Intel's (INTC) Worst Day: Why Didn't IBM Rat On Mr. Chips?

There may have been a time when Intel (NASDAQ:INTC) wanted to be the next Microsoft (NASDAQ:MSFT), at least in terms of earnings, market cap, and share of market. It has, in essence, followed in Redmond’s footsteps, at least with antitrust authorities.

Intel is becoming more embroiled by the month in charges that it used threats and kickbacks to keep PC and servers companies from doing business with its smaller competitor AMD (NYSE:AMD). AMD is close to ruin, though it is a matter of opinion whether its current state was caused by former CEO Hector Ruiz or Intel’s clandestine actions.

New York Attorney General Andrew Cuomo filed antitrust charges against Intel Corp., alleging the company threatened computer makers and paid huge kickbacks to stop them from using competitors’ chips, according to The Wall Street Journal. Among the companies that Intel may have threatened are IBM (NYSE:IBM), Dell (NASDAQ:DELL), and Hewlett-Packard (NYSE:HPQ).

Intel has already been fined $1.56 billion by the EU for anti-competitive behavior. That judgement will almost certainly be appealed. The FTC is also looking at Intel’s past business practices.

Like Microsoft before it, Intel is faced with the potential of multiple actions which might include the Justice Department and regulators in other large developed nations with strict antitrust regulations, particularly Japan and South Korea.

The NYS announcement raises several important questions. The first is whether any of Intel’s customers can claim that they were damaged by not being able to do business with AMD which, for a time, had several chip products that were considered superior to Intel’s.

The second, and perhaps more pressing question, is why companies like IBM and HP, which are larger than Intel, would allow themselves to be bullied and bribed for what may have lasted for years. Is there a reason that the companies did not bring Intel’s actions to the attention of the Justice Department?

Where were the general counsels at IBM and HP when management needed them? Certainly not riding around in the yachts that Intel bought them