday, September 15th of 2010, which is 9 months from now. Even if it were to start on time (it likely won’t), a ruling would take an equally long time. It may be 2012 before the case is ruled on, later if the case starts late.
In the meantime, there are the positions of NVIDIA, Intel, and AMD to consider. Despite the FTC’s immediate concerns, with the recent cancelation of Larrabee Prime, Intel probably isn’t the risk to the GPU market that the FTC believes they are. The question will be what Intel will be announcing in 2010 as the successor to Larrabee Prime, and what actions they may be taking. It’s not in their best interests with this case to engage in anything that might be seen as disparaging of AMD or NVIDIA GPUs, which in turn may influence Intel’s actions here.
As for AMD, for them this entire matter is largely settled when it comes to CPUs. Their exposure on the GPU side is a bit more nebulous – they aren’t going to make integrated GPUs for Intel processors, so their exposure is in the smaller discrete GPU market. Without a better idea of what the FTC is accusing Intel of when it comes to discrete GPUs, it’s hard to say what the impact of this is. If this stops Intel’s anti-GPGPU efforts however, then it’s going to be good news for AMD’s efforts in that field.
Fermi: Intel's greatest fear?
And finally there’s NVIDIA. NVIDIA has been on a crash-course with Intel for some time now, and they would have it no other way. For NVIDIA this has been a very good month: first Larrabee Prime gets canceled, and now the FTC is going to fight Intel in court over several issues that effectively has the FTC fighting Intel on NVIDIA’s behalf. This could go a very long way in boosting NVIDIA’s GPGPU efforts with Fermi, not to mention the fact that the IGP chipset business has been quite good to NVIDIA lately and is something they would like to continue. This suit could come quite close to defanging Intel from NVIDIA’s perspective.
On a long-term perspective, we’re left wondering where this is going to leave the entire market when it comes to GPU/CPU integration. Both AMD and Intel have been pushing it, with Intel preparing CPUs with both on-chip and on-die GPUs. Could a successful FTC suit put a stop to this Fusion for Intel? Will this slow down or stop GPU/CPU integration for the entire market, and greatly benefit CPU-less NVIDIA in the process? The outcome of this case could very well have an impact greater than just stopping any anti-competitive actions Intel is engaging in, so it’s going to be something we’ll be keeping a very close eye on.
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LaughingTarget - Thursday, December 17, 2009 - link
Forgot something. Monopolies are not inherently bad. A monopoly that is formed because the entity provides a product or service that is so good, so cheap, that no one can hope to compete is good for the people. If there aren't any regulations on the market (like anti-trust for instance), entering to compete against this monopoly will be easy should they cease offering a decent product, hike prices, and/or treat workers poorly. Nothing is blocking someone else from coming in. Natural monopolies tend to go out of business because they end up paying workers too much and keeping prices too low in efforts to avoid competition. How anyone can think of this as bad is beyond me.The only bad monopolies are those protected by government force. If we believe Intel is moving into a monopoly position, we need to identify why. If it's because they make a good product people want, let it be. If it's because our national governments have become so onerous to businesses that competing against the big guys is too expensive, maybe we should reevaluate our laws, tax system, and regulatory structure.
In either case, it isn't Intel's fault for doing this. Either it's good for us or our governments tax and regulate too much. Don't blame Intel for making most of the rules and conditions set by powers beyond their control.
Scali - Thursday, December 17, 2009 - link
I'd like to add that especially in the computing world, there is a strong natural push towards a monopoly.Is it really a coincidence that both the hardware (x86) and the software (Windows) completely dominate the market?
I don't think so. The market demands compatibility and interoperability. As soon as one technology reaches 'critical mass', it becomes so entrenched in the market that you're locked-in seemingly forever.
AMD was smart enough to realize this to a certain extent, and decided to fight for an x86 license, and won. Virtually all non-x86 CPU manufacturers have long been wiped out.
But how are you ever going to win the battle, if you have to pay royalties to your main competitor over every product you make?
You aren't as big and powerful as Intel to start with, how will you ever reverse that situation?
karielash - Friday, December 18, 2009 - link
There is a strong push to a compliant world with common standards. Hence the domination of standard hardware and software. That does not mean a world dominated by a single supplier, your claims that one supplier should dominate demonstrates a remarkably (and somewhat laughable) naivety.
AMD signed a cross licensing agreement with Intel in 1976, this was extended in 1982, the only fighting that was done is when Intel tried to illegally (according to the court) prevent AMD from manufacturing products under a legal contract between the companies.
AMD cross license now includes technology developed by AMD being used in Intel CPU's, they are both mutually dependent and rely upon each others patents to extend their current technology.
http://blog.taragana.com/index.php/archive/a-histo...">http://blog.taragana.com/index.php/arch...story-of...
