I write today on CNET News.com (see “FTC’s new strategy: kick ’em when they’re down”) that the FTC’s decision yesterday to attack Intel seems oddly-timed.
Regular readers of this blog will recall that only a month ago, I wrote that Intel’s settlement of long-standing disputes with rival AMD (see “The Intel/AMD Settlement: Watch What Happens”) was likely to mean the end of government-sponsored litigation against Intel, or at least a toning down of the rhetoric. I was, clearly, wrong.
It’s hard to know the real background here, but piecing together bits and pieces it appears that the FTC and Intel were close to resolving issues related to how the company sells CPU chips for personal computers when, perhaps at the urging of Nvidia and other graphics processing unit makers, the FTC began looking at the GPU market as well. Intel flinched, the FTC got mad, and filed a complaint that recites all over again the issues that appear in most of the other litigation, plus the GPU complaints.
Hell hath no fury, it seems, like a regulator scorned.
Aside from the addition of GPU complaints, there are several important differences between the FTC’s action and the rest of the pending or already-completed litigation. Most disturbing is the proposed remedy. Instead of money damages and fines, the FTC is proposing, should it make its case, to dramatically redesign the way Intel–and therefore the rest of the semiconductor industry–does business. Some of the relief the agency is seeking is, truly, draconian. Intel would be essentially run by an outside monitor, and would need to pre-approve most transactions and even advertising with the FTC.
The FTC is charged with protecting consumers from fraudulent practices–false advertising, for example, or inadequate cigarette warnings, or misleading terms in credit card applications and the like. It’s hard to see how it has anything to offer here by way of expertise in the chip market, which only affects consumers after-the-fact. The likelihood that the agency’s actions will help consumers seems very very low.
It’s also hard to see what the harm to consumers (harm to competitors aside) can be. As I write in The Laws of Disruption, the continued operation of Moore’s Law means that computing power gets faster, cheaper and smaller all the time–indeed, on a predictable schedule. The PS3 that now sells for $299 is the rough equivalent of enough early-era computers to fill the state of Washington. Today’s cell phones have more processing power than yesterday’s supercomputers. And so on.
Well, the FTC replies, maybe if Intel didn’t have a monopoly on PC CPUs those prices would fall even faster. Maybe, doubtful, but in any case, don’t they have bigger problems and more broken industries to mess with?