Entries in intel (1)

Saturday
May162009

Trends point towards increased regulation of high tech success 

Earlier this week, EU regulators levied a record $1.45 billion fine on Intel for anticompetitive practices. Through a suit brought by main competitor AMD, the commission found that rebate conditions and predatory pricing schemes violated anti-trust laws.

This exorbitant fine is bad news for the Intel, but even worse news for consumers. In the current down economy, Intel is a bright light of innovation and success that has not only revolutionized the computing industry but provided a massive engine of job growth. According to the Association for Competitive Technology:

For the past 20 years, the microprocessor industry has delivered more innovation, more speed, more functionality, and lower prices...Over the past 10 years, the average price of Intel's PC microprocessors has dropped by 60 percent. When the only one complaining about the competitive situation is AMD, it raises serious concerns about the efficacy of this action.”

This aggressive action against a company that is currently resilient enough to actually have the cash on hand to pay the fine (CEO Paul Otelinni announced two days ago that Intel has a healthy $10 billion cash balance) may be a harbinger of increased regulatory activity this side of the Atlantic.

Indeed, Ms. Christine Varney, the new commissioner of the Justice Department's antitrust division is scheduled to make a speech on Monday at the Center for American Progress outlining her intent to revive antitrust actions. Technology is one of the industries specifically expected to be targeted.

The question is: Why are governments going after high tech?

From Chairman Craig Barrett:

"The antitrust rules and regulations seem designed for a different era. When you look at high-tech companies, with the high R&D budgets, specialization and market creation they need to hold their big market shares, it's so very different from the old world of oil companies and auto makers that the antitrust regulations were designed for. They are out of sync with reality."

So the EU and American regulators are going to go after Intel (and TechCrunch predicts Google is next) where the vitality and money can be found, while propping up moribund industries like cars and encouraging massive consolidation in finance. How is this a recipe for innovation and growth?