Politics and Law

Everyone is talking security these days. Does this include Facebook?

I ask because a group called "Kill Obama" was on the social-networking site for more than a month before Facebook's attention was drawn to it by CNET late Monday evening.

The group, which appears to have been created in Alberta, Canada, had 122 members and five administrators. Its existence originally caught the eye of Brian Cuban, brother of tech entrepreneur Mark Cuban.

Brian Cuban, who has long criticized Facebook for its attitude toward Holocaust denial groups, used his blog, the Cuban Revolution, to point out the apparent criminality of the "Kill Obama" group: those found guilty of a threat to kill the president could face up to five years in jail.

The "Kill Obama" group, which was active since November, was entirely open and set out its goals like this: "We are going to kill Obama. Ten of us will surround the capital, armed with sniper rifles. Mr. Hope And Change just made his last speech."

(Credit: CC Jay Cameron/Flickr)

Facebook's response might strike some as peculiarly confident. Andrew Noyes of Facebook's public-policy group in Washington, D.C., told me via e-mail:

The group in question, which was created by an individual user, was brought to our attention on Monday and was removed promptly. As for the broader issue of controversial content that may appear on Facebook, I wonder how a phone company would answer a question about preventing threatening phone calls or how the postal service would respond about preventing threatening letters? And Web mail providers about threatening e-mails?

Some might feel that the difference is that Facebook can better see and hear what is on its site than phone providers or the U.S. Postal Service. This communication was entirely public and had been on the site for a while. The impression Facebook gives, however, is that it is doing more than most communication platforms to fight misuse.

Noyes continued:

Just as none of those communications platforms can guarantee their tools won't be misused, neither can we. However, different from those platforms, Facebook is committed to enhancing our already-robust reporting and review infrastructure, and reducing our response times in removing content that violates our policies. When we find egregious violations, we'll kick people off for good and prevent them from committing further offenses. Again, this is something that the other communication platforms can't do nearly as effectively as we can or at all.

The robust reporting and review infrastructure seems to have not been terribly robust in this instance. Facebook can give the impression that it is more attuned to removing images of breastfeeding than policing hate and threat.

Given that the company is so able and keen to collate information in order to help advertisers, some might wonder whether one member of its "porn police" might be reassigned so that Facebook might exercise a little more vigilance in the area of threatening and possibly criminal activity.

Indeed, one might have thought that Facebook would have security in place that would immediately monitor groups using such obvious keywords in their names as "Kill" and "Obama." However, Facebook's view is, according to Noyes, that there could be "millions" of possible permutations of these two words.

I know that there are many mathematically skilled readers here, so perhaps they might offer a view on these millions of permutations. My nonmathematical methods just revealed to me that by searching "Kill Obama," there were only 571 results. These results didn't appear to offer anything as overtly threatening as "Kill Obama." Indeed, the top group, with 143 members, was "Don't Kill Barack Obama."

In September, Facebook removed a "Should Obama be Killed?" poll, again after it had been noticed by the media. Indeed, Facebook's view seems to be that the policing of the site is largely down to, well, you.

Noyes told me:

No system is perfect, but we believe this is the best system, and we're always working to improve it. With extremely few exceptions, our user base has proved to be vigilant in flagging content that should be taken offline.

Perhaps there are more users concerned with naughty pictures than threats to kill the president. However, when asked if Facebook had given the personal details of the "Kill Obama" group to the authorities, Noyes said, "We don't comment on investigations, but we're in regular contact with the Secret Service."

All's well that ends well is one philosophy of life, of course. But not the only one.

Google, the company that made "don't be evil" its corporate motto, is shunning use of an open-source license variation that precludes use of software for evil purposes.

The matter illustrates the tensions between the sometimes free-wheeling ways of open-source programming world and the buttoned-down corporate realms where open-source software is no longer unusual. This particular issue bubbled up at Google Code, a site that hosts open-source projects from Google and others.

When he wrote JSMin, Douglas Crockford added this line to the open-source MIT License.

