Suit: Intel paid Dell up to $1 billion a year not to use AMD chips
Potentially devastating antitrust accusations against Intel (INTC) were buried inside a recently filed shareholder suit against Dell Inc. (DELL). Though the Wall Street Journal did write about the suit here, the allegations do not seem to have attracted much attention. Maybe the suit got overlooked because it was filed the same day Dell CEO Kevin Rollins quit, and founder/chairman Michael Dell retook the company's reins. Or maybe people are just understandably skeptical of naked accusations contained in shareholder suits brought by class-action impresario Bill Lerach. (See earlier feature or post on Lerach.)

Still, the charges Lerach leveled in federal court in Austin on January 31 are hard to ignore. For one thing, they are tantalizingly detailed--describing, for instance, the goings on at "weekly server group staff meetings" and "quarterly server group town hall meetings" at Dell--suggesting that a Dell insider might be cooperating with Lerach. In any case, if the claims turn out to be true, the Olympian reputations of Intel founder Andy Grove and Dell founder Dell could be due for some unflattering makeovers--like those endured by sluggers Mark McGwire and Barry Bonds after the BALCO steroid inquiry.

Lerach's suit alleges, among other things, that from at least 2003 to 2006 Dell received massive, undisclosed, end-of-quarter rebate payments from Intel in exchange for Dell's agreement not to ship any computers using microprocessors made by Advanced Micro Devices (AMD). The payments were allegedly never less than $100 million per quarter and, in at least one year, totaled about $1 billion. (During this period Dell represented about 20% of the worldwide market for the x86 processors both Intel and AMD made.) Intel forbade Dell from disclosing the payments, the complaint says, so as not to draw scrutiny from antitrust regulators. The payments were allegedly known to only about 15 top Dell officers, and were negotiated with personal involvement by Grove, Michael Dell, and Rollins. Since 1999, according to the complaint, Dell Computer would secretly design AMD-powered computers every year, but it would never ship them "due to the large sums of money the Company would lose from Intel for breaching the exclusive Dell/Intel processor relationship." These payments were allegedly in addition to, and nearly an order of magnitude larger than, the "market development funds" that Intel was known to be paying Dell and other customers under co-branding programs like "Intel Inside." Lerach's suit, which is brought on behalf of several institutional Dell shareholders, alleges only securities law violations, not antitrust claims, and names Intel and PriceWaterhouseCoopers (Dell's accountants) as co-defendants.

A Dell spokesperson declined comment on the suit. In a telephone interview, Intel spokesman Chuck Mulloy was extremely dismissive of it. "Our preliminary review suggests that much of it is largely made up," he says. "We plan to move very quickly to defend ourselves." He also stresses that neither the SEC nor Justice Department investigators have ever approached Intel in connection with their on-going probe of accounting issues at Dell, which started, according to Dell's disclosures, in August 2005. That SEC probe is thought to focus on possible earnings manipulation relating to the way Dell accounted for warranty revenue and expenses.

Still, Lerach's allegations have a ring of plausibility about them, in that nearly everyone in the industry has wondered why it took Dell until late 2006 to begin offering AMD-powered computers, when AMD's microprocessors were widely seen as having attained technological superiority over Intel's by early 2003. The complaint's accusations also raise eyebrows because they dovetail so explosively with allegations AMD made in a mammoth antitrust suit it filed against Intel in Delaware federal court in June 2005. (See "Intel's Worst Nightmare," here, about that case.) (About 80 antitrust class actions have subsequently been filed against Intel on behalf of consumers seeking treble damages from Intel for allegedly having paid inflated computer prices.)

The centerpiece of AMD's suit was the claim that Intel was paying so-called loyalty rebates to numerous major computer makers in exchange for varying degrees of exclusivity--80%, 90%, and, in some cases, 100%. In March 2005 the Japan Fair Trade Commission had found that Intel was, indeed, paying such rebates to five major Japanese computer makers (presumably Sony, Toshiba, NEC, Hitachi, and Fujitsu, though the companies are unnamed in the public version of the JFTC order) and that the rebates violated Japanese competition law. (Intel settled the JFTC matter shortly thereafter without admitting wrongdoing.) In its suit AMD alleges that Intel has been paying manufacturers so-called first-dollar rebates, meaning that at the end of the quarter, if the customer has achieved the level of exclusivity Intel seeks, it will get a retroactive discount on every Intel processor it purchased that quarter; if, on the other hand, it falls short, it gets nothing. Unlike conventional volume discounts--from which consumers can only benefit--many competition authorities believe loyalty rebates can become illegally coercive and exclusionary when offered by a dominant industry supplier. (Intel supplies about 80% of the worldwide market for x86 processors.)

