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Ho-Hum! Another Tech Industry Antitrust Lawsuit

A friend and colleague suggests to me that the reason you have antitrust lawsuits is not to protect the public’s interests, but to give lawyers lots of highly-profitable work. While I understand the need to earn a living, especially in these troubling times, that comment raises the question whether anyone benefits from going after companies that are allegedly abusive.

Just recently, the European Union accepted Microsoft’s ballot box proposal, where customers would be able to easily select and install alternative browsers. That was designed to protect the unwary public in Europe from having Internet Explorer forced down their throats and conclude an antitrust action. While I am certainly in favor of freedom of choice, it does appear the marketplace is already speaking when it comes to browsers.

Consider that Internet Explorer, which once held an over 90% share, is now down to approximately 60% overall without ballot boxes. That means that 40% of Internet surfers have decided to let their fingers do the walking and they have selected Firefox, and in lesser numbers, Google Chrome, Apple Safari and Opera. It doesn’t appear that the tepid updates to Internet Explorer have been able to stem the tide, just as Microsoft’s new Bing search engine hasn’t halted Google’s growth path.

This isn’t to say the ballot box concept is bad. But it’s restricted to the countries that are part of the EU. As far as the rest of the world is concerned, they still have to make their browser voices heard the old fashioned way. You have to wonder that if this idea is such a good one, why wasn’t it expanded to the rest of the planet? What about the authorities in the U.S.? Oh yes, they ave. already settled with Microsoft, and that wasn’t an option they considered. Oh well, maybe they need some new lawyers to enter the fray and devise some new schemes on billable time.

That takes us to Intel. After agreeing to pay off rival AMD to the tune of $1.25 billion, including legal fees of course, to end a lawsuit, up comes the U.S. Federal Trade Commission with their own wide-ranging complaint.

According to the FTC, Intel has engaged in all sorts of illegal trade practices that, among other ills, prevent customers from benefiting from better graphics chips and hence higher-performing personal computers.

Is any of this relevant in the real world?

Well, consider the state of Intel’s integrated graphics. Apple used to ding PC makers when they built products with what they regarded as inferior graphics capabilities. That was until lesser-priced Intel-based Macs were outfitted with the very same chips.

Now to be fair, basic 2D graphics performance was fairly decent with those chips, until you decided to try a little gaming. Then anything beyond a basic app would choke the graphics processor. Apple’s solution was to replace Intel’s integrated graphics with the NVIDIA 9400M, which has proven to be a revelation. Even the cheapest Mac mini has become a decent performer when it comes to modest gaming, even though you sacrifice some of your built-in memory for display purposes.

However that design may be an endangered species. It has been reported for months that NVIDIA and Intel are embroiled in a licensing dispute over whether those graphics chips can be used with newer Intel CPU designs. Intel says no. NVIDIA says yes, but unless a contract is signed it won’t happen.

Part of that ground is evidently being covered by the FTC action, so if it’s successful, it may well be that the 9400M and its successors will continue to be used in low-end Macs. If not, Apple will be forced to choose inferior parts from Intel, or go to discrete graphics, which will increase production costs somewhat. In the end, if Apple picks the latter, it means lower profits, or a higher retail price. In other words, you pay for Intel’s refusal to continue to license its chip designs to NVIDIA.

There have also been reports that Intel might also be using that strategy as a wedge to force NVIDIA to sell out to them. Up till now, Intel was rated dead last when it comes to graphics chips prowess. This would give them a great opportunity to build a quality product portfolio and perhaps dominate the market even further at the expense of AMD and its ATI subsidiary.

Now if this is Intel’s strategy, I don’t like it. A company shouldn’t be forced to sell out because of such draconian measures, particularly when it involves a dominant player in an industry. While I’m not fan of government intervention, I am also not in favor of using corporate muscle in a way that ultimately hurts customers by restricting choice and perhaps forcing them to pay more for what they buy.

On the other hand, if the past is a guide, Intel will have its high-priced legal eagles thrust and parry to get the best deal they can, after delaying the proceedings as long as possible. So maybe the customer will benefit somewhat in the end with superior products at a lower price. But it’s also possible any settlement will have, at best, a token effect, except for the huge paychecks those lawyers receive.