Cuomo Sues Intel
Chipping Away at Intel
Monopoly Play
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The New York attorney general alleges in the suit that the anti-competitive behavior stretched to the very top of Intel, and could touch on even the most routine business behavior. In 2006, and HP executive gave Intel CEO Paul Ottellini a heads up that HP was running an advertisement touting the computer maker’s relationship with AMD.
Here’s how Ottellini replied, according to the suit: “So, … why did you feel compelled to do this? It is certainly insulting to us and I do not see how it helps you…. If we are your key partner, this is nothing but a slap at us … I really don’t want to get in a pissing contest over this … But running an ad touting 10 years with amd [sic] and ‘choice’ is not the behavior of someone who wants to bring our two companies together.”
He was similarly hard on IBM, over that company’s sales of servers using AMD’s Opteron chips, the suit says. Here’s what he told a “senior IBM” official in November 2004: “I just saw the [sales] tracker data for Q3 …. IBM opteron shipments in 2P [dual-processor servers] doubled from 3.5Ku [thousand units] to 7. 5Ku … IBM was the fastest growing opteron system seller!! … It is a bit disheartening to see IBM outgrow both Sun and HP in Opteron shipments given our current engagement.”
The New York Times reports, based on an anonymous source, that the New York attorney general’s action would increase the likelihood of Federal Trade Commission action.
"These are separate investigations, but it would be very surprising for New York State to go off on its own without being fairly confident the FTC would pursue Intel as well," the person told the Times. The FTC has been investigating Intel since 1998, but has taken no formal action.
Intel has caught regulators’ eyes before. The company’s chips power about 80 percent of the personal computers and servers sold every year. In 1993, the FTC dropped an investigation for lack of evidence. It also ended an investigation in 2000. Intel settled a number of cases, including some involving antitrust allegations, with AMD in 1995.
The Obama administration has already proved itself more activist in antitrust matters than its predecessor. The FTC has looked into whether Apple and AT&T were acting in an anticompetitive manner when they delayed putting Google’s Voice App on Apple’s iPhone.
The administration has also taken an aggressive line in the biotech field, launching a Justice Department inquiry into Monsanto’s marketing tactics in the bioseed field. Monsanto has provided documents to the Justice Department in the department’s look into allegations by rival DuPont of anticompetitive behavior.
“The Justice Department has clearly begun a major investigation and is moving ahead, which is more than happened in the last eight years,” said Peter Carstensen, a former Justice Department lawyer who teaches antitrust law at the University of Wisconsin Law School and studies mergers in the agriculture industry.
Whether that holds true of the tech industry on the federal level or not, Intel is going to have its hands full with the Cuomo suit and the European Union action.
Cuomo’s office began investigating Intel in January 2008. He said his office has since interviewed a few dozen witnesses and examined millions of documents and internal emails involving debates at Dell, Hewlett-Packard, and IBM over whether to agree to Intel’s alleged demands or go ahead with AMD-based products instead.
For a copy of the lawsuit, click here.
Kent Bernhard Jr. is News Editor of Portfolio.com
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