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Apple's cloud visions with Lala vs. AT&T's cloudy prospects for 3G (podcast)

Publié: décembre 17, 2009, 11:33pm CET par Scott M. Fulton, III
By Scott M. Fulton, III, Betanews

In an apparent effort to appear as though the company is reversing its stance on a minority of customers consuming a disproportionate chunk of bandwidth, AT&T Mobility Chairman and CEO Ralph de la Vega is quoted by the Wall Street Journal yesterday as saying the company has "not made any decision" about implementing a tiered pricing structure.
Such a structure would have served as a sort of penalty for users who consume what AT&T may consider too much bandwidth, however much that is. As of Wednesday, de la Vega's position has changed, saying now that his company is considering "incentives" for customers to use less data, though declining to go into further detail...other than to enable the WSJ to spread the term "incentives" around.
Click here to listen to What Are We Learning Today? (MP3 file) -- Today's topic: Apple, Lala, the cloud, and the AT&T roadblock
The change from stick to carrot may not be a significant shift in position for the exclusive carrier of Apple iPhone service in the US. Last week, the company made an apparent -- and still officially unannounced, though unofficially acknowledged -- purchase of music streaming/cloud service Lala. A shift in Apple's business model for iTunes to one that incorporates Lala would most certainly raise traffic levels for AT&T, at a time when the network is indicating it can't handle them.
Our latest podcast introduces Apple to the cloud, Apple to Lala, and AT&T to its destiny. Why did Apple make the investment in Lala in the first place, and could AT&T be the proverbial wrinkle in the ointment?
Source material for today's podcast
- iTunes gets cloudy: Will a web-ified future save iTunes or kill it? by Carmi Levy.
- "Lala joins Apple." Blog post from Lala.com.
- "Switched On: Apple's song remains the same" by Ross Rubin, Engadget, December 8, 2009.
- "AT&T to New York and San Francisco: We're Working on It" by Andrew LaVallee, The Wall Street Journal, December 9, 2009.
- "AT&T to Urge Customers to Take Data Traffic Off Wireless Network" by Niraj Sheth, The Wall Street Journal, December 16, 2009.
- Satirical blog post may incite real AT&T protest on Friday by Tim Conneally.
Copyright Betanews, Inc. 2009
Can 'Operation Chokehold' be stopped? Will you join the AT&T DoS?

