New York Attorney General Andrew Cuomo (no relation to Weezer frontman Rivers Cuomo, as far as I can tell) has filed a federal antitrust suit against the chip giant. The suit alleges (stop me if you've heard this before) that Intel unfairly kept rival Advanced Micro Devices
Cuomo's suit rests on much the same evidence that inspired European regulators to slap Intel with a $1.45 billion fine a few weeks ago. The legal framework in Europe is a little bit different from the American system, and the central issue of loyalty rebates seems to be less tempered by trial by fire in our courts than in theirs. The attorney general's action may encourage the FTC to take action against Intel, much like it did against Microsoft
Cuomo's office has been working on this case for two years, and AMD's private antitrust complaint against Intel is nearly four years old. Nobody should be surprised by today's action, in other words. The European decision might have been the final straw that broke the camel's back. But Cuomo could also be using the suit as a campaign tool; he is expected to run for governor of New York next year. He is making quite a name for himself by launching investigations into mega-corporations like Intel and Bank of America
Whatever the motivation, the potential influence on the FTC's investigation is probably more important than this specific lawsuit itself. The FTC has the power to force Intel's hand like it did Microsoft's; it can impose changes that ensure Intel conducts business more fairly in the future. That seems more valuable to me than a large fine paid to some government agency. I don't really want Intel to fund the bailouts, you know. Also, AMD's private suit could win the underdog some much-needed settlement payments, if everything goes AMD's way.
But it would take a truly massive fine to make a material difference to Intel's balance sheet. Even the European Commission's punishment, while very large and impressive, amounts to nothing more than a slap on Intel's wrist. The company has $13 billion in the bank and will survive any reasonable amount of legal firestorms.
So the fallout and collateral damage is more interesting to me than the lawsuit itself. As an AMD investor, I'm supposed to hope that the dominoes start falling. But I don't. I'd much rather see AMD making its bread in the marketplace, on a level playing field, than in the courtroom. I'm old-fashioned that way.
Do you think the legal attacks will make Intel change its business practices -- or perhaps that this has happened already? Share your thoughts in the comments below, dear Fool.