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Tech Check
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So now we know.
Now we know the lengths to which a foreign entity will step in to curtail or even block American ingenuity under the guise of "protecting" consumers. More like "protectionism" if you ask me.
This morning we got word from the European Union that commissioners are fining Intel $1.44 billion for predatory, anti-competitive, monopolistic behavior that injured millions of European consumers. The blistering ruling found that Intel "deliberately (acted) to keep competitors out of the market for computer chips for many years. Such a serious and sustained violation of the EU's antitrust rules cannot be tolerated."
Oh really?
Not one of those millions of harmed consumers brought an action against Intel [INTC
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]. The only entity that was a party to this complaint was Advanced Micro Devices, which complained that Intel paid kickbacks to PC makers not to use AMD chips, and kickbacks to retailers not to stock PCs running on AMD chips, both charges that Intel has categorically denied. This all smells like those frivolous class action suits in this country where attorneys find a single victim and then move forward with a massive suit on behalf of everyone, injured or not, so they can pocket their fees when it's all done. AMD doesn't get a penny of the EU fines. It all goes to the commission. What AMD does get is to crow about Intel's punishment, the way a little brother might say "Ha, ha, ha" when an older sibling gets busted for doing something wrong.
A few things to consider as these headlines begin to wash over investors: Intel isn't crushing consumers under the weight of unrealistically inflated chip prices. Moore's Law, by its very definition, keeps the consumer front and center: A chip's processing power doubles every 18 month while its cost is cut in half. Not the other way around. It's hard to make the argument that consumers have been hurt by Intel's behavior when the laptops they're buying from Dell, Hewlett-Packard, Toshiba, and everyone else cost half as much today as they did a few years ago.
Intel is competing in the market place. Going back to Bob Noyce, Gordon Moore, Andy Grove, Craig Barrett, and now Paul Otellini. Spend any time with any of these guys, as I have done over the past 20 years, and you'll hear reasoned, reasonable, but incredibly tough, hard-charging competitors trying to win. And winning means beating your competitors.
AMD has always suffered from an economic and financial inferiority complex, bumbling its way through the industry; trying to do in the courts what it couldn't accomplish on store shelves. Still, that's not to say that Intel hasn't run afoul of antitrust laws before, or that it hasn't pushed the boundaries, or that it hasn't crossed the line here and there. I believe those situations happened occasionally, but not as a matter of corporate policy.
And unlike Microsoft, which bullies its way through the market, and has been found to engage in predatory behavior repeatedly around the globe (ask Netscape, Novell, IBM, Sun Microsystems and most US states for clearer examples and paid out billions for its antitrust discretions), Intel seems to be working around blurry rules, rather than breaking them.
I've read quite a bit about the EU case against Intel; I've seen the nebulous charges; I've watched, some weeks and months closer than others, as this case continued through European courts these last 8-plus years. And for the life of me, I can't see a single specific law that Intel violated. When you speed, you know it. If you roll a stop sign, you know it. Kidnapping. Murder. There are laws, and when you break 'em, you know it. Black and white. In the case of the EU and Intel, it's been a massive spectrum of gray, and you can't fault a company for competing hard instead of hardly competing. Like AMD.
Make no mistake: AMD will blow smoke that this is a huge win for consumers, and an even bigger win for overall competition. I don't think the EU ruling has anything to do with either. This is a shot across the bow of American ingenuity, and a stark example of what happens when politics runs amok in the market place. The EU can step in, use AMD as its lacky as it really tries to protect chip companies in its own member nations, and reel in Intel along the way.
Intel has competed, and has played by the rules offered. If the rules are too confusing, or Intel found a way around them that AMD couldn't, or other competitors didn't, that's not Intel's fault. If you don't like the way it has competed, then make laws to tighten control. Attacking Intel, making up laws as you go along, changing the rules of the game while the game is still being played and slapping Intel for breaking them is a Quixotic exercise that will not save AMD from itself.
I'm not sure what's more embarrassing: The EU's ruling today, or AMD's claims of victory. Intel hasn't stifled anything. Quite the contrary, it is driving innovation. It spends more on research and development than any other company on the planet. And consumers have been the prime beneficiary. Intel will appeal, but don't expect miracles. At least the EU gave this the impression of something other than a kangaroo court by giving Intel its due and spending the last 8 or so years hearing this case.
In the meantime, the EU banks a cool billion because Intel broke some laws no one can really point to. The only law that should matter is Moore's Law, and as long as Intel sticks to that innovation wins, industry wins, and consumers will continue to win.
Questions? Comments?
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