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Cloud Expo: Article

We Didn’t Do It: Intel CEO Otellini

Otellini also accuses the EC of ignoring, disregarding and misusing evidence

Intel CEO Paul Otellini categorically denied that Intel did what the European Commission said it did Wednesday morning when it fined the American company an unprecedented $1.45 billion for allegedly foreclosing AMD from the microprocessor market. It is the largest fine the EC has ever levied in its history.

Otellini said on a press call that Intel was innocent of any exclusive dealing. Its rebates were not predicated on keeping AMD out of accounts. They are just volume discounts. "The more you buy the less you pay," he said.

He expects the confiscatory decision to be overturned on appeal. Of course Microsoft had similar hopes in its first go-round with the EC only to have them dashed.

Otellini also accused the EC of ignoring, disregarding and misusing evidence.

During its investigation the EC refused to demand OEM affidavits taken by both Intel and AMD during discovery in the massive AMD v Intel suit, due to go to trial next year, that Intel claims would exonerate it.

Intel is restricted by a protection order from simply turning the evidence over to the EC but the Commission could have demanded it and wouldn't. Intel went to the Court of First Instance last year to try to force the EC to get it but the court told Intel to bring it up on appeal.

The EC itself admitted Wednesday that no conditions were written into Intel's contracts but claimed that they were "hidden," and that proof only came to light when the EC raided Intel, OEM and retail offices and pulled e-mail. It also said it has statements from unidentified companies and "evidence that Intel had sought to conceal the conditions associated with its payments."

Otellini said the EC's talk of kickbacks made it sound like Intel goes around with suitcases full of money and since the Commission's investigation involved "tens of millions of documents" the fact that it's basing its case on "oral, unwritten, hidden" evidence made it thin and would be helpful to Intel on appeal.

He noted that no OEMs had joined the complaint.

Otellini scoffed at the idea that the EC was protecting consumers against higher prices. "One thing they can't do," he said, "is repeal Moore's Law. During the term of its investigation processor prices have declined by a factor of 100."

The EC's decision runs some 542 pages and Intel didn't get a copy until hours after the Commission's press conference Wednesday morning. Then they faxed it over.

All Intel had was a three-page synopsis that the EC faxed to Intel's European manufacturing headquarters in Ireland although Intel's chief counsel Bruce Sewell was standing right there in Brussels. The synopsis reportedly contained no more information than the EC's press release.

What is still completely unclear to anyone at Intel, Otellini said, is what it will take to comply, especially since Intel claims it doesn't do any of the things it is alleged to have done.

The company found itself in a similar situation in Japan, where AMD also stirred up a hornet's nest with the antitrust authorities, and says it "agreed not to do what we weren't doing already." There was, however, no fine involved in Japan, especially not a historic one.

Intel is naturally afraid that - even after a close hearing of the massive tome - that the EC will play gotcha like it did with Microsoft, and not explain what it will take to comply like it did with Microsoft, and expect Intel to intuit its esoteric rules and then turn around and up the fine like it did with Microsoft.

Until it gets a handle on the remedies, Intel is at a loss to know how it may affect business but Otellini said "it's hard to imagine that the dynamics of competition would change."

The EC is insisting on compliance during the appeal, which could take two or three years, and Otellini was unsure whether compliance meant worldwide. The EC does have those kinds of pretensions however and could interpret a chip sold in China as having an effect within the European Economic Area (EEA).

Intel is supposed to pay the fine in the next 90 days. With the appeal, the money will be escrowed. It represents 4.1% of Intel's revenues last year. The maximum the EC could have demanded is 10%.

The Commission intends to publish its decision on its web site once it's been redacted.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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