Intel has so far insisted--notwithstanding the JFTC ruling--that it does not use such rebates. "We don't buy exclusivity," Intel general counsel Bruce Sewell told Fortune last fall, staking out the position his company still stands by. "We offer a discount program," he said then, "which is stepped at basically 20%, 40%, 60%, 80%. So if you buy below 20%, you get no discount. If you buy 20% to 40%, you get a discount, but it applies only to the units between 20% to 40%. . . . You don't have this dramatic incentive, where you get nothing below 90%, and everything above 90%. In our view, this is a very traditional discount that scales with volume."

CORRECTION: Earlier version incorrectly referred to Bobby Bonds, when I meant his son, Barry. Thanks to "Bob in St. Louis" for noticing.
Posted by Roger Parloff 6:40 AM 66 Comments comment | Add a Comment

I thought these things only happen in developing and third-world countries where government and business leaders are reputedly corrupt. Right here in the US of A? Shame.
Posted By M. Lim, Metuchen, NJ : 8:07 AM  

Its amazing that Intel can claim to have done no wrong. Its common knowledge that retail shelf space had been severely rationed to AMD. Now we know just one of the reasons why this came about.
Posted By Simon Hutcheson, Qu�bec, Qc. : 9:25 AM  

This post has been removed by a blog administrator.
Posted By Anonymous : 9:32 AM  

"this is a very traditional discount that scales with volume". WRONG. Giving discounts based on bulk orders is NOT the same as discounts based on the percentage of the customers business which Intel is "allowed" to control.
Posted By Jim Kovaric, Austin Texas : 9:39 AM  

If Intel is allowed to control 80% of their customers business than who really owns those companies. Is this just another way to monopolize a business without having to claim those customers as subsidiary companies.
Posted By Jim Kovaric, Austin TX : 9:47 AM  

I always new Intel was untrustworthy.
Posted By Kevin, Atlanta, GA : 9:47 AM  

love AMD backers...lol! I am wonder how much AMD CEO "Crook Hector" paid this guy money? it is an act of desperation by AMD! AMD only hope is talking about a crappy law suit. But AMD has bigger problems: close to 4 billions in debt, loosing money hands over fists for the forseable future, bad decision to buy a loosing money ATI, integration problem...lost the technology advantage (please stop the Barcelona hipp...native core BS...) most of all price war with INTC! AMD recently cut it prices aagin in order to sell its inferior chips! Gross margin will soon be in the teens! amd CAN NOT FIGHT A WAR THAT IT IS LOOSING! lost Q INTC made 1.7 billions and AMD lost over 500 millions! AMD has to issue more convertibles in order to service their debt or risking going in Bankrupcy! how the hell they are going to srvice 4 billions in debt while their cash flow is negative and loosing money on a quarterly basis well into 2008? AMD investors have a more serious problems to worry about than an unfound lawsuit!
Posted By Will, Atlanta, GA : 10:12 AM  

Shame on those who convict from simple allegations. Let's look at what's in it for those making the allegations. Let's look at evidence. It's shows how simple-minded we can be to just believe accusations before the proof. Some will say where there is smoke. there is fire. But others will contend, if you want a piece of the corporate pie, then go after those with deep, deep pockets.
Posted By John, Salt Lake City, UT : 10:16 AM  

Oh come on Roger, you are blowing AMD's horn.

Any reason why a company like Intel should do what you suggest? They employ enough lawyers to know what to do and what not.

Intel has a co-op program for advertising and also has promotion programs and they also give rebates based on volume. The more you buy, the better the rebates. THIS IS INDUSTRY STANDARD.

What AMD is doing is that they use court cases and complains as a pure marketing tool ("justice marketing"). It does not matter what the outcome of those legal disputes in a couple of years will be. What really counts is the world wide media attention and all the public agitation and comments. Your article is an excellent example that this justice marketing strategy works perfectly well. Your article is strongly pro AMD, contra Intel and also for free. No penny paid for this.

