The FTC Sues Intel Over CPU & GPU Competitionby Ryan Smith on December 16, 2009 12:00 AM EST
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AMD and Intel have had their differences. And by differences, we mean Intel engaging in anti-competitive actions that they’ve been found guilty of in the European Union.
But all of this was supposed to come to a close last month, when AMD and Intel buried the hatchet and made up for past offenses. In return for some cash, some good behavior out of Intel, and for Intel to stop trying to block the Global Foundries deal, AMD would drop all of their civil and regulatory complaints against Intel. And that would be the end of Intel’s legal problems with various governments, right? No, as it turns out that’s wrong.
The catalyst for Intel’s legal woes (besides their own actions, obviously) has been AMD complaining to various regulatory boards about anti-competitive actions undertaken by Intel. Based on those complaints, the European Commission, the South Korean FTC, and the American FTC have been investigating Intel for some time now over these alleged actions. Intel has been found guilty and fined in the EU and South Korea (with both cases on appeal) while the American FTC has continued to investigate.
In fact despite the FTC just now suing Intel, this is actually about half-way through the process. The FTC investigation is done, and they have been negotiating with Intel in private for quite some time to get the matter settled. A lawsuit is the next step for the FTC, when those negotiations break down. Those negotiations have in fact broken down, so here we are: the FTC has sued Intel, and the biggest court battle ever for Intel is soon to begin.
What the FTC Accuses Intel of Doing in the CPU Market
As the FTC’s investigation into the matter is already over, they have published a complete list of complaints against Intel which will be the basis of the coming trial. Based on these complaints the FTC case is a significant departure from the EU and South Korean cases, as the FTC is accusing Intel over not only anti-AMD shenanigans early this decade, but of continuing anti-AMD and anti-NVIDIA shenanigans right up to this day.
The Athlon, the processor that's at the root of all of Intel's legal troubles
The case fundamentally breaks down into two halves: what Intel did against AMD in the CPU market, and what they’re continuing to do against AMD and NVIDIA in the GPU market. Let’s start with the CPU-focused complaints:
- The usual complaints we’ve seen from the EU. Intel rewarded OEMs to not use AMD’s processors through various means, such as volume discounts, withholding advertising & R&D money, and threatening OEMs with a low-priority during CPU shortages.
- Intel reworked their compiler to put AMD CPUs at a disadvantage. For a time Intel’s compiler would not enable SSE/SSE2 codepaths on non-Intel CPUs, our assumption is that this the specific complaint. To our knowledge this has been resolved for quite some time now.
- Intel paid/coerced software and hardware vendors to not support or to limit their support for AMD CPUs. This includes having vendors label their wares as Intel compatible, but not AMD compatible.
- False advertising. This includes hiding the compiler changes from developers, misrepresenting benchmark results (such as BAPCo Sysmark) that changed due to those compiler changes, and general misrepresentation of benchmarks as being “real world” when they are not.
Interestingly enough, the FTC cites Intel’s reasoning for all of this being that the company was at a competitive disadvantage, and engaged in these actions to buy time to improve their products. The timelines given place specific emphasis on the Athlon (K7) launch in 1999, and the Athlon 64 (K8) launch in 2003. This is a somewhat different take than in past cases, where Intel was merely accused of attempting to keep AMD’s overall market share down rather than specifically bridging performance gaps.
The FTC believes that the effects of all of these actions have (besides limiting AMD): served to drive up CPU prices, driven up CPU distribution costs, limited CPU innovation, harmed AMD’s ability to market CPUs, limited the ability of OEMs to innovate and differentiate their products, and reduced the quality of industry benchmarking.
Ultimately all of the CPU accusations are for things long past; none of the FTC’s CPU-related allegations are for things that have occurred in the last few years. We would not take this as a sign that the FTC is happy with the current market situation, but that they have no proof that they wish to follow up on that would show Intel as having engaged in anti-competitive actions in the CPU market in the last few years. The FTC does want some significant changes at Intel, which we’ll discuss in a bit.
Finally, there’s also the matter of AMD. Since AMD and Intel have settled their matters, AMD is presumably not going to participate in these proceedings as an ally of the FTC. As the FTC is going ahead on these charges, it’s clear that they aren’t worried about what this means for their position.
