Hector Ruiz's book

[Centauri]

LOL Sounds like you wish you could have been Danielle Chiesi.

Sorry?

 

[erunion]

Bogus claim? LOL okay. There have been many bogus lawsuits over the years, but this was not one of them. In fact I doubt you will ever find a more clear example of a company outright bribing suppliers not to use their competitors products.

the issue isn't whether it happened, its whether it was illegal. It wasn't.

Intel was also the sole supplier for Macs and still is, exclusivity is not illegal.

Bribe is the wrong word, they didn't pay off CEOs. They offered discounts and threatened to stop selling chips.

AMD was hoping regulatory agencies would slap Intel on the hand for creating market conditions that made life hard for AMD.

 

[Phynaz]

YAnother huge factor was if AMD lost, that would essentially give Intel the green light to continue their illegal practices.

What's this about illegal practices? The AMD suit against Intel was civil, not criminal.

Intel viewed it less of a financial hit to funnel billions to the likes of Dell, rather than let AMD gain a foothold.

Nice terminology, but this happens everywhere in every industry, rebates are not illegal. Dell mis-reporting them has nothing at all to do with Intel.

If anything AMD's actions should be questioned. For a relatively paltry sum they agreed to stop cooperating with other organizations - such as the EU - that were investigating Intel. Kinda sounds like AMD took a bribe.

 

[Puppies04]

Nice terminology, but this happens everywhere in every industry, rebates are not illegal. Dell mis-reporting them has nothing at all to do with Intel.

Intel never should have settled, they could have easily strung the case out for a few years and walked away scot free, instead every AMD fan has a massive axe to grind with Intel because of what is pretty much standard operating procedure.

I will give you an example. If I make Wheels for a car manufacturer and I realise another manufacturer wants a piece of my action then I work out that my buyer needs 270,000 wheels next year and offer then a 30% discount if they order over 260,000 from me I have broken no law.

As Phynaz pointed out this goes on all over the world every day and nobody has a problem apart from this one specific case where AMD fanboys get butthurt because their company didn't have the ability to out maneuver Intel from a boardroom perspective.

If AMD actually thought that they could have won the case they wouldn't have settled for what was essentially peanuts (it doesn't matter if it was a decent score for AMD the idea would have been to make intel pay a sum that would hurt them financially) which nobody can argue that they didn't.

Of course all this is irrelevant because we will still be hearing the same one sided argument from fanboys in 20 years time when AMD no longer exists.

 

[Khato]

Intel never should have settled, they could have easily strung the case out for a few years and walked away scot free, instead every AMD fan has a massive axe to grind with Intel because of what is pretty much standard operating procedure.

Unfortunately for us Intel doesn't care a bit about giving fuel to the arguments of the AMD fans. Settling not only closed out the potential legal distraction but also gave them an opportunity to renew agreements... and give AMD a little infusion to ensure that they wouldn't go under and leave Intel potential open to actual antitrust/monopoly issues.

Hopefully we'll get a decision from the EU General Court on Intel's appeal sometime this year. (If they take as long as they did on the Microsoft appeal then it should be around six months from now.)

 

[Phynaz]

I agree with Khato.

Also, we don't know what other incentives Intel may have had. Maybe they worked it out with their insurance company - "Hey we will settle with AMD if you pay half".

Whatever Intel's reasons - ans it's doubtful we will ever know the whole story - they believed it was worth $1.5B to get AMD off their back.

 

[AnandThenMan]

What's this about illegal practices?

They include but not limited to:

• In general established a distribution system that punished the OEMs for doing business with AMD
• Withheld rebates to to HP until they cut AMD shipments to under 10%
• Sony, Dell, Toshiba, Gateway, Hitachi and others being forced into exclusive agreements in exchange for cash payments
• Paid Sony not to do business with AMD, AMD went from 25% shipments of processors to zero overnight
• NEC and Fujitsu forced into partial exclusivity agreements, whereas they could only ship a certain % of AMD processors or lose Intel "support" aka rebates and incentives

This is only a partial list, there is much more. The Intel CEO at the time threatened his suppliers with "severe consequences" if they did not follow Intel's specific demands. All of this and more violates the Sherman Antitrust Act and is indeed illegal.