AMD does not have marketing programs that are worth their name. They simply save that money. Intel prepares new markets and spends tons of money doing this, AMD simply follows at no cost.

AMD does not really have product or marketing news that would put them in every single paper, worldwide, national, regional, local. But a legal "underdog" case, that does get them published in every single printed or online publication who's readers may touch a PC keyboard.

So you better should keep your prejudiced opinion at bay and do some research on business practices of the IT industry.
Posted By Fred EM, Munich, Germany : 10:28 AM  

Intel does not do volumne discounting. They favor the smaller manufactures by not requireing orders that placing them in the same league as say, Dell. A smaller computer manufacturer cannot possibly buy the volumne of the larger companies to qualify for that type of rebate. So Intel provides a scaled discount based on the manufacturers output. Very simple and good for the small guy to be able to qualify for the same discounts as the 900lb gorilla.
Posted By Mike in San Diego : 11:18 AM  

Roger, how much did AMD pay you to write this article! Couldnt of been much since they dont have much. Intel will come back strong and Im sure your vested intrest in buying stock would be intel and not AMD for the long term. Its OK to admit it.
Posted By Joe, Ny, Ny : 11:18 AM  

barry bonds not bobby. bobby was his father that was a great non-cheating baseball player
Posted By bob st. louis : 11:24 AM  

The bottom line is AMD has gained market share over Intel, its stock until last year was surging and Intel had to respond with a brutal price war and with better chips, in order to stop the losses and be competitive. If a company is forced to slash prices and put out a better product, I don't see how AMD can possibly say this armed them when they were winning market share for a long time and caused their competitor to severly adjust their business tactics and products. While I don't know the truth yet like any of us since the lawsuit has yet to finish, it seems to me that AMD's accusastion are nothing but a PR move to make Intel look bad.
Posted By Ugo Lacheny, Los Angeles CA : 11:45 AM  

AMD made a good choice when they bought ATI. ATI video cards are superior to those produced by NVIDIA, only NVIDIA has better people in advertising. Anyone who does not know this should take a closer look at factual information. ATI cards, in general, outperform their NVIDIA counterparts.

Anyhow, I find it disturbing that Dell would not use superior AMD chips in their systems; hence my business refuses to sell Dell computers. Their warranty is terrible, customer service is the worst. It seems that Dell went from a decent manufacturer to a greedy, "screw our customers" mentality.

When a company refuses to use superior equipment for that long, there is a definate problem. Intel SHOULD fear AMD. AMD is Intel's only real competitor, and creates a better product for less money.
If only more people knew the facts pertaining to AMD and ATI.. Unfortunately, too many people follow trends and believe advertisements instead of looking into facts.

People should really do some research before posting ignorance.
Posted By JG, NE : 12:22 PM  

This is for Will in Atlanta:

The merger of ATI into AMD has created a company that is now able to provide superior processor/mainboard/video components.

Unfortunately, in your rambling post, you show your need to take an English course before even attempting an intelligent conversation..
Posted By Anonymous : 12:26 PM  

To the poster from Germany: It is not merely a question of having a promotional pricing scheme. It is a question of how the scheme is employed. Microsoft used similar sorts of tactics to ensure that MS-DOS was not threatened by DR-DOS (nor Windows by OS/2).

A pricing scheme that explicitly restricts your customer's ability to buy from a different supplier in parallel is at best dubiously legal; certainly it is not in the consumer's best interest. (Often, nor is it in the business's best interest. If Intel's fab goes down in a fire, Dell needs to continue shipping products somehow. If they have AMD designs and supply chain already rolling, it's much easier to minimize the impact to both the computer vendors and consumers).