Publié: décembre 17, 2009, 11:23pm CET par Joe Wilcox

By Joe Wilcox, Betanews

The strangeness spinning around AT&T's quality of service is starting to make Christmas feel like Halloween. It's scary and tantalizingly inviting to observe. It's like watching a train wreck or freeway pileup in horror and awe. Does Apple have an app for that?
Tomorrow, a service which reliability many customers have questioned, may be intentionally brought down. Whether or not there is any action or even if it fails, everything is different now -- not just for AT&T but any company looking to manage customer relations. The crowd has found a voice. Will the AT&T mob be more American Revolution or French Revolution and its "reign of terror?"
What a strange 10 days it has been for AT&T. How did it comes to this? On December 7, AT&T released the "Mark the Spot" app that lets iPhone users notify the carrier about service problems. The next day, Network World recapped a Root Wireless study that revealed AT&T consistently has the fastest 3G service of any major U.S. carrier. OK, if data's so fast, why can't telephony be more reliable? A day later, AT&T's Ralph de la Vega started talking about imposing data caps on wireless users, which would be one way to address service problems. Say what? Cap the same people who are required to purchase a data plan with their smartphone?
Then Fake Steve Jobs (aka writer Dan Lyons) called for "Operation Chokehold," in response to AT&T's demand that customers use less data. The idea: To consume even more data on AT&T's network tomorrow, December 18, at 3 p.m. ET, thus bringing down AT&T's service. He wrote on December 14:
Subject: Operation Chokehold On Friday, December 18, at noon Pacific time, we will attempt to overwhelm the AT&T data network and bring it to its knees. The goal is to have every iPhone user (or as many as we can) turn on a data intensive app and run that app for one solid hour. Send the message to AT&T that we are sick of their substandard network and sick of their abusive comments. THe idea is we'll create a digital flash mob. We're calling it in Operation Chokehold. Join us and speak truth to power!
Plan of Attack
If I hadn't switched from AT&T to T-Mobile in October, I likely would join in tomorrow's planned denial-of-service attack. Whether or not the call to action was real or a gag designed to drum up pageviews for Fake Steve Jobs no longer matters. There appears to be real momentum behind AT&T customers -- particularly iPhone users -- venting their frustrations in one massive crowd-sourced DoS.
That said, surely AT&T is planning for the attack and people often flake out last minute. Chokehold could yet be a half-hearted headlock that AT&T easily escapes. Success or failure is no longer the point, but what the noise means.
Today, at Gizmodo, Adam Frucci threw his support behind Fake Steve Jobs in post: "FSJ's Anti-AT&T Manifesto Makes Me Raise My Fist in Solidarity." Frucci has plenty of company. Operation Chokehold support is surprisingly widespread, with social media services joining -- and perhaps usurping -- bloggers and news sites driving the message.
Over at the Apple 2.0 blog, Philip Elmer-DeWitt asks: "Can kids bring AT&T to its knees?" He observes that the Facebook Operation Chokehold fan page has a young audience: "Scroll down the members list for affiliations and you'll see a few companies, a bunch of colleges and a whole lot of high schools."
Maybe, but how many high school students have AT&T phones with data capabilities/plans? It's the large number of college participants that pose a greater risk. As of this posting Operation Chokehold has more than 3,400 Facebook fans. That's not bad for something that started as a gag -- or seems to be. It's sometimes hard to separate Fake Steve Jobs' sarcasm from Dan Lyons' anger.
Crowding 'The Man'
This isn't just noise or one blogger -- Dan Lyons -- ranting. The planned attack on AT&T demonstrates the new power of the crowd, and it should be big lesson to any company about how social media is changing customer relations. One voice easily becomes many, particularly when there are shared common problems -- or frustrations. If the mob does unite and successfully brings down AT&T's network, customer relations will never be the same, anywhere.
The social media services that have allowed people to create fan pages and organize impromptu meet-ups or parties can be used to organize something else: Actions against the corporate establishment. There have been plenty of minor actions, but nothing quite as visible or on the potential scale of Operation Chokehold. Perhaps in a different era, these tools would be used more to express social outrage. "The Man" is no longer the government but more the corporation and the quality of services it provides.
There is a Facebook fan page, Operation Cuckoo, opposing Operation Chokehold, but as of this writing it has less than 70 members. The mob isn't against action but for it. Fake Steve Jobs may have tapped into something much, much bigger than he ever expected. It's now Frankenstein out of control.
Today's question: Can the one voice silence the mob it generated? Yesterday, Lyons applied some friction to Operation Chokehold. Jennifer Van Grove writes at Mashable:
With the crusade date and time (Friday) fast approaching, and proponents and opponents coming out of the woodwork, Fake Steve appears to be doing the that's-not-what-I-really-meant backtrack dance. In his latest blog post, Lyons's conscience makes an appearance and seems to drown out the voice of Apple's fake -- and now fearful -- leader.
Fake Steve Jobs writes in that blog post: "For what it's worth, we don't expect many people to participate in the flash mob. Even if all 1,600 fans of the Facebook group participate, that's probably not enough people to crash a network. Is it? Truth is, I hope not." The number of Facebook fans has doubled since yesterday, and surely there are many more. Then comes the reversal of Lyons' earlier outage: "I really don't want to cause any actual harm to my fellow AT&T users. Quite the opposite -- I feel as if we're all caught in the same horrible prison, suffering alongside one another."
That was yesterday. Today, Lyons shows continued interest in Operation Chokehold and as Fake Steve Jobs has written post after post attacking AT&T. The picture above was sent to Fake Steve Jobs' by reader Luis. Meanwhile, AT&T is preparing its defenses. Today, the Wall Street Journal reported that AT&T plans to offer customers incentives to cutback data usage rather than penalize them for heavy usage. But is there really difference? That's a question I ask you to answer in comments -- and please tell everyone if you support or oppose Operation Chokehold.
Copyright Betanews, Inc. 2009
FCC grants Verizon extra time to explain its hiked termination fees

