The FTC vs. Intel
Microsoft Corp.’s epic battle with regulators in the United States and Europe was the landmark antitrust dispute of the 1990s, but it’s fast becoming a relic of a different technological era. On Wednesday, European Union regulators approved the final piece of a settlement with the software giant; the U.S. Department of Justice reached a similar settlement with Microsoft in 2002. Meanwhile, with mobile phones becoming a popular computing platform and Web-based services extending far beyond the PC, Microsoft’s dominance over desktops is becoming less of an issue to software developers and technological innovators.
On the same day the EU wrapped up its actions against Microsoft, the Federal Trade Commission filed a lawsuit against Intel Corp., the chip maker that rose to dominance alongside Microsoft. Intel now stands in the uncomfortable position Microsoft just vacated, having been sued on both sides of the Atlantic for its hardball competitive tactics against rival chip makers. (EU antitrust officials won their case against Intel in May, but the company is appealing.) The regulators’ goals are similar as well: to clarify the distinction between aggressive and unfair tactics by a dominant firm, and to prevent Intel from using its strength in one market to take over another one.
Intel executives say that none of its actions were illegal. They also say that the company was close to settling the FTC’s complaints before the case was filed but the agency’s demands were unreasonable. Other critics argue that the FTC should have held off because several rival chip makers are suing Intel.
It will be up to the courts to decide the merits of the FTC’s case, of course. Nevertheless, after almost a decade of relative silence from the Justice Department’s antitrust division, we welcome the commission challenging how far a dominant company can go with discounts, incentives and penalties to hold on to its share of the market. The $1.25-billion settlement Intel reached last month with rival Advanced Micro Devices doesn’t address Intel’s pricing, just its exclusive deals with PC makers and retailers. Another important issue raised by the FTC’s complaint is whether competition can be considered harmed if prices fall, as they have in chips.
Just as the PC operating system is being overtaken by other technologies, though, so is the ground shifting under Intel. It has little sway over the markets for portable and mobile devices and not much presence in televisions, Blu-ray players and other increasingly intelligent devices in the living room. The commission is rightly concerned about companies extending their dominance unfairly from one market to another, but it needs to bear in mind how rapidly the computing world is changing.