Intel has had a string of pullbacks (e.g. a complete defeat and withdrawal from the embedded market); they are now simply defending their core markets with every weapon - dirty or otherwise - they can muster. While they're not quite a one-product company, it's pretty close. Very similar to Microsoft; all their significant cash is generated by a single product family. The reason they are behaving like Microsoft is that they have exactly the same problem; they can't create innovative and profitable products to diversify their profits enough to survive a really successful competitor in their monopoly space.
Posted By Lewin Edwards, Forest Hills, NY : 12:39 PM  

Those in favor of intel don't know the story from the beginning
Intel already got its monopoly position when they had to give good mask sets to AMD on the 286 and they started to provide non working ones. the PCAT became a standard thanks to the AMD second source with a better factory and processor performance e.g. 12MHz when intel could only provide 10!
then when they had to provide 386 masks sets (because of AMD bringing Modems, Graphics chips, Memory controllers, ... (pre chip set)they refused and it took too long to a retired judge to arbitrate in favor of AMD. the bad was done. Since then Intel continued its wrongdoing
and even with profits higher than AMD revenus, they were surpassed by AMD's architecture and technology 64 bit X86 instruction, dual core and soon native quad with individual core power control.
With Dell using only Intel chips, USA and the planet has uselessly burned energy (a lot! equivalent to a few power plants!) . still time to think about it ;o)
Posted By Alain, Paris, France : 12:45 PM  

This post has been removed by a blog administrator.
Posted By joe looby Limerick Irland : 12:52 PM  

The business practices of corporate US of A are the worst in the world. They have too much leeway with gaping holes in the law or lack of oversight in the name of self regulation. Why do you think year after year companies agree to pay hundreds of millions in fines while claiming no wrong doing?
Posted By Nelson, London UK : 1:18 PM  

great article.

btw, amd has %25 now of the x86 market now, leaving intel with less than %75.

this really does sound true. i've been saying there was something super shady going on there all this time.
Posted By bradley, vancouver bc : 1:19 PM  

The suit hardly sounds "devastating" to Intel. Assuming that payments took the form of discounts as described in the last paragraph, how does that lock out AMD? Couldn't AMD offer similar discounts? The problem is that the payments were not disclosed to Dell shareholders.
Posted By John, Oakland CA : 1:21 PM  

Japan and Europe have already found Intel violated antitrust laws there, and South Korea's looking, and yet some Intel apologists insist that AMD's lawsuit is without merit. But after AMD filed the lawsuit, which would have the effect of tripling any damages found for continuing the monopolistic behavior, Dell found reason to switch over to AMD, almost as if Intel decided they'd better stop to protect themselves and without illegal payments Dell had good reasons to start selling AMD. The former head of Compaq said that Intel told him point blank that if he started selling Athlons he would not get any Intel high end server CPUs. Since Compaq needed those high demand CPUs in order to compete in the lucrative server market, he cancelled an AMD deal.

I do not think Intel's hands are clean in this. I also believe the lawsuit will be settled with a secrecy agreement; Intel risks losing too much if they go to court and lose. The amounts alleged in this Dell lawsuit suggest that Intel is at risk (before tripling) of about as much as AMD's total debt, plus the loss of reputation and other verification penalties down the road.
Posted By Richard, Oakhurst, California : 1:28 PM  

< thought these things only happen in developing and third-world countries where government and business leaders are reputedly corrupt. Right here in the US of A? Shame.

Posted By M. Lim, Metuchen, NJ : 8:07 AM>

Wow. I think you need to get out a little more.
Posted By Vikram, India : 1:31 PM  

Good Article, AMD doesnt need to cheat to succeed
Posted By Anonymous : 1:50 PM  

People just don't know what they're talking about. Dell do not have a huge budget on R&D so they used Intel chips only to make their costs lower then the rest of the industry. This will attract more buyers and they did thrive and took market shares from others.

Intel offers discounts on certain amounts of chips they sell. If one say it is illegal to reimburse your customer then what about vendors giving supermarkets and retailers money for their shelf space? Is this also illegal?

Or is it illegal for a waiter to accept a bigger tip from a customer so he or she can get the better serive? Is that also illegal?

You see, it is competition and who has the better products wins out and also one need marketing skill to sell as well as this is a dumb consumer market we have today.
Posted By Mike,Salem, OR : 1:59 PM  

Intel builds better processors anyway. I got an few AMD athlon processors last year trying to save a few bucks and it was a horrible mistake. I have since been buying nothing but Intel processors since they are far superior.
Posted By John Mulder, NY, NY : 1:59 PM  

I've been buying PCs with AMD chips all my life, and have ALWAYS had to specify them, no matter where I bought the machine. Intel was always the 'default' CPU - regardless of price or performance.
Posted By Barry, Plymouth, NH : 2:24 PM  