Publié: décembre 17, 2009, 9:18pm CET par Tim Conneally

By Tim Conneally, Betanews

Early in December, the Federal Communications Commission sent an inquiry to network provider Verizon, asking why the company doubled its Early Termination Fees in November and whether customers were properly notified and informed. Additionally, the Commission addressed the controversial $1.99 mobile Web connection fee, some claim is a dishonest method of obtaining service charges from customers for their accidental keystrokes.
Verizon's response was originally due at the end of today's business day, but the carrier asked for more time. Today, the FCC granted Verizon three more days to finish its response, and on Monday we will find out the answers to some rather blunt questions from the FCC.
One of the most important questions concerns Verizon's justification of the increased fees. Verizon has made statements to the press that "advanced devices" have made the increase in fees necessary. The commission asked the rationale behind this, the cost differentials between what Verizon spends on these devices versus what it charges the customer, and how the levels of the termination fees relate to the cost differentials of "advanced devices."
Copyright Betanews, Inc. 2009
Analytics: 15% of all Android devices are Motorola Droids

Publié: décembre 17, 2009, 6:26pm CET par Tim Conneally

By Tim Conneally, Betanews

This morning in the Android Developer's Blog, Google Engineer Raphaël Moll announced the Android device dashboard, a statistical tool which lets developers know which Android versions are most commonly used.
Today's dashboard's data is accurate up to three days ago, and provides insight into the mix of Android devices out in the wild.
As you can see, Android versions 1.5 and 1.6 comprise the vast majority of Android installations at present, nearly 82%. Devices presently running 2.0.1 make up just under 15%.
While this is a handy tool for developers to single out the version for which they should develop, it is also somewhat useful for gauging the penetration of the various Android devices. The Droid Eris by HTC and Cliq by Motorola, for example, are both based on 1.5, while the HTC/T-mobile G1 and MyTouch3G run 1.6. The Motorola Droid, which is the only Android device officially running version 2.0.1, therefore makes up 15% of the Android population by itself.
This data is, of course, only so accurate. It is gathered from Android devices that have accessed Android Market within a 14-day period ending on the data collection date (Monday). So if an Android user did not access the market in the last two weeks, his device was not counted. Furthermore, there is no way of knowing which device is running which version, so it is possible that more people have rooted their phones and installed different versions, instead of leaving them with the manufacturer-sanctioned OS version.
Copyright Betanews, Inc. 2009
RIM confirms BlackBerry e-mail outage

Publié: décembre 17, 2009, 5:46pm CET par Tim Conneally

By Tim Conneally, Betanews

Research in Motion said this morning that North American customers could be experiencing delays receiving e-mail on their BlackBerry devices today. Betanews has seen the outage first-hand: E-mails have not been reflected to one of our BlackBerry devices since approximately 8:20 pm ET yesterday.
Though the specifics of the outage have not been detailed yet, the problem is isolated to RIM's BIS push e-mail services; and voice calls, Web browsing, and text messaging are not affected, the company has said.
"Our technical teams are working to resolve this issue for those impacted. Phone services, browsing and PIN-to-PIN messaging are not impacted. We apologize for any inconvenience," Research in Motion said.
Customer complaints in BlackBerry forums started rolling in at around 7:00am EST, and have continued throughout the morning. Twitter is currently full of individual reports confirming the outage all over the United States and Canada.
There is currently no estimated time of repair for the issue. Betanews continues to investigate.
Copyright Betanews, Inc. 2009
With 'Avatar' close at hand, the Blu-ray 3D spec is launched