Taft12 - Thursday, December 17, 2009 - link
There are so many errors in your post, it is hard to decide where to begin. The "strong natural push" toward a monopoly is what the FTC is there for! We do not have "unbridled capitalism" in this country or anywhere because the bad outweighs the good. Competition is necessary.Growing market share from Apple, Linux, ARM refutes your claim that critical mass cannot be reversed.
Scali - Thursday, December 17, 2009 - link
The 'push' coming from the market I meant, not from Intel or Microsoft.FTC shouldn't do anything about that. It's a majority vote.
Apple and Linux have been struggling for decades, and still have not reached critical mass. If anything, they prove it's futile to try and resist. They certainly don't prove that you can reverse Microsoft's dominant position.
Oh, and next time, skip the personal attacks like "there are so many errors in your post, blahblah". It doesn't exactly make your arguments any stronger.
Scali - Thursday, December 17, 2009 - link
I have two issues with the Intel Compiler complaints:1) Yes, I know for a fact that it originally generated SSE/SSE2 code which only worked when the CPUID instruction returned "GenuineIntel" as a brand name.
How you interpret that fact is another matter though. AMD didn't have SSE/SSE2 support yet at this point. So any CPU that wasn't Intel, couldn't run the code anyway. Intel couldn't guarantee the compatibility of future SSE/SSE2 implementations from other vendors either.
I personally never used the "GenuineIntel" string, I only looked at the MMX/SSE/SSE2 bits, because that should be the 'correct' way to determine these features... But I can understand why Intel would only enable them on their own CPUs. After all, I'm an independent software developer, and Intel is a CPU manufacturer.
The motive is not necessarily 'foul play'.
2) It is the Intel Compiler, the name says it all. It is written by Intel, for Intel products. Intel has no responsibility to other vendors whatsoever with this product, Intel has never made any claims or guarantees about performance on competing products.
The responsibility is completely with software vendors, if they decide to use the Intel Compiler for their products. They could just as easily have used a more neutral compiler, such as the Microsoft Compiler or gcc. It is the vendor's choice, not Intel's.
I don't see why Intel wouldn't be allowed to make a compiler for their CPUs. And I also don't see why Intel would be responsible for how developers decide to use their compiler, which may or may not benefit CPUs other than Intels. Perhaps the developers weren't interested in anything other than Intel CPUs anyway. It happens.
I see a parallel with nVidia's CUDA, and the software that's now trickling in, like games with PhysX acceleration, virus scanners, Adobe products etc.
Yes, they only work on nVidia hardware, so it's 'not fair' to other GPU brands... but you can't blame nVidia for that. The developers knew (or should have known) what they were getting into and chose to support only nVidia.
Radnor - Thursday, December 17, 2009 - link
The thing is CUDA, is a proprietary, NVIDIA developed technology. The fact that is exclusive to Nvidia is because nobody bought a license for it. So, no harm no foul.x86 is a standard and it is licensed to more partners. I believe the point with the Intel C++ compiler, isn't that it gives advantag to Intel Hardware, but mainly because it was forced to software developers. Lets wait and see in this point.
blaster5k - Thursday, December 17, 2009 - link
The vast majority of developers on Windows use Microsoft Visual Studio -- not the Intel compiler. It's hardly "forced". I'd guess that it's market share is pretty low actually.Scali - Thursday, December 17, 2009 - link
x86 was a proprietary, Intel developed technology, until AMD managed to persuade a court to force Intel to license the technology back in 1991. Before that, it was no different from CUDA.Even though Intel is forced to license it to other companies, it's still Intel's instructionset, and Intel is the one who controls the licenses. It was never meant to be a multi-vendor standard, and Intel has never considered it a multi-vendor standard either. They never speak about AMD at all.
Again I point out the obvious: It's the Intel Compiler. The brochure specifically talks about Intel platforms.
It doesn't say anything about 'any x86 platform' let alone 'AMD'. It's a compiler BY Intel, FOR Intel. Intel has never claimed otherwise.
Compare it to Mac OS X. It runs on x86 processors, but it's not meant for 'any x86 system'. Apple sells it as an OS for their hardware. You can't sue Apple because you managed to install OS X on your non-Apple hardware, and now the performance, stability or compatibility are not as good as on Apple hardware. It's not Apple's fault that you installed it on unsupported hardware.
I don't see how Intel could force their compiler on any developer. Are you implying that Intel has men in black who visit developers and put a gun to their heads, saying "You will use our compiler, or else..."?
I don't see it. Intel may be able to muscle OEMs a bit, because they depend on Intel's supply and Intel's pricing. But what leverage could Intel possibly have over any developer?
karielash - Friday, December 18, 2009 - link
Your dreaming. Intel licensed the original x86 design to AMD who were to be a secondary supplier to IBM in 1982 (single source products were frowned upon by IBM) the court forced Intel to stand up to their commitment in 1993 and agreed that the 386 was an extension of the original x86 design and was covered by the license agreement allowing ADM to continue to manufacture x86 CPU's.