(Credit: Douglas Crockford)

Google only permits software governed by a limited list of widely used open-source licenses to be hosted at Google Code; one that's permitted is the MIT License. Douglas Crockford picked a variation of the MIT license for his JSMin program to shrink JavaScript programs so that Web browsers can download them faster, and Ryan Grove carried that license over for his variation called JSMin-PHP rewritten in the PHP language.

JSMin-PHP had been hosted at Google Code until earlier in December, when it came to the attention of Chris DiBona, Google's open-source honcho, that the software's license had an extra requirement added to the regular MIT License:

"The Software shall be used for Good, not Evil."

"As Google (and some others) interpret it, this additional requirement constitutes a vague use restriction and thus makes the license non-free. Chris [DiBona] explained that if I were to remove that line from the license and 'return to a proper open source license that we support,' then jsmin-php could stay on Google Code. Otherwise, he said, 'we can't host you,'" Grove said on his blog. "Of course, I can't change the license, because it's not my license. It's Douglas's license...All derivative works and copies of jsmin.c either include this license or are in violation of it."

Consequently, Grove moved JSMin-PHP to the GitHub collaborative programming site. "If you currently have a project on Google Code that is derived from or includes jsmin.c, you might want to consider migrating to a new host with less restrictive policies," Grove added.

How did this all come about? According to a July speech by Crockford, who works for Yahoo and describes himself as a heretic, the license was an artifact of the George Bush administration's war on "evildoers." He uses the licenses for all the projects he's created, he said.

"This was late in 2002, we'd just started the war on terror, and we were going after the evildoers with the president and the vice president, and I felt like I need to do my part," he joked. "So I added one more line to my license, which was that 'the software shall be used for good, not evil.'"

"About once a year I'll get a letter from a crank who says, 'I should have a right to use it for evil! I'm not going to use it until you change your license.' Or they'll write to me and say: 'How do I know if it's evil or not? I don't think it's evil, but someone else might think it's evil, so I'm not going to use it,'" Crockford said. His conclusion: "My license works, I'm stopping the evildoers."

He's willing to grant an exception, though, he said.

"Also about once a year, I get a letter from a lawyer, every year a different lawyer, at a company--I don't want to embarrass the company by saying their name, so I'll just say their initials: IBM--saying that they want to use something I wrote," he said. "They want to use something that I wrote in something that they wrote, and they were pretty sure they weren't going to use it for evil, but they couldn't say for sure about their customers. So could I give them a special license for that? Of course. So I wrote back... 'I give permission for IBM, its customers, partners, and minions, to use JSLint for evil.'"

These days, though, lawyers are a real force in the programming world, and I can see how the line, however jokingly it might have been added, might cause corporate indigestion. Perhaps Crockford has no intention of enforcing the license, but perhaps some contributor to a project farther down the path of derivative works might have a more humorless interpretation.

After all, there have been efforts to add political elements into open-source and free-software licensing--for example, one variation of the GNU General Public License that prohibited military use of the software. And deeply held philosophical and ethical beliefs are certainly no stranger to the open-source and free-software realm.

Even if a company, project, or individual does conclude the license isn't onerous, that extra line adds a lot of busywork to the collective and never-ending task of evaluating software. I'm all for humor, principled positions, and honest debate, but I prefer it to take place where it won't hobble some other software project's prospects.

I know I sound stuffy (or perhaps "risk-averse" and "disconnected from the community," as Aaron Boodman would have it), but I hate to see good work fall by the wayside for what seems to me a reason that's secondary at best.

Updated 1:38 p.m. PST to clarify the nature of JSMin-PHP.

New cybersecurity chief Howard Schmidt

(Credit: The White House)

The White House's new cybersecurity chief faces a tough agenda, but will be able to draw on the lessons of a 40-year career, including stints at Microsoft and eBay.

Former security adviser Howard Schmidt is returning to the White House as President Obama's new cybersecurity coordinator, the White House announced Tuesday.

In his new role, Schmidt will report to the National Security Council. Schmidt will also "have regular access to the president," said an official who spoke to The New York Times.

Earlier this year, President Obama initiated a review of the government's cybersecurity policies in an effort to streamline operations. Turf wars among various agencies and a perceived weakness in the Department of Homeland Security had raised red flags, prompting the president to declare that the country was not adequately prepared on the cybersecurity front.