Intel acts VERY arrogant from the beginning of these kind of competitions. They thought they could get away with their huge market domination in the past. The truth is Intel can run but it can't hide.
Posted By Tommy, San Marcos CA : 2:31 PM  

Since Ronald Reagan took office the US has abandoned anti-trust legislation. We need a sheriff to rein in the corporate greed and corruption in this country, another Teddy Roosevelt to bring back the Sherman Anti-trust Act. After Eliot Spitzer gets done cleaning up New York State politics, hopefully, he becomes president and takes on the evil corporatocracy that knows no laws or ethical bounds. The corporatocracy with its greedy and dishonest CEOs has made America unrecognizable, from the country it used to be in my youth.
Posted By Andrew H. Dral, Sacrmento, CA : 2:41 PM  

Standard oil, Microsoft, Intel, all the same. Without AMD we will be paying double for those microprocessors.
Posted By Steve, Los Angeles : 3:04 PM  

No wonder AMD is loosing money. As a Manager of Servers for a 3 billion dollar company I am even more upset. Intel has no integrity.
Posted By Ken, Detroit, MI : 3:19 PM  

FYI - The "w" in PricewaterhousecCoopers is not capitalized.
Posted By Arthur Andersen, Houston TX : 3:25 PM  

I used to work for Dell in 1999 and 2000 and we desparately tried to create a competitive solution using AMD products, so that we could pressure Intel to drop board and chipset prices, but we never could.......even without any so-called secret discounts by Intel. AMD is just whining AGAIN.
Posted By Greg, Johnson City, TN : 3:31 PM  

I'm glad this is finally coming to light. I only hope that it's not too late, and that AMD get some fair compensation from Intel for being locked out of Dell for such a long time. AMD has had the best processors in the last 3-4 years and only in the last six months has Intel caught up, sort of. Intel knew that their chips were inferior and bribe Dell not to sell the superior AMD chips until it felt it had enough time to deliver better processors themselves. In the world of chip design, timing can be everything, and had AMD and Intel competed on an even playing field with Dell, AMD would between 35-40% of the market by now and not just 25%. Not only that, but they would be a much more profitable company something Intel also didn't want because pricing pressure was the only way Intel could compete during the last few years of exclusivity with Dell.

Any other company would have crumbled under these unfair competitive practices from Intel especially since it's been going on for years. It says a lot about AMD that they've been around since 1969 and been able to withstand and even thrive in this environment.
Posted By X-Man, Los Angeles, CA : 3:58 PM  

Regardless of what we call the transaction (volume discount, rebate, etc.) Dell was not forced to use only Intel processors. It was a sound business decision.

Imagine the litigation by Dell share holders if they found out that Dell's cost structure increased due to using AMD and Intel processors rather than just Intel processors.

This litigation has no merit and will only generate value for Lerach and his partners.
Posted By Robert, Austin, TX : 4:33 PM  

but Mariah Carey is in intel's commercials... doesn't that mean they are better? right? Performance of the chips doesn't mean much to your average retail shopper. All they care about is will it do what they need, and is it reasonably priced. That is where AMD wins, if people are smart enough to realize they won't notice the difference between the two if they are surfing the net and playing solitare...
Posted By Sam, Woodbury MN : 4:42 PM  

This article is claiming that Intel (and somehow Andy Grove himself?) blatently broke dozens of antitrust laws. Is anyone really willing to believe that, in the age of Sarbanes Oxley, the Intel legal team would build such practices into a contract with Dell? Are you also willing to believe that "only about 15 top Dell officers" even knew these alleged payments were occuring? How could the CEO and his staff possibly sneak $1B annual rebate payments off the Dell books? When you start adding those eighth, ninth, and tenth digits to the rebate, something tells me it might have caught the eyes in Accounting or Audit.

I have no doubts that Intel had a very aggressive pricing structure with Dell for Dell to maintain a sole CPU supplier for so many years. However that doesn't mean Intel was paying Dell for specifically avoiding products from a specific competitor.