 

[uribag]

As my father once told me... "The truth is always in between".

I thinks it´s naive not to believe that Intel could have done some illegal practices to protect "its´s" market.

And I also believe that it was not AMD´s only problem.

 

[Phynaz]

They include but not limited to:

• In general established a distribution system that punished the OEMs for doing business with AMD
• Withheld rebates to to HP until they cut AMD shipments to under 10%
• Sony, Dell, Toshiba, Gateway, Hitachi and others being forced into exclusive agreements in exchange for cash payments
• Paid Sony not to do business with AMD, AMD went from 25% shipments of processors to zero overnight
• NEC and Fujitsu forced into partial exclusivity agreements, whereas they could only ship a certain % of AMD processors or lose Intel "support" aka rebates and incentives

This is only a partial list, there is much more. The Intel CEO at the time threatened his suppliers with "severe consequences" if they did not follow Intel's specific demands. All of this and more violates the Sherman Antitrust Act and is indeed illegal.

Got proof? I'm sure the US DOJ would like it.

 

[Idontcare]

You certainly made it sound like the risk was minimal or nonexistent.

Then I failed to communicate, my fault. I suck at that from time to time

The risk was tremendous. For starters, the financial drain was something Intel could easily absorb, AMD could not. The longer the case went on, the more it hurt AMD. Another huge factor was if AMD lost, that would essentially give Intel the green light to continue their illegal practices. Also AMD gained some major concessions from the lawsuit, such as being able to fab x86 products outside of factories not owned by them. If AMD had gone to court and lost, no such concessions would have taken place, and AMD would have been pretty much out of the x86 business for good. AMD might have tried to use TSMC and GloFo anyway, Intel would have sued them for breach of contract.

Well that does make a lot of sense. Sort of like a double-jeopardy thing then. AMD had one shot to make the charges stick and if they blew it by being ill-prepared or rushed through the process, I can see that as a significant risk.

Likewise the point you make regarding the downside of an unfavorable outcome, that Intel would be emboldened to be all the more aggressive in the same areas.

I really hadn't thought about those aspects, thanks for bringing them up.

I was just surprised that anyone would ask such a question. Taking a cash rich, dominant competitor to court is of course going to be filled with risk. But no risk no reward, which is why I view was Ruiz did as being ballsy.

Well you've no reason to take me at my word, for sure I could be lying through my teeth here and why would you give any doubt otherwise, but for what it is worth the truth is I had absolutely no preconception of such risks to AMD. I just didn't get it. I was genuinely baffled.

I had figured they were so screwed by Intel's successful marketing maneuvers that regardless how the case went down that AMD either came out ahead or at worse they'd come out no worse for the wear (meaning no favorable judgment, and so, screwed as always).

But I suppose you are right, there is the downside of Intel really taking it to 11 if they felt emboldened on the momentum of a court ruling in their favor and essentially condoning or sanctioning their already aggressive marketing tactics. That is a definite possible outcome, and therefore a definite risk, just as you said.

 

[Charles Kozierok]

Bribe is the wrong word, they didn't pay off CEOs. They offered discounts and threatened to stop selling chips.

So... coersion? It's not a nicer word, certainly.

I will give you an example. If I make Wheels for a car manufacturer and I realise another manufacturer wants a piece of my action then I work out that my buyer needs 270,000 wheels next year and offer then a 30% discount if they order over 260,000 from me I have broken no law.

How about if you don't know how many your customer needs and you just offer them a 30% discount if they agree not to buy from your competitor?

I don't know if that's legal or not. And I don't know for certain whether or not Intel did it. But it's different than just a discount. And, at least, Japan's FTC had a problem with it.

How about telling your supplier that if they need 100,000 of your chips next year, well, that amount is reserved for your most loyal customers, see, and those who aren't as loyal might only get 50,000 chips...