Following that review, the White House identified a need for a new cybersecurity chief, then plunged into a tricky, months-long process that now brings Schmidt back to public service.

President Barack Obama greets his new White House cybersecurity chief Howard A. Schmidt in the Cross Hall of the White House.

(Credit: Official White House Photo by Lawrence Jackson)

In a recorded speech introducing himself, Schmidt said he sees information technology as offering great opportunities but also great dangers to national security, public safety, economic competitiveness, and personal privacy. As dependence on technology increases, he said, the need to protect our security and privacy also increases.

As such, Schmidt said that the president has directed him to focus on several key areas:

• developing a new and comprehensive strategy to secure U.S. networks to ensure an organized response to future cyber incidents;
• beefing up both public and private partnerships in the U.S. and abroad;
• promoting research and development of next-generation technologies;
• and leading a national campaign to promote cybersecurity, awareness, and education.

Acknowledging that Washington can't solve cybersecurity problems on its own, Schmidt said his agenda is to bring together the government, the private sector, and other stakeholders as part of a new and comprehensive cyberstrategy to strengthen online defenses.

Following Schmidt's appointment, a variety of security analysts offered their thoughts.

In a Tuesday blog post, Randy Abrams of security vendor ESET said that Schmidt is very smart and personable, possessing a depth of knowledge and experience that makes him one of the best possible candidates for the job. But Abrams cautioned people not to expect miracles or fast changes as Schmidt will face huge obstacles trying to coordinate security across different government agencies, most of which have people who think their way is the only way to do things.

Phillip Dunkelberger, president and CEO of security vendor PGP, where Schmidt serves on the board of directors, said: "Howard's familiarity with public sector, private sector, large vendors and small innovative companies should be a great asset to this unique position; one that will just expand as our nation's dependency on cyber communications continues to grow." He also stressed that Schmidt will need to jump in quickly and form a solid working relationship with the Department of Defense and with the federal government's chief information officer, Vivek Kundra, and chief technology officer, Aneesh Chopra.

Schmidt brings to his new post a lengthy resume of government service, with a particular niche in computer crimes and forensics. Early in his career, he worked for the FBI's National Drug Intelligence Center, where he ran the Computer Exploitation Team. He also was a special agent and program director for the Air Force, where he set up one of the government's first dedicated computer forensic labs.

His new post will be Schmidt's second stint at the White House. In December 2001, just after the 9/11 attacks, he was appointed vice chairman for President Bush's Critical Infrastructure Protection Board and deputy to former White House cybersecurity czar Richard Clarke. Schmidt left his post in February 2003 to return to the private sector. During his tenure with the Bush administration, he helped create a new cybersecurity plan, which at the time was criticized as being too watered down, a charge that Schmidt disputed.

In the private sector, Schmidt served as chief security officer for Microsoft from 1997 to 2001 before joining the White House. After leaving his government post, he joined eBay in 2003 as vice president for security.

More recently, Schmidt was the president and CEO of the Information Security Forum, an international nonprofit organization that focuses on risks and research in the cyberworld.

Updated December 23, 4:00 a.m. PST with comments from security analysts.

U.S. lawmakers face an uphill battle enacting a climate bill in 2010 that includes a cap-and-trade market in greenhouse gases, after this month's U.N. meeting in Copenhagen failed to hammer out a global pact on emissions cuts.

U.S. climate legislation remains likely as lawmakers feel pressure to help the country lead in production of low-carbon energy sources such as wind, solar, and nuclear power.

But the Copenhagen Accord did not include emissions targets. This will make it difficult for lawmakers to argue that the United States should have a cap while China, the world's top emitter of greenhouse gases, and other big polluters are not legally required to act on climate.

"We were previously of the view that cap and trade was becoming an increasingly hard sell in the U.S.," said Paul McConnell, an energy markets analyst at Wood Mackenzie. "But I think the events in Copenhagen have probably made that even more difficult."

Alternatives to cap and trade will emerge, such as mandates and incentives for increasing levels of energy from low-carbon sources like solar, wind, and nuclear.

