AMD accuses Intel in vendor payoff scheme

There's no love lost between rival chipmakers AMD and Intel, and this week's news isn't going to improve the relationship. According to legal filings and news reports, AMD alleges that Intel has paid major computer manufacturers not to use AMD products. The company filed a 108-page document with the court this week containing more details of the alleged scheme, but many of the points remain redacted. (According to Intel, AMD isn't alleging any new complaints in its latest filing, it's just making a few more of those complaints available to to the public.)

AMD and Intel have been fighting it out in court since 2005, when AMD first accused Intel of being a monopoly under anti-trust law. Intel has long been the market share leader in computer CPUs (actually, it's been the leader ever since PCs were invented), but AMD began to challenge that leadership in 2003-'04 as AMD innovated some then-unprecedented features into its chips, releasing the first 64-bit CPU and the first dual-core chips for consumer-level computers.

AMD's lawsuit alleges that rather than innovate a competitive response, Intel instead leveraged its vast power in the market to have AMD pushed to the sidelines by paying Dell, Gateway, Acer, HP, and others not to use AMD chips. (Of course, Intel did eventually mount a response: When the Core series of chips were released in 2006, Intel regained its place as the producer of the best chips on the market, a spot it's held ever since.)

Though I am not a lawyer, pay-for-placement schemes like this, if the allegations are true, are not immediately and universally illegal (after all, this is a big reason why Blu-ray ultimately beat HD DVD), but it will be up to the courts to decide whether legal lines were crossed. Intel has denied any wrongdoing, saying in its filing that any payments made simply amount to rebates and price cuts.

I'll also note that all of the companies mentioned, to my knowledge, have always offered products with AMD chips, even though they may not make up a large part of the product portfolio. That said, AMD accuses Intel of a whole range of wrongdoing, including predatory pricing and even tampering with benchmarks to make its products look better. Again, Intel denies all such claims in its response.

There clearly won't be a resolution to this issue until it is dealt with by the courts, and that seems some years off, unless a settlement is brokered. (The trial is already three years old: The current kerfuffle is over how many depositions each side can call for, so we're in for a long haul.)