Trade Commission Rules Intel Used Unfair and Deceptive Practices

ABC News' Jack Cloherty reports: The computer chip has powered the digital revolution, and Intel has been the dominant chip maker.  But today, the Federal Trade Commission said Intel’s market dominance was achieved in part by the use of “unfair, deceptive and anticompetitive” practices.
 
“Intel had stepped well over the line,” FTC Chairman Jon Leibowitz said.  “We believe that Intel told buyers that it wouldn’t sell chips to them unless they agreed to limit…or entirely stop buying chips from Intel competitors.  In fact, sometimes Intel paid off its customers so they wouldn’t buy competing chips.” Intel has now agreed to a settlement with the government. The company  promised it would discontinue anti-competitive practices, and agreed to establish a $10 million fund to help make damaged competitors whole. The FTC said Intel’s anticompetitive practices went back at least 10 years.  One “disturbing” Intel tactic that the FTC slapped down today is called “predatory design.” Intel actually configured its chip to  make competitors software run more slowly. For example, if you loaded a graphics program compiled by Intel onto a computer that was run by an AMD processor, the Intel program would intentionally slow down the AMD processer. The FTC says that Intel would then tell manufacturers and designers the poor performance was AMD’s fault.   As a result, computer manufacturers didn’t purchase AMD’s chip as often as they might have, and consumers did not have access to a potentially superior product. “This type of deceptive conduct is, of course, harmful to competition and to consumers,” Leibowitz said. The FTC does not have the power to fine companies, unless they violate the terms of the settlement. The FTC said it will be watching Intel closely to make sure it stops these anti-competitive practices.