What the FTC Accuses Intel of Doing in the GPU Market
When we were first reading the FTC’s suit, the thing that caught us entirely off-guard was that it wasn’t merely about anti-competitive actions in the CPU market, but anti-competitive actions in the GPU market as well. While the CPU-related accusations are all for things done well in the past, the GPU accusations are fresh, very fresh. These run right up to today, and include the Larrabee project and the anti-competitive actions Intel has taken in the GPU market both outside and inside that project. To get right to the point, the FTC believes that as things currently stand, Intel is likely to get a monopoly on the GPU market similar to the one that they have on the CPU market, and that this monopoly will be created by abusing their CPU monopoly.
In the complaints about the GPU market, both NVIDIA and AMD are mentioned as being the primary competitors for Intel. The bulk of the complaints however are related to NVIDIA and their chipset business, as while AMD stands to be harmed too by an Intel GPU monopoly, it’s NVIDIA that stands to be the most harmed. In effect Intel has finally gotten AMD off their back for CPU matters, only to now have NVIDIA on their back for GPU matters.
The GeForce 9400M: Intel's chief competitor in the integrated graphics market and a threatened product line
Just to note where things stand, the FTC already estimates that Intel has approximately 50% of the GPU market. This is consistent with the vast number of Intel IGP-equipped computers that are on the market. Depending on how you intend to count various user bases, this stands to grow in the future as Intel puts their IGP GPUs first on-chip, and then on-die with their CPUs.
The basis of the FTC’s complaint here is that they believe Intel is threatened by the rise of GPUs as programmable computing devices, and that using them in GPGPU situations threatens Intel by making CPUs less important (something NVIDIA has been trying to play for ages) and as a result less profitable. The FTC argues that Intel is seeking to establish a monopoly here to maintain their overall control of (and high margins in) the computing market.
As for the specific complaints:
- Intel eliminated the future threat of NVIDIA’s chipset business by refusing to license the latest version of the DMI bus (the bus that connects the Northbridge to the Southbridge) and the QPI bus (the bus that connects Nehalem processors to the X58 Northbridge) to NVIDIA, which prevents them from offering a chipset for Nehalem-generation CPUs.
- Intel “created several interoperability problems” with discrete CPUs, specifically to attack GPGPU functionality. We’re actually not sure what this means, it may be a complaint based on the fact that Lynnfield only offers single PCIe x16 connection coming from the CPU, which wouldn’t be enough to fully feed 2 high-end GPUs.
- Intel has attempted to harm GPGPU functionality by developing Larrabee. This includes lying about the state of Larrabee hardware and software, and making disparaging remarks about non-Intel development tools.
- In bundling CPUs with IGP chipsets, Intel is selling them at below-cost to drive out competition (given Intel’s margins, we find this one questionable. Below-cost would have to be extremely cheap).
- Intel priced Atom CPUs higher if they were not used with an Intel IGP chipset.
- All of this has enhanced Intel’s CPU monopoly.
The FTC believes that all of this will help Intel to establish a GPU monopoly. This is on top of all other effects of Intel’s actions, which are similar to the effects of their actions in the CPU market: driving up GPU prices, driving up GPU distribution costs, limited OEM differentiation, and limited GPU innovation.
There’s also one last complaint unrelated to GPUs, which has to do with standards.
- Intel used their market position to delay AMD and NVIDIA’s implementations of USB and HDCP by refusing to make the specifications accessible until Intel’s products were ready. We know that there has been some strife among Intel and virtually everyone else over Intel dragging its heels on the USB3 specification, but it’s not clear if this complaint is about that.
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Alouette Radeon - Wednesday, March 10, 2010 - linkHow could anyone still support Intel? You realize that their anti-competitive practices haven't just hurt AMD and nVidia, they've hurt US, the consumers! Intel has shown that they don't give a damn about the industry, they just want dominance. They don't care about the technology, they just want money. nVidia is dishonest, sure, that's why I'll only be buying ATi for a good long while. However, Intel is so corrupt that I'd choose a VIA nano before I'd take an Intel CPU. Does it hurt me to do so? I don't think so. I have a brilliant gaming rig based on the Phenom II X4 940, the AMD 790FX northbridge and the ATi Radeon HD 4870! Considering the savings I realized over purchasing an Intel/nVidia combo I'd say that instead of hindering me, my choice of platform actually was to my benefit! Intel can go pound salt.
chizow - Monday, December 21, 2009 - linkGreat write-up Ryan, very thorough yet easy to digest and well worth the read, however, you missed two extremely important points from the FTC's complaint, discussed in this NY Times article:
While these are certainly long-shots that may extend beyond the scope of realistically enforceable actions, they do address some of the more popular "what-ifs" regarding Intel's stranglehold on x86 and their ability to stifle competition by voiding existing x86 licenses if their licensees are acquired by another company.
