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Thread: AMD File Anti-Trust VS Intel!

  1. #1
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    AMD File Anti-Trust VS Intel!

    AMD Files Antitrust Complaint Against Intel In U.S. Federal District Court

    – Complaint Details Worldwide Coercion of Computer-Makers, System-Builders, Distributors and Retailers from Dealing with AMD –
    – Intel’s Illegal Acts Inflate Computer Prices and Limit Choices for Businesses and Consumers –

    SUNNYVALE, Calif. -- June 28, 2005 --AMD (NYSE: AMD) announced today that it filed an antitrust complaint against Intel Corporation (“Intel”) yesterday in U.S. federal district court for the district of Delaware under Section 2 of the Sherman Antitrust Act, Sections 4 and 16 of the Clayton Act, and the California Business and Professions Code. The 48-page complaint explains in detail how Intel has unlawfully maintained its monopoly in the x86 microprocessor market by engaging in worldwide coercion of customers from dealing with AMD. It identifies 38 companies that have been victims of coercion by Intel – including large scale computer-makers, small system-builders, wholesale distributors, and retailers, through seven types of illegality across three continents.

    “Everywhere in the world, customers deserve freedom of choice and the benefits of innovation – and these are being stolen away in the microprocessor market,” said Hector Ruiz, AMD chairman of the board, president and chief executive officer. “Whether through higher prices from monopoly profits, fewer choices in the marketplace or barriers to innovation – people from Osaka to Frankfurt to Chicago pay the price in cash every day for Intel’s monopoly abuses.”

    x86 microprocessors run the Microsoft Windows®, Solaris and Linux families of operating systems. Even Apple®, a pioneer of the PC and one of the industry’s enduring innovators, announced that it would switch exclusively to x86 processors to run Mac OS® software beginning in 2006. Intel’s share of this critical market currently counts for about 80 percent of worldwide sales by unit volume and 90 percent by revenue, giving it entrenched monopoly ownership and super-dominant market power.

    This litigation follows a recent ruling from the Fair Trade Commission of Japan (JFTC), which found that Intel abused its monopoly power to exclude fair and open competition, violating Section 3 of Japan’s Antimonopoly Act. These findings reveal that Intel deliberately engaged in illegal business practices to stop AMD’s increasing market share by imposing limitations on Japanese PC manufacturers. Intel did not contest these charges.

    The European Commission has stated that it is pursuing an investigation against Intel for similar possible antitrust violations and is cooperating with the Japanese authorities.

    “You don’t have to take our word for it when it comes to Intel’s abuses; the Japanese government condemned Intel for its exclusionary and illegal misconduct,” said Thomas M. McCoy, AMD executive vice president, legal affairs and chief administrative officer. “We encourage regulators around the world to take a close look at the market failure and consumer harm Intel’s business practices are causing in their nations. Intel maintains illegal monopoly profits at the expense of consumers and computer manufacturers, whose margins are razor thin. Now is the time for consumers and the industry worldwide to break free from the abusive Intel monopoly.”

    The 48-page complaint, drafted after an intensive investigation by AMD’s lead outside counsel, Charles P. Diamond of O’Melveny & Myers LLP, details numerous examples of what Diamond describes as “a pervasive, global scheme to coerce Intel customers from freely dealing with AMD to the detriment of customers and consumers worldwide.” According to the complaint, Intel has unlawfully maintained its monopoly by, among other things:

    * Forcing major customers such as Dell, Sony, Toshiba, Gateway, and Hitachi into Intel-exclusive deals in return for outright cash payments, discriminatory pricing or marketing subsidies conditioned on the exclusion of AMD;
    o According to industry reports, and as confirmed by the JFTC in Japan, Intel has paid Dell and Toshiba huge sums not to do business with AMD.
    o Intel paid Sony millions for exclusivity. AMD’s share of Sony’s business went from 23 percent in ‘02 to 8% in ‘03, to 0%, where it remains today.

    * Forcing other major customers such as NEC, Acer, and Fujitsu into partial exclusivity agreements by conditioning rebates, allowances and market development funds (MDF) on customers’ agreement to severely limit or forego entirely purchases from AMD;
    o Intel paid NEC several million dollars for caps on NEC’s purchases from AMD. Those caps assured Intel at least 90% of NEC’s business in Japan and imposed a worldwide cap on the amount of AMD business NEC could do.

    * Establishing a system of discriminatory and retroactive incentives triggered by purchases at such high levels as to have the intended effect of denying customers the freedom to purchase any significant volume of processors from AMD;
    o When AMD succeeded in getting on the HP retail roadmap for mobile computers, and its products sold well, Intel responded by withholding HP’s fourth quarter 2004 rebate check and refusing to waive HP’s failure to achieve its targeted rebate goal; it allowed HP to make up the shortfall in succeeding quarters by promising Intel at least 90% of HP’s mainstream retail business.

    * Threatening retaliation against customers for introducing AMD computer platforms, particularly in strategic market segments such as commercial desktop;
    o Then-Compaq CEO Michael Capellas said in 2000 that because of the volume of business given to AMD, Intel withheld delivery of critical server chips. Saying “he had a gun to his head,” he told AMD he had to stop buying.
    o According to Gateway executives, their company has paid a high price for even its limited AMD dealings. They claim that Intel has “beaten them into ‘guacamole’” in retaliation.

