Intel: Antitrust Troubles Ahead?

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How Intel holds onto its dominant market share is at the core of AMD's complaints to regulators. Intel held 77.3% of worldwide PC microprocessor shipments in the first quarter, compared with 22.3% for AMD, according to market researcher International Data Corp. AMD contends it doesn't hold a larger piece of the market because of subsidies Intel pays to computer makers to reimburse them for advertising costs, and because of threats to stop the payments if vendors don't buy enough from Intel. Mike Silverman, a spokesman for AMD, said in an e-mail that the company is "encouraged that the FTC is conducting a serious investigation," and called on it and the Justice Dept. to "investigate thoroughly" its claims.

Andrew Cuomo on the Case

AMD's complaints have led to legal troubles for Intel in a number of jurisdictions. A civil suit filed by AMD against Intel in U.S. District Court in Delaware in 2005 is slated for trial next March. New York State Attorney General Andrew Cuomo's office has an ongoing investigation into whether Intel stifled competition and hurt consumers by illegally coercing PC makers to use its chips. Intel has also faced antitrust inquiries in Japan and South Korea.

Intel may not be the only tech company in the crosshairs of U.S. antitrust regulators. In mid-2008 remarks before she was nominated for the Administration's top antitrust job, Varney said Google's growing power in Internet computing could be the next frontier in tech industry antitrust regulation. Varney lobbied the Clinton Administration to open its landmark antitrust case against Microsoft (MSFT) as a lawyer for Netscape.

Google (GOOG) is already drawing scrutiny from U.S. regulators. The company dropped an advertising deal with Yahoo (YHOO) last year amid opposition from the Justice Dept. which is also examining Google's efforts to digitally scan millions of books. Meanwhile, the FTC is investigating the effects of overlapping board members between Google and Apple (AAPL).

Google on Justice's Radar

In her remarks last year, Varney called Microsoft—long the Justice Dept.'s No. 1 enemy—a "last century" case, and drew parallels between Microsoft's dominance of PC operating systems and Google's growing influence over the technology for computing conducted over the Internet. Google spokesman Adam Kovacevich said in an e-mail that Varney's early efforts are "a positive step. It's clear that the U.S. economy needs strong antitrust enforcement," he said.

Remarks like that show Google isn't making the same mistakes Microsoft did when it took a more belligerent stance toward regulators in the 1990s. But for it and Intel, the thorniest legal problems may yet lie ahead.

Ricadela is a writer for BusinessWeek in Silicon Valley. With Theo Francis in Washington, D.C. and Andy Reinhardt in London

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