Aim64C - Monday, December 21, 2009 - linkWell, this certainly has some implications for the integrated graphics. I know many gamer-types scoff at the integrated graphics solutions, but when you go to schools, libraries, many corporate workstations, and military computers (all of which are ordered by the hundreds, thousands, and tens of thousands) - you see integrated graphics solutions. The overwhelming majority are Dell computers running an Intel processor with integrated graphics. Can't tell you how many Dells there are with Top-Secret classification stickers on them (don't need anything too heavy duty to handle message traffic) - but there are quite a few.
Of course, what I'm far more concerned about is the implications this will have for the whole market. The computer industry has enjoyed a rather free and unregulated environment. Because of that, we have seen unprecedented growth and continual price-drops relative to GDP that have not been seen in any other industry since the industrial revolution.
The rulings made in this case can end up shaping into computer market regulations for the whole of the computer industry. This would mean that certain practices that have given us low-cost computer-electronics will go by the wayside.
Take, for instance, volume-discounts. If I am only going to build OEM PCs with Intel CPUs (or AMD CPUs, whichever), I can anticipate the relative demand along one dimension - cost. Higher-cost components are going to be in lower demand than the middle-road and cheaper components aimed at the average internet browsing consumer who might get a wild hair up their anus and start playing WoW. Thus, I can anticipate demand for the whole season and order in huge quantity with bulk savings (which is a common industry practice - I could get into why this is done from the manufacturer's perspective, but you can google that if you really don't know and care to know).
Now, if I am forced to vary my market and cannot choose to support only a single CPU by market restrictions - I now have two dimensions to the demands I will experience. Not only will I be seeing changes in the relative spending trends (high dollar components being less/more popular with consumers) but also changes between brands. I could still purchase from both companies for the whole season, but I run the risk of misinterpreting the market, and having to order more AMD or Intel while having surplus of the other brand. This means I'm going to go from seasonal purchases to quarterly or even monthly purchases from the manufacturer. This will drive costs up at least 10-20% for the OEM builder, while the suicide rate of upper-managers at Intel and AMD would go up exponentially due to the logistical nightmare all of this would create.
While Intel has been behaving in a manner not becoming of a respectable business as of late - I have even less respect for government-run agencies/committees that tend to be used to bring businesses under state ownership. Their suit against Intel can be used to a much broader effect later on if they win, and will use it to bring over-regulation into the computer industry, which will have the same effect it's had on every other industry that has become so tied up in government regulations that it has more bureaucrats than actual floor workers.
Donkey2008 - Saturday, December 19, 2009 - linkConcerning Intel IGP, I disagree with all of the overly opinionated tech users on this board. Claiming Intel graphics are "abysimal" is a ridiculous comment and made by someone who apparantly has no experience rolling out hundreds of desktops in a corporate setting. They are perfectly stable (let me correct that - entirely MORE stable than ANY aftermarket card). If you need better 3D performance, buy an after market card. If you need multi-monitor support, buy an aftermarket card. It's pretty simply math.
"OMGZ!! I can't play Fallout 3 with my G31 graphics!"
No shit. Get a clue or possibly a new job, because you obviously don't have the common sense to work in IT.
Aries1470 - Saturday, December 19, 2009 - linkWow, at last. Someone with some sense. IGP are PERFECT for WORK COMPUTERS. Examples are: Call centres, Banks & Financial instutions and other areas. Excluding some small pockets in those industries that need stronger graphics. People should NOT be playing games on their work computers when they need to be productive. That is why at some companies there are special areas to play during their breaks/ smoko's (people might know them as tea or coffee breaks).
IGP are Great, for industry computers, not CONSUMERS, unless they are used mostly for web browsing etc or (HD)DVD / BD playback.
And I would like to correct some people. IT IS NOT A DUOPOLY, even if it seems like it is. There is VIA for CPU & Chipsets with S3 for Graphics & SiS for Chipsets & Graphics. Granted they are not that great, except for very low power consumption or great image quality, with low power and not really for Gaming, SiS are still on DX9, but S3 are with DX10.1 and with BD playback and some other things...