Further delays in launching a trillion-dollar market in U.S. rights to emit greenhouse gases will disappoint potential investors and dealers looking toward a trading scheme that could be several times larger than the one in Europe.

The health care debate has delayed U.S. Senate action on climate, and financial industry reform legislation will likely push back the cap-and-trade debate into early next year, analysts said.

The longer the delay, the harder it will be to convince undecided Democratic senators to vote for a cap-and-trade plan.

"For a lot of moderate Democrats who are up for re-election, they don't want to be seen as closely attached to this because of the concerns about job losses and higher energy prices," said Divya Reddy, an analyst at the Eurasia Group in Washington.

Said McConnell: "Cap and trade potentially could have economic impacts, which many senators would be loathe to push onto the U.S. economy right now," as it struggles to recover from recession.

That could make it harder for the three senators working on a compromise climate bill -- Democrat John Kerry, Republican Lindsey Graham and independent Joe Lieberman -- to come up with the 60 votes required to pass the measure with cap and trade. Such a proposal was included in the climate bill that passed narrowly in the House of Representatives in June.

Failure to pass a U.S. cap and trade program could have international implications. It could delay development of a similar market in Canada, which has signaled it will follow the U.S. lead on an greenhouse gas emissions mechanisms.

Lengthy delays could also hamper investments in energy efficiency and low-carbon sources like wind, solar, and nuclear power. Experts say such alternatives would remain more expensive than today's dirtier technologies.

"Plan B" alternatives
Kerry said in Copenhagen last week that the Senate bill may not contain cap and trade, and other options are being discussed.

So-called "Plan B" alternatives to cap and trade could include carbon taxes and national mandates for power generators to produce higher levels of cleaner energy sources, Reddy said.

A new climate strategy could also include elements of a "cap and dividend" plan recently introduced by two senators. That aims to cut Wall Street's role in emissions markets by auctioning permits to polluters and delivering most of the proceeds to the general public.

But Kevin Book, an analyst at Clearview Energy Partners said many senators and many companies, like oil major ConocoPhillips and power generator Duke Energy, are already sold on cap and trade. Some power companies that have invested in low-carbon electricity generation feel they could compete better against companies that burn mostly coal under a cap-and-trade regime.

In addition, the U.S. Environmental Protection Agency may become more aggressive on forcing polluters to cut emissions after issuing a finding late this year that greenhouse gases endanger human health.

Still, the lack of a global agreement on emissions cuts will make it hard for U.S. lawmakers to convince the public to accept caps on emissions that get stricter over time.

"There's definitely scope for other solutions," McConnell said. "For the U.S. to put itself under strict and binding emissions targets when other major emitters aren't doing the same thing, represents something of a challenge."

Story Copyright (c) 2010 Reuters Limited. All rights reserved.

Editors' note: This is a guest column. See Larry Downes' bio below.

Wednesday's announcement that the Federal Trade Commission had filed a complaint against chipmaker Intel came as quite a surprise.

Not because of the allegations themselves, which focus on illegal tactics the company allegedly uses to maintain its dominance in the market for PC and server CPUs. Nearly all of them have already been cited in regulatory actions in the United States and abroad.

Earlier this year, the European Union fined Intel nearly $1.5 billion for conduct similar to that alleged in the FTC complaint (an appeal is pending). New York State Attorney General Andrew Cuomo, likewise, filed an antitrust case against the company in November. Private antitrust suits, notably by competitor Advanced Micro Devices, have been ongoing since 2005. Japan and South Korea have already concluded their own actions against the company.

Rather, what is surprising about the FTC complaint is its timing. Given the range of both public and private litigation against Intel, it's hard to see what the FTC hopes to achieve by jumping in so late in the game. Indeed, the commission had been investigating the chipmaker since June 2008, before the EU reached its decision and before a landmark settlement between Intel and AMD was reached in the private lawsuit just last month, in which Intel agreed to pay AMD $1.25 billion and cross-license various patents.

According to Intel's statement Wednesday morning, the company and the commission had been close to a settlement "of all outstanding issues with the FTC" when the commission instead decided to issue its complaint.

