European Union wants to kill innovation

Someone should fine the European Union for stifling worldwide innovation. No, really–I’m serious. In the decision handed down today to fine global silicon manufacturer Intel (INTC) the sum of $1.45 Billion, the EU essentially is forcing Intel to watch its every move in both national and multinational arenas. Essentially, this will cause Intel to impose internal restrictions (read: bureaucracy and red-tape) on how it competes with other silicon manufacturers, specifically it’s little brother, Advanced Micro Devices (AMD). I firmly believe that the EU made the wrong call on this one as they admittedly have no hard evidence that any anti-competitive practices were being done by Intel. In fact, their only basis for the fine is speculation that Intel made secretive verbal agreements with 3rd party companies in order to force them into buying Intel-only chips. This makes absolutely no sense for several reasons.

First, just a few years ago AMD was stealing huge portions of market share from Intel with very new and incredibly powerful multi-core and 64-bit processors. Intel was sticking with it’s Pentium 4 line of processors and was content to simply increase the processor clock speed every 6 months or so, but AMD woke the sleeping giant and threw Intel’s R&D department into a frenzy. Intel quickly began to close the gap with their Pentium D processor line. A few months later, they released the Core Solo and Core Duo processor lineups and quickly followed those with the more efficient Core 2 Duo processors. Intel was back in the game and before AMD knew what hit them, Intel had retaken the market share and then some. Now, Intel’s Core i7 processors are taking AMD and others to the woodshed for a lesson in processor power, performance, and efficiency. Intel’s product is simply years ahead of the competition.

Second, most PC manufacturers (Apple included) are interested in making their customers as happy as possible (okay, really just making the most money possible) by building the highest quality products. Perhaps this is not the case across the board, but generally most of the machines you can pick up off a store shelf are fast and reliable. And just about all of those run on chips made by Intel. Apple Computer, known to use some of the most robust hardware in the business, is not using AMD chips–instead they use Intel processors. If AMD’s lineup were indeed better, don’t you think they’d switch? I certainly do… You just simply cannot fine a company for being good at what they do. It’s retarded. If AMD and others were just as good, then competition would be more intense. This is just simply not the case.

Finally, the evidence put forth isn’t really evidence. It’s hearsay. When was the last time you heard of a court charging someone with murder without any evidence; material, circumstantial, or at least from an ear or eye witness? The verdict from the judge/jury nearly always points to the evidence presented to them by the prosecution. Yet in the instance between the EU and Intel, we see and hear no evidence whatsoever. Intel has asked for it, but the EU cannot produce it. Instead they’ve fined the company on a ‘gut feeling’ or perhaps it’s just a whim. I imagine that companies like AMD have just been whining to the EU for so long that they’ve finally decided to do something about it to quell the complaints. Definitely not a good reason.

I look back to another instance where the EU seemed to have lost it’s mind. They charged Microsoft with violating antitrust laws and forced them to create versions of Windows that did not contain the normally-bundled Windows Media Player. They cited the fact that customers needed to have a choice rather than being forced to use WMP over other players. I just don’t understand this either. What about Apple’s bundling of iTunes and Quicktime with every version of OS X? How is that not identically anti-competitive? Actually, I don’t believe that either companies are guilty of violating antitrust laws. They simply make a product that contains obviously related other products. How would you like to have to go find your own calculator, text editor, Internet browser, file explorer, media player, and so on immediately after booting your computer for the first time? It’s tedious and pointless. In fact, if the OS didn’t include a web browser, you would need to use another computer to obtain one. It makes absolutely no sense whatsoever to force companies like these to do the bidding of an organization that obviously does not understand technology. It makes me sick.

Find some hard evidence of wrong-doing or back off, EU. I don’t like your constant interference with American companies.

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  • Filipe Oliveira

    If you were at all well informed about intel vs AMD and competition you would know that intel paid off many laptop and desktop supliers  most big suppliers to hold off against selling similar machines with amd chips and was fined billions, so if EU say watch your step its not to stop innovation it is clearly to promote healthy competittion and avoid stupid lawsuits and fines that which money could go into manking products available cheaper to end user.

  • Anonymous

    Your claims cannot be proven. Essentially, the EU ruled on speculation and hearsay, not cold, hard facts. Goes totally against the whole: “innocent until proven guilty” thing.

    Now, was Intel likely involved in some gray-area dealings with other companies? Potentially, yes–and if so, they’re totally wrong. However, I highly doubt those *potential* mis-dealings were worth $1.5 BILLION.

    Regardless, the fact remains that AMD has fallen behind in innovation and leadership, whether due to mismanagement or lack of funds, I don’t know. But they are consistently 6 to 12 months behind Intel, and I guarantee that their position has nothing to do with anything illegal on Intel’s side.

    All in all, the EU is just full of jerks using their power over commerce to manipulate large companies. They EU had no justifiable right to impose such a fine in the way they did.