The Federal Trade Commission launched its long-expected Pearl Harbor attack on Intel today:
FTC Challenges Intel’s Dominance of Worldwide Microprocessor Markets
FTC Charges Anticompetitive Tactics Have Stifled Innovation and Harmed Consumers
The Federal Trade Commission today sued Intel Corp., the world’s leading computer chip maker, charging that the company has illegally used its dominant market position for a decade to stifle competition and strengthen its monopoly.
In its complaint, the FTC alleges that Intel has waged a systematic campaign to shut out rivals’ competing microchips by cutting off their access to the marketplace. In the process, Intel deprived consumers of choice and innovation in the microchips that comprise the computers’ central processing unit, or CPU. These chips are critical components that often are referred to as the “brains” of a computer.
According to the FTC complaint, Intel’s anticompetitive tactics were designed to put the brakes on superior competitive products that threatened its monopoly in the CPU microchip market. Over the last decade, this strategy has succeeded in maintaining the Intel monopoly at the expense of consumers, who have been denied access to potentially superior, non-Intel CPU chips and lower prices, the complaint states.
“Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly,” said Richard A. Feinstein, Director of the FTC’s Bureau of Competition. “It’s been running roughshod over the principles of fair play and the laws protecting competition on the merits. The Commission’s action today seeks to remedy the damage that Intel has done to competition, innovation, and, ultimately, the American consumer.”
Notably, the Commission based its complaint solely on the FTC Act and not the Sherman Antitrust Act. This is important, because it keeps the entire proceeding inside the FTC’s wheelhouse. The FTC will conduct a trial next year, and Intel will be found guilty two to four years from today.
There is no chance Intel will prevail before the FTC, as the commissioners control the discovery, judging, and initial appellate process. By 2015-2016, a federal appeals court will undo whatever damage the FTC tries to inflict (assuming Intel doesn’t surrender before then). I’ve seen this movie before.
I don’t have much to say on the “merits” of the FTC’s complaint. All FTC cases come down to the same basic question: Should the FTC have more power? Here, the FTC wants the power to literally control every decision made by the computer chip industry. The FTC wants to decide how much market share a company may have, what contractual terms can be offered, what products may be distributed, etc. This case is the first step towards full “nationalization” of the tech sector, a long-held FTC goal.
Remember, the FTC does not operate under any constitutional or “democratic” constraints. None of the four commissioners who made today’s decision were even appointed by the current president. (Curiously, the FTC waited until a day after Barack Obama’s two FTC nominees appeared for their Senate confirmation hearings to announce the Intel complaint.) The FTC is not required to respect any provision of the Bill of Rights, and commissioners cannot be fired no matter how much taxpayer money they waste on this case. If those are the sort of people you want running the computer chip industry, then there’s really nothing more I can say to you.
Of course, regardless of the outcome here, today’s FTC attack will cause substantial short- and long-term damage to the economy. Firms in all industries are now on-notice that they need to divert significant resources away from meeting consumer demand and towards retaining expensive antitrust lawyers — mostly former FTC and DOJ prosecutors — to “protect” them from the next wave of attacks. Intel may defeat the FTC in court, but there will be a lot of “collateral damage” while the process plays out over the next decade.
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The complaint itself reads like an accusation against the company for having a successful business and generally engaging in competitive enteprise. And the idea is ridiculous that bureaucrats can know what is a superior product. This is a brazen override of consumer preference.
The processor industry has been horribly stagnant! How dare Intel deny consumers progress! I mean w/o their “monopoly” computer chip progress may have outpaced Moore’s law, instead of just followed it!
This has to be one of the stupidest charges ever, with absolutely no way to show causation or damages. I don’t know anyone who uses a computer who feels that Intel has harmed them through having a dominant share of the market.
The ONLY cause for concern is the possibility of Intel using IP law to stifle the development of competing firms, and to solve that the FTC anti-trust prosecutor should look to break up the patent granting monopoly!
It seems like practically the only remaining areas of US business leadership are Intel CPUs, iPhones and Hollywood movies.
Given the economically murderous and suicidal trends now present in the US government, I predict that Apple and Hollywood studios will soon be targeted.
Knocking US business flat on its azz is the best way to create an economic emergency and then seize greater control of investment and business management. Government wrecks, and then gets rich by taking control of the cleanup operation (see: Iraq, Afghanistan, HUD, Wall Street, health care, education, …)
If anyone should be the target of the FTC, it’s TicketMaster.
I’m also curious to know what higher quality product Intel forced from the market. AMD? Motorola? Please…
Hey, the lawyers need employment too! Efficiency be damned!
To become a corporation, Intel must register with the government.
The government then gives Intel the power of intellectual monopoly over what it discovers.
The government then sues Intel for having a monopoly, thus, stripping it of its power that it got through state-sponsored monopoly.
Not very consistent, government.
On the news cast on which I first head this the announcers were saying Intel was breaking laws that did not exist. I guess Intel is ignorant of the future law which of course, can be no excuse. The talking heads did not see the idiocy of the FTC;’s accusation or ask how it was possible to break a law that did not exist. Apparently, what Intel has done isso bad that laws have not been written to prevent their actions.
Unbelievable!
I think I understand this. If there is only a single company, there’s no competition, so its products will be poor. So it’s good to have a company that offers competition. But the second company can’t make products that are too good, becuase then everyone would buy from them and put the first company out of business. So the second company can’t make products that are too good, or at least we need to force people buy the first company’s inferior products, or something. And all this is so we, the buyers, will get the best products instead of something inferior. Because allowing us to choose which companies we’d like to support wouldn’t be in our best interests.
This will continue until an Intel finally has the sense to tell FTC, “Have your fun. We’ll send an intern to the proceedings, just for laughs.
“Make your ruling. Then try to enforce it…
…but you’re going to have to provide your own body bags.”
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