COMMENTARY -- This was a small event by contemporary legal standards, but you won't find a better example of antitrust waste.
The Federal Trade Commission ended its Intel (Nasdaq: INTC) investigation and investors couldn't care less. Shares of the chip giant followed the overall market lower today after a brief surge at the beginning.
Wall Street has the right idea, because for all practical purposes, the FTC's case was finished a year and a half ago when the two sides settled most issues. The real question is: why did it take so long to formally close these investigations?
Concerns about Intel's business practices -- the company was accused of wrongly withholding technical data from three customers who happened to be competitors in other areas -- were basically alleviated with the FTC's consent order in March 1999.
But a smaller issue provides the more illustrative point.
FTC officials also reviewed Intel's forays into the graphics market. Federal trade regulators wondered if the purchase of Chips & Technologies and an investment in Real3D would create hurt competition in the graphics controller market.
Actually, the FTC was right. Since Intel entered that field, at least two major names have left. One is S3 (Nasdaq: SIII), which recently closed its graphics unit to focus on MP3s and home networking.
The other casualty: Intel.
Intel's i740 accelerators were generally regarded as inferior to designs from Nvidia (Nasdaq: NVDA), 3dfx (Nasdaq: TDFX) and ATI Technologies (Nasdaq: ATYT). It's a difficult market, because everyone pushes so fast.
Intel couldn't keep up and dropped plans for successors to the i740. Engineers from Chips and Technologies ended up designing elements for Intel's motherboard chipsets. C&T's flat panel controller technology was licensed to Asiliant Technologies.
Graphics provide just one instance of how rapid technology changes can overcome any supposed market advantage. It's such an obvious case that even the antitrust bloodhounds at the U.S. Department of Justice declined to look deeply into the matter.
Other areas of Intel's business show the same phenomenon. Intel's purchase of Level One hasn't caused Broadcom (Nasdaq: BRCM) to miss a beat; if anything, it's the other way around, with Broadcom now taking Intel to arbitration on patent issues. Regardless of who wins the case, the fact remains that mighty Intel's muscle hasn't produced any noticeable changes in market share among the top players so far.
Even Intel's core processor business doesn't appear as unassailable as it seemed only a few years ago -- one look at the bottom line of Advanced Micro Devices (NYSE: AMD) in recent quarters tells you that. And an upstart like Transmeta doesn't seem to need the FTC's help in establishing a technology lead, or so it claims.
Go beyond Intel and you'll find the same phenomenon. Linux vendors don't need government intervention to compete with Microsoft (Nasdaq: MSFT) in server operating systems, which is one reason why many observers believe Microsoft will win on appeal: the company has legitimate competition.
IBM (NYSE: IBM) and Siebel Systems (Nasdaq: SEBL) require no government intervention to compete with Oracle (Nasdaq: ORCL) in databases or enterprise software, even though Oracle now uses bundling tactics not much different from the ones that offended the DOJ's legal sensibilities regarding Microsoft.
Cisco Systems (Nasdaq: CSCO) commands huge market share in corporate networks and Lucent Systems (NYSE: LU) remains far and away the biggest equipment vendor for communications providers. But Nortel Networks (NYSE: NT) holds the largest piece of optical networking business right now, without any legal intervention by a government agency.
And Yahoo! (Nasdaq: YHOO) hasn't stopped being the most visited Web (not proprietary network) portal in the Media Metrix rankings, even though America Online (Nasdaq: AOL) and Microsoft (Nasdaq: MSFT) provide browsers with their own websites as default home pages.
None of this means antitrust laws aren't needed. Of course they are.
But technology and Internet industries move too quickly and contain far too much competition for our current batch of antitrust laws to apply. Intel's graphics foray ended before the FTC's investigation finished into the matter, so what was the point of having the government involved at all?
A strong position in one market doesn't guarantee success in another, even if they're related. Good businesses win in the technology industry. Bad ones don't.
Are there exceptions to that? Probably. But not enough for the government to make a difference. 22GO>