Publié: décembre 17, 2009, 3:29pm CET par Tim Conneally

By Tim Conneally, Betanews

Now that the theatrical release of James Cameron's Avatar is only hours away, the Blu-Ray Disc Association has announced the final release of the Blu-ray 3D specification.
During Panasonic's keynote at CES 2009, Cameron spoke about the production of Avatar and his collaboration with Panasonic on the acceleration of 3D Blu-ray technology. The film, which debuts nationwide at 12:01 am tonight, was filmed with new stereoscopic cameras that were still in development as filming took place. Panasonic, as well as other Blu-ray Disc Association member companies, devoted floorspace at CES to showing off the possibilities of 3D in the home.
Today, Victor Matsuda, chairman of the Blu-ray Disc Association's Global Promotions Committee said, "Throughout this year, moviegoers have shown an overwhelming preference for 3D when presented with the option to see a theatrical release in either 3D or 2D. We believe this demand for 3D content will carry over into the home now that we have, in Blu-ray Disc, a medium that can deliver a quality Full HD 3D experience to the living room."
The BDA says that the Blu-ray 3D specification encodes 3D video using the Multiview Video Coding (MVC) codec, an extension to the ITU-T H.264 Advanced Video Coding (AVC) codec currently supported by all Blu-ray Disc players.
"MPEG4-MVC compresses both left and right eye views with a typical 50% overhead compared to equivalent 2D content, and can provide full 1080p resolution backward compatibility with current 2D Blu-ray Disc players. The specification also incorporates enhanced graphic features for 3D," a statement from the group said.
A BD-3D player will be able to be hooked up to any display and output three dimensional imagery, the BDA said today, and the most popular Blu-ray player of all time, Sony's PlayStation 3, has been taken into consideration in the spec. The consoles will reportedly be able to support the discs.
"3D playback will require a new player in most cases," Pioneer's Andy Parsons, Chairman of Promotion at the Blu-ray Disc Association told Betanews this morning. "Some existing playback systems might be capable of a retroactive upgrade to 3D playback if they were designed to accommodate it, but this would most likely be the exception and not the rule. The new 3D specifications do provide a way for 3D titles to be played in 2D on existing players if they are authored this way -- this is a studio decision."
So to answer the question: Blu-ray 3D discs are designed to be compatible with standard BD players, they just won't be in 3D when played back in one.
The Spec will be available to manufacturers soon, and the BDA expects the first Blu-ray 3D products to be available in 2010.
Copyright Betanews, Inc. 2009
10 Things you shouldn't give Steve Ballmer for Christmas

Publié: décembre 17, 2009, 7:20am CET par Joe Wilcox

By Joe Wilcox, Betanews

Microsoft CEO Steve Ballmer is a man who has pretty much everything. That makes him a difficult person to buy holiday gifts for. God forbid, if you're the Microsoft employee who picks Ballmer's name to be his secret Santa. Just because Ballmer might have everything, doesn't mean you should buy him anything.
I couldn't resist putting together a list of things not to buy Microsoft's chief executive. It might seem like a slow news day thing to do. In fact, Tuesday was a busy news day. This is all just holiday fun.
But how to present the list? I considered writing long explanations, but decided instead to use links -- mostly to somewhere other than Betanews. It's the giving season, so we're giving some link love to other sites.
I'm considering a second list on what might be appropriate to buy Ballmer for Christmas. I'm collecting reader suggestions by e-mail or comments. The gift suggestions could be funny (as in gag) or totally sincere. You might ask yourself what Ballmer deserves this holidays, which bring to close his first decade running Microsoft.
So-o-o-o, if you value your life, don't buy Steve Ballmer any of these things:
1. An iPhone
2. Toyota Prius
3. Windows 7 Family Pack
4. New wardrobe
5. Bobblehead Steve Jobs
6. MSN Direct Watch
7. Plane ticket to Brussels
8. Ballmer puppet
9. Dinner with Don Dodge
10. A new hat
Do you have a gift to add to the list? Please do so in comments.
Copyright Betanews, Inc. 2009
Ask Santa for one of these compact digicams for Christmas