MengNa - Sunday, December 20, 2009 - linkA duopoly doesn't mean there are no other competitors on the market, it mean that the competitors market share is relatively insignificant.
Intel vs AMD and Nvidia vs ATI are textbook duopolies.
Wirmish - Thursday, December 17, 2009 - link"For Intel to do a few different things about the versions of their compiler that put AMD at a disadvantage (which the FTC is calling the Defective Compiler): offer a substitute compiler to customers for free that is not a Defective Compiler, or to compensate customers in switching to another compiler, to provide notice to software buyers of products compiled using the Defective Compiler that they may need to replace their software."
Like this ? -> http://arstechnica.com/hardware/reviews/2008/07/at...">http://arstechnica.com/hardware/reviews/2008/07/at...
Scali - Friday, December 18, 2009 - linkSadly it's not always that simple.
I've written optimized MMX routines for Pentium MMX that turned out to run like a dog on Pentium II or Athlon (which I couldn't have known at the time I wrote them, because those CPUs weren't on the market yet).
When CPUs are significantly different in architecture, then just checking for a certain featureset isn't going to guarantee the best performance. There could be severe performance penalties for certain code constructs. I think people just don't really understand that. They think x86 is x86, SSE is SSE, and all that. It doesn't always work that way (even with different CPUs from the same vendor, like Pentium vs PII, or Pentium 4 vs Core2).
You just can't win em all.
However, using multiple code paths in a benchmark... that's a bit dubious imho. That is, selecting one of various code paths. I think the proper way would be to run ALL codepaths on ALL CPUs. That way you avoid the problem that not all CPUs run the most optimal codepath for them.
mountain2k - Friday, December 18, 2009 - linkAlthough I agree with hanging intel out to dry for anti-competitive behaviour, I don't agree with the way they try to do it. When it comes to the rebates, prioritising clients, ok. It might be a thin line, but Intel is the big dog, so they need to be more careful. There weren't though luck for them, make them pay.
When it comes down to their compilers, I was not aware that intel had any significant market-share that would allow it to therewith stifle competition.
When it comes to licensing of patents... that's a whole other ballgame. You can't set the rules for intel to be any different just because they are top dog. To give make it bluntly obvious, why not force NV to free their patents so that intel could include a proper GPU? It is just as crazy as the other way around! What would be wiser, is to re-evaluate the patent-laws altogether. Patents that haven't been used for more than 5 years after applying... patent becomes open source. Patent older then 10 years... open source. That would drive competition, knowing that they couldn't hide behind patents for years. Imagine of all patents regarding CPU and GPU would be open source that were 10 years or older...
Yes, intel needs to get punished, but don't throw out the baby with the bathwater.
Scali - Friday, December 18, 2009 - linkWe must not forget why the patent system was invented in the first place. It is to protect the inventor so that he can exploit his invention.
In that sense it's good. Without patents, I think the industry would become self-destructive... One company invests millions into a new invention, another company just clones it and runs away with the profit, leaving the first company to go bankrupt.
At some point, nobody will invent anything anymore, because they cannot protect their investment. In software, open source is mainly doing the same... They provide clones for existing applications, but you rarely see something new or groundbreaking, it's just 'commoditizing'. Companies who invest in new developments (eg Apple's UI or Microsoft's Surface), will do that in a closed way, to protect their investment.
I think they now run into the problem that patents can make a company huge and dominate the entire market. I think it's about 20 years too late now. Intel won the war back when AMD wanted to build 386 clones, and Intel could delay them for years, until they were finally forced to open up x86 and the related patents for licensing.
During that time, Intel had already cornered the market, and gotten such a headstart on AMD that it's virtually impossible for AMD to ever get back in the race.
So now they go after Intel and try to use the anti-trust laws to throw the book at them. Thing is that those anti-trust laws are pretty arbitrary.
Steve Ballmer said the same thing... They battled it out in court for years because they wanted to have clear rules of what they can and cannot do. So now they made their own 'case law'.
I think Intel should do the same thing. Just battle it out in court for years, and in the process, you basically paint the FTC into a corner.
Let this anti-trust madness end. Define some proper rules. Sure, Microsoft and Intel may have broken the rules... but even if they don't, it won't change the situation. They're too big to compete with.