There's a lot of gray here.

 

[grkM3]

They include but not limited to:

• In general established a distribution system that punished the OEMs for doing business with AMD
• Withheld rebates to to HP until they cut AMD shipments to under 10%
• Sony, Dell, Toshiba, Gateway, Hitachi and others being forced into exclusive agreements in exchange for cash payments
• Paid Sony not to do business with AMD, AMD went from 25% shipments of processors to zero overnight
• NEC and Fujitsu forced into partial exclusivity agreements, whereas they could only ship a certain % of AMD processors or lose Intel "support" aka rebates and incentives

This is only a partial list, there is much more. The Intel CEO at the time threatened his suppliers with "severe consequences" if they did not follow Intel's specific demands. All of this and more violates the Sherman Antitrust Act and is indeed illegal.

this is spot on +10000 I used to do business with a friend from the old school computer fair days and way before we even had internet and the second intel found out you were selling a competitors cpu they would cut you off there supply chain.I can remember asking a bunch of people at computer fairs why they don't sell amd cpus and they all gave the same exact answer that intel would cut them out and not do business with them if they sold AMD.

Th

 

[Idontcare]

...discount if they agree not to buy from your competitor?

I think that right there is the fundamental question. Whether it is a manufacturer making such an offer to a reseller, or a reseller making such an offer to an end-user - is it ok for the person spending their money to decide for themselves whether or not they are ok with signing an exclusive?

It happens all the time in media and sports. Signing exclusives. There is a price-premium associated with them because of the intrinsic financial value they bring to the equation.

So are they really bad? Or is it just a sore loser situation. The guy who loses out on the exclusive will always cry foul, no news there.

If AT&T offers me an exclusive offer, if I agree to not use anyone but AT&T for the next two years for all my mobile accounts then I get $100 cash back (hypothetical scenario) then what right does the government have to tell me I can't make that decision for myself?

And what if Apple scores an exclusive with AT&T in which no one but AT&T gets to sell iPhones? What right does the government have to tell Apple that they can't make that decision for themselves?

Or Coke at McDonald's? Or Pepsi at Burger King? Or Dish network in my house but Comcast at my neighbors?

We live in a world of exclusives, everyone wants one. But for some reason when it comes to Intel doing it then all of a sudden it is evil and must be burned at the stake as such. It is weird, the schizophrenic approach to what is one universally generic situation involving practically all business activity.

 

[Idontcare]

this is spot on +10000 I used to do business with a friend from the old school computer fair days and way before we even had internet and the second intel found out you were selling a competitors cpu they would cut you off there supply chain.I can remember asking a bunch of people at computer fairs why they don't sell amd cpus and they all gave the same exact answer that intel would cut them out and not do business with them if they sold AMD.

Th

You think that is tough, try selling a Toyota when you are a licensed GM dealership, your GM dealership license won't get renewed. Or try selling Pepsi if you are a McDonald's franchise holder, guess what happens to your McDonald's franchise license. (hint: not much different than what your friends describe evil Intel doing)

Intel, so evil for doing absolutely nothing more than what everyone else in business does. LOL that. Let's not even get into the pharmaceuticals industry, people's heads will explode if we go there.

 

[grkM3]

You think that is tough, try selling a Toyota when you are a licensed GM dealership, your GM dealership license won't get renewed. Or try selling Pepsi if you are a McDonald's franchise holder, guess what happens to your McDonald's franchise license. (hint: not much different than what your friends describe evil Intel doing)

Intel, so evil for doing absolutely nothing more than what everyone else in business does. LOL that. Let's not even get into the pharmaceuticals industry, people's heads will explode if we go there.

Not even close to being the same as retail stores that sold pc parts sold a bunch of brand names and back then AMD was not allowed to compete fair as the big intel would bully there oems if they decided to carry amd.

A better analogy would be if you walk into sears and look threw all the brand name jeans and ask why don't you have xx brand and them saying well we sell a lot of tommy Hilfiger now and if we carry that xx brand hilfiger will stop selling to us.

