Intel Hit With Antitrust Suit In NY - InformationWeek

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Infrastructure // PC & Servers

Intel Hit With Antitrust Suit In NY

The New York attorney general claims the chipmaker used bribery and coercion to prevent computer makers from using rival products.

The suit says Intel paid HP hundreds of millions of dollars in return for HP's agreement to cap sales of AMD-based products at 5% of its business desktop PCs. And, when HP considered promoting products from AMD, Intel threatened to derail development of a server technology on which HP's future business depended.

To prevent IBM from launching an AMD-based server, Intel allegedly paid the manufacturer $130 million. The chipmaker also threatened to pull funding for joint projects that benefited IBM, if the company marketed AMD-based servers.

The lawsuit is the result of an investigation launched by Cuomo in January 2008. During the probe, Cuomo's office reviewed millions of pages of documents and e-mails and took depositions from several dozen witnesses.

Among the e-mails pointing to Intel's allegedly illegal activities was a January 2005 message from an IBM executive who wrote, "I understand the point about the accounts wanting a full AMD portfolio. The question is, can we afford to accept the wrath of Intel...?"

In June 2004, an internal e-mail from an HP executive discussed possible retaliation from Intel for launching an AMD-based product. "Intel has told us that HP's announcement on Opteron (AMD's server chip) has cost them several billion dollars and they plan to 'punish' HP for doing this."

In a September 2004 e-mail, an HP executive warned of the consequences of marketing products from an Intel competitor. "If you do and we get caught (and we will) the Intel moneys each month is gone (they would terminate the deal). The risk is too high. Without the money we do not make it financially."

In a February 2004 internal Dell e-mail, an executive warned of the repercussions of ending the company's exclusive relationship with Intel. The e-mail said then-president Paul Otellini and then-chief executive Craig Barrett were "prepared for jihad if Dell joins the AMD exodus."

Internal Intel e-mails indicated that the company was aware of its anti-competitive practices and tried to hide them, according to the suit. In April 2006, one executive wrote, "Let’s talk more on the phone as it's so difficult for me to write or explain without considering anti-trust issue."

In September 2006, an internal e-mail from an Intel negotiator asked that references to "market share" be switched to "volume targets," in order to avoid revealing the company antitrust violations, according to the lawsuit.

"Our counsel is very picky on that stuff and I don’t want to infer we had conversations about anything other than volume targets or relative volume targets," the e-mail said.

The suit asks the federal court to bar Intel from further anti-competitive acts. In addition, it seeks to restore lost competition and recover monetary damages suffered by New York governmental entities and consumers and to collect penalties.

InformationWeek Analytics has published a guide to the Open Government Directive and what it means for federal CIOs. Download the report here (registration required).

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