Publié: décembre 17, 2009, 5:30am CET par Joe Wilcox
By Joe Wilcox, Betanews

Are you shopping for or asking Santa for a compact digital camera this holiday? Sure, it seems like everyone who is anyone wants a digital SLR for their Christmas stocking. But compacts have their place -- and a newer crop are closer to digital SLRs in performance and photo quality.
But to be fair, close is still a long ways off. Shutter response, action shooting, optical viewfinder, photographic quality and changeable lenses all put dSLRs way ahead of compacts. Still, compacts can be easily carried pretty much anywhere, and many newer models sport surprisingly pro features.
I would want to receive or give any of the digicams listed below for Christmas. None is perfect, and each has different strengths I will highlight. I present them in no order of importance. What features appeal to one person might not appeal to others. Besides, a digital camera is more than about features. It's about handling and ergonomics, too. Anyone considering any of these digicams should try them out in a store. Feel them. Handle them. Use them. Get to know them. This isn't a gadget purchase but a relationship.
Canon PowerShot S90
The PoweShot S90 is a simply delightful and innovative pocket digital camera. The f/2 lens lets in more light than do most other compacts, and the multi-function control ring (around the lens) will make amateur shooters feel like pros. Meanwhile, the same control ring, 10-megapixel CCD sensor and RAW support should appeal to pros looking for a small carry-along camera.
I can't say enough good about the multi-function ring, which gives the shooter surprisingly easy access to changing settings. A review at Steve's Digicams, emphasizing the lens ring's functionality, sold me on the S90. But that review is gone following a massive site redesign. The replacement review is more a features list. At Gizmodo, Matt Buchanan's S90 review -- "It'll Never Leave My Pocket (Except When I'm Taking Pictures)" -- captures a geek's reaction to the lens ring, which he found to be awkward to use; I didn't.
Highlights:
- f/2 lens
- 10MP sensor
- RAW shooting
- Image stabilization
- Multi-function ring
- 28mm-105mm zoom range
- Good low-light performance
- Same sensor as PowerShot G11
Dings:
640 x 480 (no HD) video
Street Price: $400 (Spend another $35 and get the Canon PSC900 deluxe leather case)
I highly recommend the S90 to just about anyone -- novice, amateur or pro -- who doesn't care about HD video in a compact digicam (I'm someone who does). The multi-function ring alone makes the S90 a helluva geek stocking stuffer. By the way, I recommend that most anyone considering the larger PowerShot G11 to choose the S90 instead.
Sony Cyber-shot WX1/B
I would never have considered the WX1/B if not for using it. Sony's pro compact takes surprisingly sharp pictures, which perhaps says something about the "G" lens and sensor matchup. The compact is solidly constructed and comfortable to use. Sony has a habit of overwhelming performance with features. But the WX1/B is an exception.
I found the 10-pic burst mode setting to be a bit odd, yet it delivered satisfying results while shooting a high school volleyball game. Small gripe: The feature ties up the camera from other uses for too long, at least for my tastes. The Cyber-shot offers excellent face detection, which improves self-portraits and group shots (It will delight teens). The auto macro mode is simply awesome. "Twilight" mode combines six images into one, sprinkling in some software magic, for night shots without using a tripod. It's appealing, but I got mixed results.
Highlights:
- Sony G lens
- 10.2MP sensor
- "Twilight" mode
- Auto macro mode
- 720p HD recording
- Image stabilization
- Excellent battery life
- 24mm-120mm zoom range
Dings:
- No RAW option; JPEG only
- Mono audio; inappropriate for HD video
- Audio picks up lens motor when zooming in video mode
Street Price: $299
I recommend the Sony Cyber-shot WX1/B to anyone who wants to shoot like a pro without being one. The auto mode will nicely suit most novices, who can switch to manual mode as their photo skills improve. Twilight mode and surprisingly good normal low-light shooting make the WX1/B an excellent gift for teens or night-owl party goers. By the way, DigitalCameraReview.com contributor Howard Creech posted a first impression review using the camera, today.
Sigma DP1s, Sigma DP2
The Sigma DP1s and DP2 are compact digital cameras that require loads of patience. But for those with patience and a good eye, they will deliver simply the best photos taken by any compact digicam or by many dSLRs. The two cameras share in common the same Foveon sensor also available on the Sigma SD14 dSLR. The sensor has two compelling features: Large size compared to sensors typically found on compacts and pixel color processing. Typical compact (and most dSLR) sensors capture red, green and blue in disproportionate number of pixels on the sensor. By comparison, the Foveon sensor captures each color in its own layer. The difference is richer, more accurate color.