I saw it with my own eyes bro,I clearly remember asking oems at random computer fairs and shows why they don't sell amd cpus and they all told me the same thing

If intel had its way stores like newegg would not carry amd and stores back in the day DID NOT because of intel forcing them not too.

Its funny how you mention the dealerships because in my area there is one guy that has like 40 dealships and all different brands.

look up herbchambers.com and see how many different brands he carries and most of them are on the same lots

another one in my area is tulleybmw and he legit sells like American cars on the same lot also

this guy on the same lot and dealership sells BMW,MAZDA,GMC and BUICK

http://www.tulley.com/index.htm

 

[Charles Kozierok]

So are they really bad? Or is it just a sore loser situation. The guy who loses out on the exclusive will always cry foul, no news there.

Well, I was curious, so here's what the FTC has to say about the matter:

Exclusive dealing or requirements contracts between manufacturers and retailers are common and are generally lawful. In simple terms, an exclusive dealing contract prevents a distributor from selling the products of a different manufacturer, and a requirements contract prevents a manufacturer from buying inputs from a different supplier. These arrangements are judged under a rule of reason standard, which balances any procompetitive and anticompetitive effects.

Okay so far.

But further down the page...

On the other hand, a manufacturer with market power may potentially use these types of vertical arrangements to prevent smaller competitors from succeeding in the marketplace. For instance, exclusive contracts may be used to deny a competitor access to retailers without which the competitor cannot make sufficient sales to be viable.

... which is pretty much exactly what is being alleged in this case.

But wait! It gets more confusing still:

Q: I am a small manufacturer of high-quality flat-panel display monitors. I would like to get my products into a big box retailer, but the company says it has an agreement to sell only flat-panel display monitors made by my competitor. Isn't that illegal?

A: Exclusive distribution arrangements like this usually are permitted. Although the retailer is prevented from selling competing flat-panel display monitors, this may be the type of product that requires a certain level of knowledge and service to sell. For instance, if the manufacturer invests in training the retailer's sales staff in the product's operation and attributes, it may reasonably require that the retailer commit to selling only its brand of monitors. This level of service benefits buyers of sophisticated electronics products. As long as there are sufficient outlets for consumers to buy your products elsewhere, the antitrust laws are unlikely to interfere with this type of exclusive arrangement.

So in the end, it seems to come down to a judgment call as to whether the exclusivity is beneficial or detrimental to the consumers as a whole, as well as how much of the market one company has locked up. So, it's no problem for, say, Intel to arrange with Dell to only use Intel chips, but if they start doing this with a large chunk of the market...

 

[podspi]

Antitrust law is very situation-specific. The larger and more successful you get the more careful you have to be.

Perfect example: Apple bundles Safari with OS X -- No problem
Microsoft bundles IE with Windows -- Antitrust violation

(And now we're back to Microsoft bundling IE with Windows and it is A-ok, at least in the U.S.)

I think a lot of people would benefit from reading these two wiki articles:

http://en.wikipedia.org/wiki/Rule_of_reason
and
http://en.wikipedia.org/wiki/Illegal_per_se

TL;DR: While some things are always illegal, some things are not always illegal

 

[Idontcare]

So in the end, it seems to come down to a judgment call as to whether the exclusivity is beneficial or detrimental to the consumers as a whole, as well as how much of the market one company has locked up. So, it's no problem for, say, Intel to arrange with Dell to only use Intel chips, but if they start doing this with a large chunk of the market...

Antitrust law is very situation-specific. The larger and more successful you get the more careful you have to be.

In other words it is entirely subjective, whose watching the people who decide these things and are they driving a mercedes while making $40k/yr on a government regulator salary?

Sounds like your classic situation of what could be black-and-white being intentionally held in a gray area so the corrupt can do what they like and when they like.

In other words, its just business as usual.

 

[Abwx]

How about proposing to each single retailer to put an "Intel inside" logo
in their PCs advertisements and get 50% of the adverisements costs
refunded with explicit clause that stipulate that the retailer must not
sell PCs that have an other CPU brand...??..

