EC to Intel: How About Some Chips With That Guacamole?
by John Paczkowski
Posted on May 11, 2009 at 4:40 AM PT
“After Gateway’s 2004 merger with eMachines, AMD attempted to revive the relationship it had enjoyed with Gateway until 2001, but experienced extremely limited success. While Gateway built one AMD-powered desktop model at the request of Circuit City, AMD remains locked out entirely of Gateway’s direct internet sales, its commercial offerings and its server line. According to Gateway executives, their Company has paid a high price for even its limited AMD dealings. They claim that Intel has beaten them into ‘guacamole’ in retaliation.”
Gateway officials once claimed that Intel “beat them into guacamole” in retaliation for doing business with rival AMD. Five years later, the European Commission is poised to give Intel a similar beating for doing so.
The EC has finally completed its review of Intel’s practice of paying computer makers to delay or cancel the release of machines outfitted with AMD (AMD) chips and, suffice to say, the commission has not concluded that it is “lawful, pro-competitive, and beneficial to consumers,” as the chipmaker claims. In fact, the EC has determined that Intel’s methods are exactly the opposite. And on Wednesday, it is expected to penalize Intel (INTC) by slapping it with what may be the highest antitrust fines in Europe’s history–as much as 10 percent of the company’s annual world-wide revenue. With Intel’s 2008 revenue topping out at $37.6 billion, penalties could conceivably reach $4 billion, far in excess of the $1.51 billion in combined fines that have been levied against Microsoft (MSFT).
Comments
I’m almost tempted to feel sorry for Intel. When governments run short of cash, we now have an infinity of laws that can be used to bring in the revenue.
On the other hand there is something JUST WRONG about the fact that Intel controls so much of our computing infrastructure. With operating systems (at least the ones not vended by Microsoft) able to mask the differences between all manner of hardware (Linux runs on a dozen different platforms from the smallest embedded device to the largest mainframe, and the Apple OS, at least until recently had the potential to do the same). But whenever software gets to the point where the microprocessor is on the verge of becoming a commodity item, Intel is off making no-audit-trail deal that gets everyone locked in again.
Europe will no-doubt waste the money they extort from Intel, but they may get this country’s technology back on a multi-vendor track that will withstand the eventual emergence of non-American competitors that will use Open Source solutions and true commodity hardware to do to Silicon Valley what they have already done to Detroit.
Posted by Mac Beach at May 11th, 2009 at 1:39 pm