FTC Seeks Limited Relief in Case Against Intel

Compared with the Justice Department’s broad attack against the heart of Microsoft’s Windows technology, the Federal Trade Commission’s action Monday against microprocessor behemoth Intel Corp. is more like a tightly aimed, low-caliber shot across the bow.

The FTC is pursuing a relatively narrow case against Intel, focusing on the company’s alleged efforts to use is dominance in the microprocessor industry to coerce information from competitors and punish them by withholding critical design specifications.

The case specifically details Intel’s dealings with Maynard, Mass.-based Digital Equipment Corp., Compaq Computer Corp. of Houston and Intergraph Corp., a Huntsville, Ala.-based manufacturer of high-speed workstations.

The case has raised several thorny issues concerning the rights of companies to control their intellectual property, which in the Information Age are as precious as coal and iron were in another time.

Intel, which now accounts for about 80% of the microprocessor market, has maintained that it should be free to wield its information to its benefit. In essence, the company argues it should not be forced by the government to give away the company’s prizes.

While these broad issues loom over the proceedings, the actual relief sought by the government is relatively limited, according to Howard Morse, a former senior litigator with the FTC.

The commission is seeking to require Intel to not discriminate against companies when it releases design information and stop using the withholding of information as a type of retaliation against companies that sue Intel or refuse to give into demands from the company.

“The relief the FTC is seeking is narrow, but the principles are potentially huge in their implications,” Morse said. “It has the potential to define competition where intellectual property is involved.”

In contrast, the Justice Department’s case against Microsoft strikes at the very core of the software giant’s vision of the future. For years, Microsoft has talked about joining the Windows desktop with the vast expanse of the World Wide Web through the melding of desktop and browser.

The department has asked for Microsoft to separate the two--a task that, depending on which side is talking, can involve widely varying degrees of retooling. At the very least, however, the prospect of unbundling shifts Microsoft off its once unrelenting course to creating a unified interface that would dominate the desktop and the Web.

Mark Lemley, a professor of law at the University of Texas who specializes in antitrust, computer law and intellectual property rights, said the FTC’s action will probably have little impact on the course of Intel’s technological development since the company is not being asked to change its products in any way.

Other experts say that the case is weak to begin with and that the FTC is wasting its time.

“In the Microsoft case, the company’s actions allegedly affected people they compete with,” said James Berger, a Washington lawyer who was formerly head of government affairs at the Washington office of Apple Computer Inc. “The people complaining about Intel don’t compete with the company. They are in totally different markets.”

But many experts predict the FTC antitrust lawsuit is just the first salvo in a much broader agency examination of Intel’s aggressive expansion to dominate the manufacture of other key computer components, such as the logic chips that control communications between the microprocessor and the main computer circuit board.

Incremental antitrust litigation is a new strategic wrinkle that the government has increasingly used to good effect in several cases, including the Justice Department’s case against Microsoft, experts say.

“In general the legal environment and political environment for bringing huge cases is much more hostile now than it was in the late 1960s when the Justice Department brought its antitrust case against IBM,” said Simon Lazarus III, a Washington antitrust lawyer who helped America Online get its software included in Microsoft’s Windows 95 operating system.

“Government then enjoyed much greater public favor. Now it is very controversial to take on companies like Microsoft and Intel, which have contributed so much to the economy and to technological innovation.”

Just how the public will react over the long run to the government’s moves against Intel is still uncertain, especially since the case is not likely to have much impact on consumers or the microprocessor industry in the short term, experts say.

There is a passion about Microsoft’s dominance of the software industry that, beyond the legal issues, fuels an intense focus upon the company, Lemley said.

Intel’s product, however, is just a chip inside a box, Lemley said.

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Staff writer Jube Shiver contributed to this report.

* FTC FILES SUIT

Federal Trade Commission files antitrust lawsuit against Intel. A1

* A CHANGING MARKET

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