Amazon CEO Jeff Bezos, taken with Sigma DP1
The larger sensor, color processing method and suitably matched "prime" lens deliver exceptionally good photographic results. But both cameras come up short for ergonomics and shutter speed. The LCD display hopelessly washes out in bright light. Simply put: Neither compact is for the masses. But people who use either camera well will shoot simply amazing photos. Carl Rytterfalk's Sigma DP1 and DP2 China galleries demonstrate the compacts' potentials.
Highlights:
- Prime lens
- RAW shooting
- Foveon sensor
- dSLR-size sensor
- 14MP (4.7MP x 3)
- Exceptional image quality
Dings:
- No image stabilization
- JPEG photos are subpar
- Cumbersome ergonomics
- No macro or zoom options
- Low-resolution 320 x 240 video
- Slow focusing and shutter response
- Writing time to storage cards unusually long
Street Price: $599 for either camera.
I recommend either the Sigma DP1s or Sigma DP2 for patient amateurs or experienced photographers. The major differences between the cameras are the lenses. Sigma DP1s: f/4 24mm (film equivalent). Sigma DP2: f/2.8 35mm (film equivalent). Either camera is ideally suited to nature shots or portraits, although the Sigma DP1s' wider-angle lens will prove a little better for landscapes. Both cameras are pretty much useless for anything moving fast. I recommend either camera as an adjunct to a dSLR but not as the only digital camera used. I highly recommend both Sigma compacts but for the minority of shooters.
Leica D-LUX 4/Panasonic Lumix DMC-LX3
Who says that identical twins are the same in every way? These two essentially identical compact digital cameras are different in ways that will likely divide potential buyers. Leica has big brand appeal, while Panasonic offers the more budget-friendly digicam. The guts are essentially the same -- and made by Panasonic -- with a Leica lens attached. Feature-for-feature these cameras are identical inside, although their exteriors differ. Ha, does that make them fraternal twins?
The cameras are easy to recommend. Like the Canon PowerShot S90, they have light-loving f/2 lenses. Ergonomics are excellent, RAW shooting is available and shutter response is fast -- at least the D-LUX 4 is blazing, or it is with a class 10 storage card. I haven't tested the nearly identical DMC-LX3 but assume performance should be comparable if not the same. Over at DPReview, Richard Butler gives an excellent and through review of the DMC-LX3, which he rates as "highly recommended." The D-LUX 4 ships with Phase One's Capture One 4 software, which is excellent for processing RAW images. I upgraded to Capture One 5, which I highly recommend.
The controversy surrounding these two cameras is religious warfare. Think Mac and Windows PC fanboys. On the street, the Leica digicam costs $200 to $300 more than the Panasonic, for essentially the same camera. As I write, Amazon has the black DMC-LX3 discounted to $398.95, while the D-LUX 4 is $699.95. What's in a name? Oh, about $300. The forum and blog chatter about the price and other presumed differences is fiercely emotional. D-LUX 4 supporters claim the photo colors are warmer and clarity is better than the DMC-LX3. I've done blind tests of photos taken by both cameras and can see the slightest difference in favor of the Leica, but nowhere near $300 worth.
Highlights:
- f/2 lens
- RAW shooting
- 10.1MP sensor
- 720p HD recording
- Image stabilization
- 24mm-60mm zoom range
- Good low-light performance
- Responsive performance and fast shutter
Dings:
- Occasional color over-saturation
- 60mm zoom range limiting for some shooters
- White balance accuracy in high-light situations
Street Price: $400-$450, Panasonic Lumix DMC-LX3; $699 to $779, Leica D-LUX 4.
Like the S90, I highly recommend either of these twin cameras to just about anyone -- novice, amateur or pro. Auto mode delivers excellent results, while there are plenty of controls for advanced shooters. Pro photographers should find either camera to be a great carry-along. I chose the D-LUX 4 because I preferred the exterior styling and retro Leica brown leather case. But I also shopped around and got good enough deal that the price difference was acceptably small. Would I pay $300 more for the D-LUX 4 this holiday? Absolutely not. But if the styling and prestige of the Leica name matter to you -- Ho! Ho! Ho! Merry Christmas!
[Photo Credit: Joe Wilcox]
Copyright Betanews, Inc. 2009
FTC: 'Intel fell behind' against AMD, used unfair tactics to catch up