This was done in the whole Europe and Intel settled quickly with AMD
once they heard that the EU filled a complaint for their unfair practices...

Indeed , it s a given that 1.5bn was peanuts compared to the 15bn
(at least) that were spent to keep them from acquiring a critical size
that would had rendered them far more dangeourous than any uber
alles CPU.

 

[ShintaiDK]

Its funny, because the difference between lawful and unlawful is simply the size of the marketshare so to say.

Thats pretty bad, because you sit with something that is objective. AMD could for example do exactly what Intel did in both graphics and CPus and get away with it, simply due to marketshare size.

 

[Olikan]

Thats pretty bad, because you sit with something that is objective. AMD could for example do exactly what Intel did in both graphics and CPus and get away with it, simply due to marketshare size.

with such low marketshare, doing that is shooting your own foot...with a rocket luncher

Nvidia tryed to do that with XFX, and backfired against them... nvidia even had superior market share that time

 

[Lonyo]

Good God, the man who destroyed AMD, is now writing a self serving book to absolve himself of all blame and AMD fans are lining up to buy it.

Cult like stuff. D:

I've pre-ordered it.
I have 5 PCs, all Intel.
I have AMD and NV GPUs.
I own shares in Intel.

I'm buying it because I think it will be interesting to get a perspective on how things happened.
It will, of course, be insanely biased, but then most non-fiction work tends to be, because it's written by humans.
When it's an autobiographical type piece, that's especially true.
Doesn't mean you have to be an AMD fanboy to want to read it though.

 

[MisterMac]

IDC:

Your right that this is hypocritical subjective scenario - where the judging party gets full control of the outcome.
I don't neccesarily agree with this logic - but i think the reason governments are wary of intel is not only because of their size - but also because of the power they represent in the global community.

What companies in the world would you say has the most power and control over the general populace or how we live?

If Samsung disappered - would it destroy the global economy? the market place?
Would competitors be ready to snap up marketshare ? - Well, duh yes.

Intel (Atleast in my view) is becoming such a base driving engine (A CPU!! ) - in almost any field or anything we do construct\create.
This in term makes them EXTREMELY beyond all comprehension more powerful than any other company out there.

Facebook, Google, P&G, BMW, BET365, McDonald, WalMart etc - all of these companies are giants.

But they are also extremely replaceable - if they were missed from the global marketplace.

I can't see that happening with Intel. This puts them in the same league as the truly global major banks - you can't afford to not have them.
This gives them immense power - and i think that's actually Intel's greatest threat the next 10-15 years.

Itself.


That's why for the whole "greater good" thing - you need a little control over where Intel is going specifically.
It's not really fair for Intel - but on the other hand they're now gaurenteed to never fail.

I think Otellini and the directors are fully aware of this - and that's why they play their cards the way they do.
Accept and settle certain things upfront for some lump cash - in exchange for not being moved out of its position.

 

[Charles Kozierok]

Sounds like your classic situation of what could be black-and-white being intentionally held in a gray area so the corrupt can do what they like and when they like.

I think this is highly cynical and sort of misses the point.

The alternative to regulators is no regulators. And big corporations have proven that without oversight, they will take actions that help themselves to the detriment of small corporations and society as a whole.

There's nothing hypocritical about assessing an action taken by a company that already dominates a market as different from a similar action taken by a small competitor. The entire point is that exclusivity should be used as a reasonable tool to improve the efficiency of markets, and not as a cudgel to reduce competition. A company with 65% of a market is far more able -- and likely to be willing -- to do the latter than a company with 5% of the market.

 

[USER8000]

And big corporations have proven that without oversight, they will take actions that help themselves to the detriment of small corporations and society as a whole.

Correct.

Considering light regulation of the financial sector,lead to the worst recession in a century worldwide,its funny that people make excuses for companies to do what they want,and had to be bailed out by the taxpayer who now has more debt,will eventually need to pay more tax and get less services worldwide.

The only people who didn't want more regulation were employed by the firms or were making money out of the results of light regulation.