Intel in the Anti-Trust Crosshairs, but Why?

Intel's headquarters in Santa Clara, California.
Paul Sakuma
Intel's headquarters in Santa Clara, California.

New York Attorney General Andrew Cuomo filed some salacious charges this morning, accusing Intel of using "illegal threats and collusion" to control the microprocessor market.

In the filing, Cuomo says the anti-competitive behavior and monopolistic strategy stretched all the way to the top of Intel's executive team.

While the charges are nothing new (see AMD vs. Intel for the last 30 years or so), the timing of today's filing is curious. I certainly will not act as an apologist for Intel, and the company's statement to me moments ago speaks volumes: "We disagree with the New York Attorney General. The market works, prices are going down and consumers are benefiting."

The company plans to defend itself.

That's all boilerplate.

But here's some background worth considering. Why are these charges being made today? Could it have something to do with the upcoming AMD vs. Intel anti-trust suit that comes to trial in Delaware in March? Isn't it strange that Cuomo filed his suit, not in New York State court, but — you guessed it — in Delaware? An Intel source says it sure sounds to him as if the NY AG is "piling on" when it comes to anti-trust charges and Intel. And if there's a settlement to be made, which could cost hundreds of millions of dollars, why not try to hitch your wagon to the Intel settlement gravy train? Did the European Union's $1.45 billion fine against Intel have anything to do with emboldening Cuomo?

Isn't it strange that this is the second major action filed by Cuomo in the last four days against a California corporate powerhouse? He filed collusion and kickback charges against Amgen last Friday in a case that generated enormous headlines. I don't know but something smells a little funny here. Is Cuomo making a run for NY governor on the backs of companies 3,000 miles away? Seems very odd to me.

I have said this before, and it bears repeating here: The EU complaint (which Intel is appealing and an independent investigator in Europe has called into question) echoes the charges in the NY filing today: That Intel tried to prevent the sale of competing microprocessors by paying billions in kickbacks to the likes of Hewlett-Packard , Dell , Lenovo and other major PC makers; and that Intel even retaliated against PC companies that did business with competitors.

That all sounds juicy to be sure, but last I checked, Intel-based machines still share shelf space with machines running AMD chips; that prices continue to plunge (see the HP computer available beginning today at Wal-Mart for $298); and innovation continues to increase (Moore's Law of a chip speed and power doubling every 18 months while prices fall by half is alive and well, which Intel CFO Stacy Smith reiterated to me on the air as recently as Friday.)

The proof is in the marketplace.

If prices remained stable, and Microsoft was unable to release Windows 7 because Intel's chip innovation was unable to keep up then sure, the charges may have some merit. I have followed, exceptionally closely, the charges and counter-charges in the Intel vs. AMD saga, or Intel vs. The World, depending on your perspective. The timing of all this is suspect. If Cuomo wanted to make a statement on behalf of the good people of New York, his case would have been filed months, even years ago.

A filing today, now, seems more about politics and revenue generation for a state that could certainly use some settlement scratch, and less about consumer protection.

Questions? Comments?