Publié: décembre 17, 2009, 2:53am CET par Scott M. Fulton, III
By Scott M. Fulton, III, Betanews

Clearly choosing the path of minimum compromise, the US Federal Trade Commission this morning voted to press antitrust charges against Intel, in an action that now parallels that of the European Commission, as well as the state of New York.
The principal charges are those we've covered here before, and which are also at the root of the EC's case, among them that Intel entered into near-exclusivity or exclusivity arrangements with Dell and Hewlett-Packard. According to the terms of those arrangements (which may or may not be legally considered "agreements" since they apparently were not entirely on paper), the OEMs promised to purchase mainly Intel parts in particular market segments, in exchange for preferential pricing and rebates (or programs that had the same effect as rebates).
But to those charges today, the FTC added an unexpected dose of venom -- a tone completely opposite to that of the Bush-43 era FTC, which at times died down to such a lull it was difficult to tell whether the Commission had dropped its case. At the heart of the FTC's claim today is a broader allegation: that Intel found itself to be technologically inferior to AMD, and that it concluded it could only regain its footing through anti-competitive behavior.
"In 1999 after AMD released its Athlon CPU and again in 2003 after AMD released its Opteron CPU, Intel lost its technological edge in various segments of the CPU markets. Original equipment manufacturers ('OEMs') recognized that AMD's new products had surpassed Intel in terms of performance and quality of the CPU," reads this morning's complaint from the FTC. "Its monopoly threatened, Intel engaged in a number of unfair methods of competition and unfair practices to block or slow the adoption of competitive products and maintain its monopoly to the detriment of consumers. Among those practices were those that punished Intel's own customers -- computer manufacturers -- for using AMD or Via products. Intel also used its market presence and reputation to limit acceptance of AMD or Via products, and used deceptive practices to leave the impression that AMD or Via products did not perform as well as they actually did."
The complaint alleges that Intel entered into deals with Dell, HP, and others as a first-strike response to the technological threat from both AMD and Via, a player whose name has been forgotten in recent years.
But in a completely new set of charges, the FTC is adding fresh allegations that many did not see coming. Among them:
- Intel is currently, actively engaged in manipulating the design of CPUs so as to limit the development of CPU/GPU hybrid technologies to favor Intel's graphics parts. Specifically, the FTC charges Intel with "adopting a new policy of denying interoperability for certain competitive GPUs," and adds that it's protecting its technology by "making misleading statements to industry participants about the readiness of Intel's GPUs." This suggests that the FTC may also have been investigating Intel's conduct with regard to Nvidia, including the skirmish over whether Nvidia was licensed to produce chips for Intel's Nehalem platform.
- Intel is currently, says the FTC, bundling its chipsets with CPUs at below-cost pricing in an effort to drive Nvidia out of the chipset market, "resulting in below-cost pricing of relevant products in circumstances in which Intel was likely to recoup in the future any losses that it suffered as a result of selling relevant products at prices below an appropriate measure of cost," as this morning's complaint alleges.
- Intel intentionally designed the interface between its CPU and chipsets so as to selectively, at a time of its own choosing, exclude Nvidia and ATI (through AMD) from attaining full interoperability with its CPU.
- ADDED 11:08 pm: Intel developed interface standards such as USB and the high-def HDCP connection in such a way that it could take advantage of their specifications before anyone else: "In these instances, Intel encouraged the industry to rely on standards that Intel controlled and represented that the standards would be fairly accessible," states the FTC's complaint. "But Intel has delayed accessibility to the standards for its competitors so that Intel can gain a head start with its own products and wrongfully restrain competition. Intel's conduct has no offsetting, legitimate or sufficient procompetitive efficiencies but instead deters competition and enhances Intel's monopoly power in CPUs."
- The FTC claims Intel intentionally distributed C++ compilers and software libraries whose code would run slower on AMD CPUs than on Intel's. This has been a minor concern of AMD's now-dismissed legal case against Intel, which Intel has continually denied. Nonetheless, Intel did promise to continue not doing this sort of thing, in its settlement last month with AMD.
- Intel published misleading benchmark claims, the FTC alleges -- misleading in that they didn't use real-world representations of performance, and that they were on occasion manipulated. "In truth and in fact, the benchmarks Intel publicized were not accurate or realistic measures of typical computer usage or performance, because they did not simulate 'real world' conditions, and/or overestimated the performance of Intel's product vis-à-vis non-Intel products," the complaint states, going on to use the phrase "false and misleading" to make the publication of tinted benchmarks the equivalent of fraud.
