ACT RESPONDS TO FTC LAWSUIT AGAINST INTEL

FTC IGNORES PLEAS FOR CAUTION AND FILES LATE HOMEWORK ASSIGNMENT

Washington – Today, the Federal Trade Commission sued Intel Corp. charging that the company has abused its dominant position in the computer chip market.  This lawsuit comes just days after ACT asked the FTC to proceed with extreme caution in this case, because it has the potential to disturb the dynamics that have pushed the chip industry to unprecedented levels of innovation and price decreases over the past 40 years.

In response to the lawsuit, ACT president Jonathan Zuck said:

“The FTC’s complaint is a hasty solution to some hypothetical and imaginary issues. Following the settlement between Intel and AMD that resolved the core issues that the FTC has been investigating for more than two years, the FTC has slapped together a completely new set of allegations into this complaint. The result is a complaint reads like a late homework assignment, with little substance and lots of rhetoric.”

“The decision to pursue a case under Section 5 versus Section 2 of the Sherman Act seems to be a realization that it is impossible to make the case that consumers have been harmed by higher prices or less innovation. Commissioner Rousch admits as much in his opinion.  The pace of innovation and price reductions in the chip market is simply unparalleled by any other industry.”

“One of the most troubling aspects of this complaint is that it appears to advocate for an expropriation of Intel’s intellectual property, which is a dangerous precedent for all innovative firms large and small.”

“The real question is “why is the FTC rushing this case?” They took more than 2 years to investigate their concerns about Intel’s pricing programs without filing a case, but they are now pushing these new claims out the door without giving them more than a couple months of thought? All companies deserve a fair and transparent investigation.”


As ACT found in our recent study, Exponential Innovation, the computer chip market is delivering unparalleled benefits to consumers and OEMS.

  • Innovation Levels Outpace Any Other Industry – The chip industry has kept pace with Moore’s Law, doubling the speed of computer chips every 18-24 months.  From 2000-2008 alone, the speed of the average chip has increased by 28 times.
  • Chipmakers Continue Massive R&D Investments – Chipmakers spent $45.7 billion in 2007 on R&D and related engineering activities.  With R&D investments greater than 15 percent of sales, chipmakers rank among the top R&D investors in a cross-industry comparison.   In absolute numbers, the semiconductor industry is expected to spend nearly $35 billion in 2009, placing it below the pharmaceutical industry but above the software industry, which includes such R&D heavyweights as Microsoft and Google.
  • Prices Decrease Faster Than Any Other Industry – According the Bureau of Labor Statistics, the quality-adjusted price of computer processors has fallen faster than any other industry in the past decade.  Computing power that cost $2.73 in 1996 cost a penny in 2006, and, from 2000 to 2008, relative processor performance among high-end chips increased by approximately 28 times while the price was cut in half.

The full “Exponential Innovation” Report can be found here: http://www.actonline.org/library/act-paper-exponential-innovation.pdf