Former Intel CEO Andy Grove of Intel was
Time magazine’s “1997 Man of the Year.” Now Intel
is the Federal Trade Commission’s “2009 Company to Fear.”
If the FTC gets its way, Intel will be characterized not as a
productive marvel that helped turn the rest of us into productive
marvels. The chipmaker will be tarred as a Robber Baron instead.
Competitors AMD and Nvidia are delighted — and party to the
investigation.
Sometimes people make choices others would prefer they not make.
But that is no reason to use force to prevent a company from
offering products for voluntary sale. An FTC picking winners and
losers is not capitalism. It is crony capitalism. The agency
should recognize that Intel doesn’t call the shots in the
microprocessor market. Consumers do.
And we consumers have many computing options. Desktop computing
is only one choice in our increasingly networked world.
Smartphones and sub-notebooks grow more popular every year. Who
knows what the next decade will bring? Even an antitrust lawyer
at the FTC is allowed to adopt these options.
It’s true that Intel’s chip sales of $32.8 billion are 80 percent
of the market — as measured by number of microprocessors inside
computers. But most chips don’t go in computers. They go into
cars, phones, appliances, toys, and seemingly just about anything
else these days.
Chips in “Wintel” desktop computers increasingly constitute just
one subset of a vast semiconductor market. Only a small fraction
of the chips in non-PC devices are Intel’s — and these devices
are where the future lies. Samsung, Texas Instruments, and other
companies are dominating Intel in this larger market.
Bottom line, the relevant market cannot be defined merely as
“computer chips.” All chips — perhaps barring Pringles, Lay’s
and Doritos — are a part of the picture.
Intel’s absence from expanding non-PC markets is more than enough
to topple its dominance in coming years. Regulators should leave
it alone. A generation from now, any consumer product that
doesn’t include a chip or two will be an aberration.
By all appearances, Intel’s past and current disputes with its
partners appear to be ordinary patent disputes and exclusive
contracts and rebates hyped into “antitrust” violations. Oddly
enough, Intel was accused a few years ago of preventing computer
manufacturers from installing its chips in a patent dispute case.
Of course, it would be more efficient simply to shoot customers
as they walk in the door.
Now, the firm stands accused of the exact opposite: shoehorning
its chips in at the expense of a rival like AMD. Regulators’
charges against Intel have changed over the years, but their
verdict always remains the same: guilty.
The FTC’s desire to attack a company already in the crosshairs of
foreign competition authorities indicates that the agency
fundamentally doesn’t care about anything other than taking down
a target. Consider the fact that anybody who wants a non-Wintel
computer can get one. Intel is no “essential facility,” similar
to electrical power. Many companies are in the computing and
architecture game. The market is large, diverse, and competitive.
Internal disputes regarding computer building are squabbles among
equals, and they can be resolved. Intel could just as readily
claim that computer makers could bully it, since they can demand
and get significant price concessions.
Competing chipmakers have no fundamental right to piggyback on
Intel’s architecture, or to have government grant them a gift of
Intel’s customers. But they do have a right to give consumers a
better deal than Intel. The time and energy they are spending in
Washington are time and energy not spent innovating.
We’d be better off prosecuting the DOJ and the FTC for colluding
against free enterprise.