- Intel publishes false and misleading white papers, including this one (PDF available here"), says the FTC: "Intel's Web site includes a White Paper called 'Choosing the Right Client Computing Platform for Public Sector Organizations and Enterprises.' In the document, Intel stated that the 'SYSmark 2007 Preview is a benchmark test that measures the performance of client computing software when executing what is designed to measure real-life activities.' In truth and in fact, the benchmark was not designed to measure 'real life activities,' but to favor Intel's CPUs." SYSmark 2007 Preview is a benchmark produced by Business Applications Performance Corporation, which that firm says was developed in cooperation with both AMD and Intel, among others. Betanews located the offending passage as footnote 1 on page 3.
Next: The FTC's proposed remedies...
The FTC's proposed remedies
While charges of violating the Sherman Antitrust Act were anticipated, the Federal Trade Commission also charged Intel this morning with violations of Section 5 of its own FTC Act of 2006 -- specifically, with creating the conditions for an unfair method of competition not covered by Sherman.
In their explanation of charges this morning, FTC Chairman Jon Leibowitz and Commissioner Thomas Rosch wrote, "Despite the long history of Section 5, until recently the Commission has not pursued free-standing unfair method of competition claims outside of the most well-accepted areas, partly because the antitrust laws themselves have in the past proved flexible and capable of reaching most anticompetitive conduct. However, concern over class actions, treble damages awards, and costly jury trials have caused many courts in recent decades to limit the reach of antitrust. The result has been that some conduct harmful to consumers may be given a 'free pass' under antitrust jurisprudence, not because the conduct is benign but out of a fear that the harm might be outweighed by the collateral consequences created by private enforcement. For this reason, we have seen an increasing amount of potentially anticompetitive conduct that is not easily reached under the antitrust laws, and it is more important than ever that the Commission actively consider whether it may be appropriate to exercise its full Congressional authority under Section 5."
Section 5 permits the FTC to prevent individuals, partnerships, and corporations (excluding banks) "from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce." In essence, the Act broadens the FTC's power to prohibit what it deems to be anti-competitive activity, and it does not need to show case precedent with regard to the Sherman Act to do it.
The Commission considered Intel's oft-heard argument that its conduct can't be held as exclusionary if the net effect was the lowering of CPU prices. But in his partial dissent from the complaint -- specifically, with regard to the part in which he did not dissent -- Comm. Rosch explained why Intel may still be held accountable under Sections 2 and 5 of the FTC Act:
"To be sure, most conventional Section 2 cases alleging monopoly maintenance or attempted monopolization rise or fall on proof of higher prices -- if for no other reason than that kind of injury is easiest to measure. But that is not the only kind of consumer injury with which a law enforcement agency like the Commission should be concerned. The Commission must also be concerned with whether a course of conduct by a firm with monopoly power reduces consumer choice by reducing alternatives. That is true whether the 'consumer' suffering the reduction in choice is an original equipment manufacturer...or an end user of computer equipment that buys equipment from the OEM. Thus, if and to the extent that an exclusionary course of conduct by a firm with monopoly power results in that less measurable form of consumer injury, Section 5 is the most appropriate vehicle for the analysis, and the Commission, with its expertise and experience, is the most appropriate plaintiff to make that determination."
So among the remedies the FTC is seeking are price controls that would effectively bar Intel from making any kind of pricing discount deal with an OEM that it would not make with any other OEM of like standing in the market. It seeks to bar Intel from offering conditional rebates and discounts to OEMs, and from manufacturing any technology that intentionally impairs the performance of another from a competing manufacturer. It would prohibit Intel from producing false and misleading advertising, and to correct allegedly false statements it made in the past.
And the FTC would also require Intel to license interoperability information under terms and conditions specified by the Commission, "including whatever is necessary to interoperate with Intel's CPUs or chipsets."
Intel's response early this afternoon came from newly appointed general counsel Doug Melamed, who characterized his company as one bewildered by an arsenal of new charges against it. "This case could have, and should have, been settled," Melamed said. "Settlement talks had progressed very far, but stalled when the FTC insisted on unprecedented remedies -- including the restrictions on lawful price competition and enforcement of intellectual property rights set forth in the complaint -- that would make it impossible for Intel to conduct business...The FTC's rush to file this case will cost taxpayers tens of millions of dollars to litigate issues that the FTC has not fully investigated. It is the normal practice of antitrust enforcement agencies to investigate the facts before filing suit. The Commission did not do that in this case."
Copyright Betanews, Inc. 2009