Ironically, since Dell announced that they would begin to supply AMD-based systems, the financials of both companies have been on a steady decline.
Posted By Mark, Portland, Indiana : 5:00 PM  

Er...I used to work at Dell, and this type of activity absolutely went on. At the end of each quarter (at least in 2004-2005) procurement would go twist Intel's arm to get additional "cost goodness" for goods already sold - essentially rebates. I am no lawyer, but in themselves these payments don't and didn't strike me as necessarily illegal. Is there a potential for impropriety, however? Definitely...
Posted By S, Austin Tx : 5:02 PM  

I guess we all are jumping the gun by concluding in favor of AMD or Intel. Let the jury do his Job. If its true then it�s a very shabby thing else AMD should pay same amount for mudslinging.

No company or no individual is above law no matter how big they are by there pockets or by there muscle power.
Posted By Ruchir Choudhry, Stamford, CT : 5:27 PM  

For those of you questioning Intel's integrity, check this list: http://www.thecro.com/?q=node/304

Both Intel and AMD are in the top 5 (AMD #2, Intel #5) of the Best Corporate Citizens....
Posted By Chris, Sacramento, CA : 6:22 PM  

AMD has had better products off and on over the last few years (not anymore) but never had a reliable or capable manufactoring ability and still doesnt. even if a customer like dell wanted to order AMD chips, AMD wouldnt be able to provide them. ever since Dell started ordering AMD chips, AMD could no longer supply the channel and a lot of smaller computer vendors had to order chips from a more reliable source,intel. since intel can actually supply chips in a reliable way. AMD is just crying over spilled milk to get media attention
Posted By mike, oregon : 6:47 PM  

It's business.
Posted By John Cambell, Bayside New York : 7:55 PM  

Well, why is everyone that's commenting so outraged? This is America's corporations at their best, it's been happening for years and will continue. Leave with it, greety businessmen will always look for cheap labor and a way to squeeze the dollor until it screams. And who cares if someone or many, gets's hurt in the process.
Posted By Brian Thomas Detroit,MI : 8:55 PM  

On the face of it, the Intel behaviour looks like simple discounts; all companies try to keep loyal customers etc. For Dell who are built on high volume business, it would make sense to be pure Intel so as to maximize their discounts and therefore their own margins, or to maximize their own ability to keep their prices low and volumes up. Both Dell and Intel win and guess what? That's not illegal; that's just a business partnership. That's what Buffet would call a 'wide moat' that makes them hard to compete with. But since when is it a crime to be a success?
Posted By Steve, Peterborough, Ontario : 9:10 PM  

I've been using Intel Chips for years and I have been always happy with them...I had one AMD system once and I was unhappy with the performance and the CPU always had an issue or the Chipset always had issues with hardware or what not...I've never had that problem with an Intel Based systems.
Posted By Anonymous Denver CO : 10:39 PM  

This is what Microsoft does to Dell... I guess Intel is doing it, too.
Posted By Will, Austin, Texas : 11:05 PM  

It is common knowledge among all long term Dell employees that Intel was paying BIG dollars to keep Dell exclusively on Intel processors.

This is no big revalation... the question is whether or not the payments were properly structured as volume discounts or illegally disguised as something else.
Posted By RF, Austin Tx : 11:36 PM  

Wow, I didn't know Hugo Chavez was such a prolific blog poster. Seriously, are you all shamelessly socialists, or only when it comes to your pet fanboi companies?

This story is ridiculously made up and false from all appearances (that's why, gee, it sure looks _plausible_ - because it's _made_ to look plausible).

If it were true, who cares. Any company should be able to sell any legal product in any way they want. If buyer and seller are consenting, stop your socialist whining. And BTW, to the "Microsoft! Standard oil! Intel" deep thinkers, give me a break.

Applying antitrust law to anything other than government created monopolies or monopolies on scarce physical resources (oil, water, power, food) is laughable. It shows a cognitive deficiency to even suggest it.
Posted By Charles, Boise Idaho : 12:17 AM  

Dell starts using AMD for the first time: there margins shrink and they loose market share. Apple starts using Intel for the first time: there margins and market share grow. hmmmm, intel must be doing something illegal. or, maybe they are just making better processors now and the market (the ultimate judge) is recognizing this.
Posted By Adam Smith, UK : 2:50 AM  

To Adam Smith of the UK: HP gained the #1 position in global PCs sales with perhaps the strongest use of AMD processors by any OEM aside from Sun. Severs, notebooks, desktops; business and consumer.