    * Establishing and enforcing quotas among key retailers such as Best Buy and Circuit City, effectively requiring them to stock overwhelmingly or exclusively, Intel computers, artificially limiting consumer choice;
    o AMD has been entirely shut out from Media Markt, Europe’s largest computer retailer, which accounts for 35 percent of Germany’s retail sales.
    o Office Depot declined to stock AMD-powered notebooks regardless of the amount of financial support AMD offered, citing the risk of retaliation.

    * Forcing PC makers and tech partners to boycott AMD product launches or promotions;
    o Then-Intel CEO Craig Barrett threatened Acer’s Chairman with “severe consequences” for supporting the AMD Athlon 64™ launch. This coincided with an unexplained delay by Intel in providing $15-20M in market development funds owed to Acer. Acer withdrew from the launch in September 2003.

    * Abusing its market power by forcing on the industry technical standards and products that have as their main purpose the handicapping of AMD in the marketplace.
    o Intel denied AMD access to the highest level of membership for the Advanced DRAM technology consortium to limit AMD’s participation in critical industry standard decisions that would affect its business.
    o Intel designed its compilers, which translate software programs into machine-readable language, to degrade a program’s performance if operated on a computer powered by an AMD microprocessor.

    To view the full text of the complaint, please visit http://www.amd.com/breakfree.

    Leading publications such as The Wall Street Journal, The Washington Post, The Economist, San Jose Mercury News and CNET have recognized AMD as a leader in microprocessor innovation. AMD has achieved technological leadership in critical aspects of the x86 market, particularly with its AMD Opteron™ microprocessor, the first microprocessor to take x86 computing from 32 to 64 bits, and with its dual-core processors. The company has also stated its commitment to help deliver basic computing and Internet connectivity to 50 percent of the world’s population by the year 2015.
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  2. #2
    Senior Member nihil's Avatar
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    Jul 2003
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    The only thing I find surprising is that it has taken so long? Intel have been at this sort of thing for ages.

  3. #3
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    Jun 2005
    I have no doubt in my mind that AMD will lose this battle. I don't feel that any of Intels actions have ever been to unethically create a monopoly. One of the major parts of Intels success has been based on its work ethic and view towards the industry, pushing new technologies forward and helping small companies get off the ground. I imagine Intel have plenty of proof to put against this claim.

    There is a fine line between good and bad business practice. One I do not think Intel has crossed without quickly making making sure it resets the misstake.

    I guess we shall see.

  4. #4
    Senior Member gore's Avatar
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    Oct 2002
    that's because you work for them

    I do agree though, I love Intel. They just seem to run at cooler temps. My Pentium 4 gets warm and so does my Celeron but my P3 does NOT, and my AMD Athlon... Wooooooo hottness.

  5. #5
    T̙͓̞̣̯ͦͭͅͅȂͧͭͧ̏̈͏̖̖Z̿ ͆̎̄
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    I've noticed that...most of the people with AMD Athlon's are always talking about how hot they run and how many fans they've installed to cool them down, and something about water to cool them down...anybody know why they run so hot?


  6. #6
    Jaded Network Admin nebulus200's Avatar
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    Jun 2002
    If I had to guess it probably has something to do with the power consumption is exponentially related to the frequency (the equation in my head from VLSI was something like P=nf^2), you consume more power, you have more heat. I tend to let my BIOS manage my frequency settings (optimal, where it slows down CPU slightly if it heats up too much) and don't have problems with heat....only really seen issues with it when people are trying to get an extra 10% out of the chip by overclocking and pushing it past its rating...(which is partly why it was rated at that speed)...
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  7. #7
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    Aug 2001
    AMD will win in Japan and Europe, and will loose in the US... isn't that how it always goes

  8. #8
    Senior Member nihil's Avatar
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    Jul 2003
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    Well, they have already won in Japan, and are likely to win in Europe because in both cases it is the authorities that are involved.

    I guess that it depends on whether the US authorities decide to get involved? They were certainly not very convincing in the way they dealt with Microsoft?

  9. #9
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    Oct 2001
    It could be timed with Apple's adoption of the Intel x86 platform for their future products. The complaint they filed of course doesn't mention it because they have no evidence of that, but from what AMD has shown in the complaint Intel has already done some very under-handed things to prevent them from competing.

    Really, it must suck to be AMD when you're forced to provide your product to OEMs for free, and when even HP can't accept the free product because they would risk losing more money from Intel denying HP secret rebates and pricing punishments than they could get from 1 million free processors. Intel really keeps the choke-chain on OEMs, Distributors, and Standards Organizations.

    Hopefully AMD can break into the market. Though I'll be upset if prices continue to increase (as always I want prices to go down). As it is right now, Intel forces AMD to price way under value to have any chance at competing due to "goals" allegedly set by Intel for an OEM to qualify for a retroactive discount. The examples in the document are pretty disturbing... Paragraphs 60 - 62, etc.

    Anyways, should be interesting to follow. Many people are watching the stock prices, and over the past couple of days before the filing Intel's stock declined a fair bit. (so did AMD's) Maybe someone got word of this in advance? Cheers.

  10. #10
    Senior Member RoadClosed's Avatar
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    Jun 2003
    Interesting article. It's a little one sided though since it's off AMD's site and their PR machine.
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