Dell lost that position with an all-Intel line-up. Look it up.
Posted By Henry Oliver, Austin, TX : 8:10 AM  

All of you Intel fanbois need to read up on the Sherman Anti-Trust Act, period.

"The Sherman Act provides: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal" (see 15 U.S.C. � 1). The Act also provides: "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony [. . . ]" (see 15 U.S.C. � 2)."

Gee... If that doesn't describe how Intel (or Microsoft for that matter) has been conducting thier business for the past 25 years or so I don't know what does. Face it boys, Intel needs a shovel, they are in some deep sh!t this time. This won't be the first lawsuit they've lost to AMD either.(386 fiasco anyone???) There are too many people speaking up now and aren't afraid anymore to reveal thier crooked business schemes and show Intel for the abusive, monopolistic company they are.
Posted By Lou Ceifer, Heil, LA : 10:05 AM  

Intel has one of the most recognized brands in the world, is the only CPU manufacturer that had capacity enough to keep up with Dell's demand/ business model and you wonder why Dell took so long to adopt AMD. Furthermore, in 3 decades AMD has had a slight tech lead for a few of those years in limited market segments. I guess we should start investigating every AMD OEM now that Intel has regained the lead across the board. This article is speculative and premature.
Posted By Damien, Oregon : 6:13 PM  

If this article is true, then shame on Intel. Its bit surprising that despite all the regulations and laws, this sort of this do happen...and then companies end up paying huge penalty...then they talk about cost cutting etc..and childish explanation by the management with all sorts of explanations and excuses ...thinking rest of the world can buy all their explanations.Seems, innovation taking back seat and "Investors" driving the market for their own profitability...
. This is INVESTOR driven market...gone are the days of technology and innovation...even the laws helps only the big muscle players who can hire top notch legal firms to fight their case and reasoning.
Posted By Robin, Singapore : 7:50 AM  

We should have known Intel was a criminal entity, just look at the comments of its supporters. Criminals flock to INTC, as if they could sense each other.

Bullies and the cruel have always loved INTC, now we know why.
Posted By Saul, Washington DC : 12:27 PM  

Apparently Intel marketing is working well, they were able to make people believe that they regain a total lead!!!
In many Benchmarks, AMD has still the lead and in some there is only one Intel device in front and it's a quad core opposed to a dual !!! and its a few percentage points better perf. for twice as many dollars!!!
it's true that Intel has improved their old architecture, but not enough to surpass AMD in all benchs.
and proc is not all,need to compare power, Memory, consider Mother board evolution, and soon graphic integration,
+ process evolution (with IBM to 45, 33 and 22 nm!)
and Open forums to bring better hardware coprocessors and software
Posted By alain, paris, France : 12:29 PM  

Geez the Intel lackeys are dumb. This was a billion-dollar bribe that violated anti-trust laws, not a $5 tip to a waiter. If it wasn't illegal, why would Intel try to hide it?
Posted By Bob, Chicago Il : 1:39 PM  

As a OEM system builder for Microsoft, I have seem plenty of dirty deeds done by Intel. I was forced to sign up with Intel just so I could get a exta 2% discount at my wholesale houses. I do not buy Intel, but I wanted the discount. Amd was always a better chip as far as I am concerend for the home owner. Intel has all of that money to brain wash people by clever ad's for a inferior product.
Notice how they never finish their sentences on the ad's that would tell you more about what is in a computer.
Just saying Pentim 4 at 3 gig means nothing to me. There are several speeds of the same chip.
Back in 1999, I had to call Intel for some serious help. My answer back was " we could care less about home owners or home owner problems, we only care about big busines. " That was the last time I sold a Intel product. I have noticed since then that they have their grubbly little hands in all kinds of Big Business.
Posted By Scott, Abilene,Texas : 3:12 PM  

I will add that AMD only looked like it had a Superior CPU to INTC when it came out with the 32/64 Bit CPU.

Of course, as I pointed out at that time, there was no OS or Programs to utilize the 64 part.

Even to this day, Vista being the one exception by a few days, that 64 bit part of those CPU's are still silent.

What a PR rip off they sold on their poor customers.

FWIW,

H
Posted By Jay Palmer, Orlando, Fl. : 5:32 PM  

People are either Blind or Na�ve. There is so much proof that Intel has been running there business based on Monopolist strategies, buying companies out in other words.

There is still several if not 1,000's of PC shops which still do not carry AMD products all due to Intel money kick-backs. I call this dirty money, and the industry wants change & fair competition.

Competition & choice for the consumer is what we need, and Intel is not helping in this department at all.

Thank GOD that AMD came out with a marvel of a design (Athlon 64) to put them back into the spot light. I know this fuelled Intel to come out with the faster Core 2 Duo, but this is what to expect in fair competition. No harm done when both parties are playing fair & competing properly.

Anyway, just my view in what really is going on in the PC industry.
Best Regards,
IT Tech.
Posted By IT Tech Guy, Athens Greece : 7:25 PM  

Do everyone remember the Pentium bug?
Does nobody remember the Celeron issue?
Intel's bad pentiums(with broken chach�)sold as New Brand Processors.

I'm very surprised how the people act with the AMD technology leadership. They nearly neglects all the AMD's innovation and it seems they don't accept that intel is using the AMD's 64 bit technology (with a different name). The original Intel's 64 bit implementation didn't run 32 bit applications.
The Marketing can do miracles changing the perception of the people. I had very serious problems with machines with intel's processors and intel chipsets
in the same way. But, take a look to your board before attack the processor.
All types of refund attemps against the competence, because when the refund cause dissapears, the refunds dissapears too, and in that time you'll be buying to a monopoly (and at the prices the monopoly wants)
Remember, no company had won enough money ever, and it never will. I prefer the competence.
Posted By Chistian, Buenos Aires, Argentina : 10:40 AM  

Nothing compares to Intel processors
Posted By bill, bklyn, ny : 8:06 PM  

Most of the people posting in this thread validate the reason for AMD to file such utter rubbish. Most people don't have the education needed to turn off their right brains for a minute and look at the data. So much contract negotiation between any 2 corporations can be spun various ways to those incapable or unwilling to look past the rhetoric. This type of suit is simple propoganda to attempt to gain market segement share via sympathy for the "poor little guy" - and, sadly, it works based on the breathtaking inanity seen here.
Posted By Scott, Portland Oregon : 1:47 PM  

I worked for one of the bigger computer manufacturers and we where Intel only and it was made clear it was because we got "bonus" money from Intel. Then when Intel had issues with processors one year and they where not able to make their contracts that we started using AMD.
Posted By John, SLC, UT : 9:11 AM  

There is nothing wrong with what is going on here. It is no different than Coca-Cola paying school districts to only have their machines in your childrens' schools. People need to stop being hipocritical and look at the big picture. If people WANT an AMD processor, it is not difficult to obtain one. Their WANT for a Dell computer simply outweighed their WANT for an AMD processor. We cannot MAKE Dell sell their chips. That IS anti-competitive.
Posted By Anonymous : 12:43 PM  

Roger are you telling me that Dell is nowing losing a Billion dollars a year because they have started selling AMD. If what you were saying is true, then Dell would never have abandoned their Intel exclusivity, esp. when Intel has regained the performance lead with new innovations both in servers and desktops.

I dont buy the idea that Dell did not know about Intel's Microarchitecture plans well in advance.

Get real man, I hav seen the lawsuit and I think it is complete hogwash.
Posted By Charit, India : 1:17 AM  

Some people point out stuff like "it's business", or made sense for Dell, etc., etc.

Well, it would make a lot of sense for Exxon and Chevron and Shell to get together and decide to simultaneously raise gas prices in a lot of cities where they have almost all the market say about 30%, just enough where only a few people would drive far to buy cheaper gas.

"It's business" is rather uneducated. In fact, we have laws exactly and precisely in response to what businesses do, and because the laws were often necessary. Further, huge amounts of work and experience have gone into molding and changing laws over time to improve them.

Just because we might be libertarians doesn't mean we have to ignore history and knowledge that is widely available.
Posted By Hal, Austin, Texas : 8:03 PM  

Or feel free to send a letter to the editor about this story. Top of page

About this blog
This blog is about legal issues that matter to business people, and it's geared for nonlawyers and lawyers alike. Roger Parloff is Fortune magazine's senior editor (legal affairs). He practiced law for five years in Manhattan before becoming a full-time journalist. To join in the discussion or suggest topics, please email rparloff@fortunemail.com.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.