The real deal
So what's going on here? Let's start by looking at a few key differences between the FTC action and those brought by other litigants. First, the FTC complaint broadens the charges against Intel. In early December, sources reported that the FTC had widened its investigation beyond CPUs to include anticompetitive behavior in graphics processing units, in which Intel is alleged to control about half the market.

Nvidia, one of Intel's main competitors for GPUs and itself a party in still another lawsuit, confirmed that the FTC had contacted the company about its investigation. (In a Wednesday statement, Intel argued that the GPU claims have not been fully investigated by the commission and are therefore premature. It appears that the addition of these new issues derailed the settlement talks, leading to Wednesday's action.)

Second, the FTC's complaint alleges multiple violations of the Federal Trade Commission Act, which only the commission has the authority to enforce. Under section 5 of the act, the commission may use its power to remedy practices that have not yet reached the threshold of harm necessary under either the Sherman Act or the Clayton Act, the more general antitrust statutes. As the U.S. Supreme Court put it in a 1953 case, the commission quotes from in the first sentence of its complaint, section 5 gives the FTC power to "stop in their incipiency acts and practices which, when full blown, would violate" the Sherman or Clayton acts.

Third, and perhaps most disturbing, the FTC's proposed remedies are much broader than those sought in any of the other litigation. Rather than seeking fines, penalties, or money damages, the commission intends to enforce wide-ranging changes to how Intel operates.

For starters, the FTC wants to limit Intel's use of bundled prices, quantity discounts, minimum purchase guarantees from original equipment manufacturers, pricing products below cost and other long-standing industry practices. Moreover, the commission intends to require Intel to license its technology to "others" on terms and conditions "as the commission may order" and to require Intel to preclear any future acquisitions, including purchases of intellectual property such as patents and copyrights.

These and many other restrictions on Intel's conduct would be overseen by an independent monitor appointed by the FTC. Intel would also be required to submit "periodic compliance reports" with the commission.

In short, if the FTC goes forward with its complaint, and Intel is ultimately found to have violated the FTCA, the company would find itself closely regulated for an undetermined period of time by the commission and its outside monitors. Even advertising and promotional materials would need to be reviewable on demand by the government.

Notable timing
None of these differences, however, add up to a justification for the FTC's decision to insert itself into a complicated matrix of ongoing litigation, just as the other actions are or are close to reaching resolution.

For starters, if the GPU claims are as strong as the commission says they are, then they could easily have formed the basis of a separate complaint, filed once the FTC had had a full opportunity to investigate them.

As for the FTCA, the FTC undermines its own argument that the special powers of section 5 are necessary to repair the semiconductor market. The commission notes throughout the complaint that Intel's monopolies and the behaviors it is seeking to remedy, with the exception of the GPU-related violations, have been ongoing since 1999--the year in which Intel and the commission settled an earlier section 5 complaint. Given that so many other lawsuits are already years in progress, it's unlikely that any "incipient" behavior is involved here; whatever Intel has done, it has done for years.

The FTCA is a red herring, in any case. As leading antitrust scholar Richard A. Posner noted in 2005, expansion of the Sherman and Clayton Acts over the years has left no real difference between the more general antitrust laws and the FTC's special powers under section 5. Private enforcement or lawsuits brought by the Department of Justice or state attorneys general now cover all the behavior that may have been subject only to what was once the broader powers of the agency.

The FTC's belated decision to pursue Intel brings Posner's longstanding critique of the commission into sharp focus. Posner, who has questioned the effectiveness of the commission since 1969, concluded in 2005 that the agency's continued existence might be justified, not for its enforcement of antitrust laws, but rather on the basis of its unique role in protecting consumers against fraud. The Department of Justice is a "powerful and highly regarded" federal agency tasked with enforcing antitrust law, Posner wrote, "but there is no counterpart federal agency that tries to protect consumers against fraud and oppression--unless it is the Federal Trade Commission."

And while the FTC complaint duly invokes "harm to consumers" 31 times in its complaint, evidence of any real damage will be hard to come by. Thanks to Moore's Law--Intel founder Gordon Moore's promise that semiconductors will continue to get faster, smaller, and cheaper every 12 to 18 months--the price of raw computing power has fallen dramatically and consistently since Intel was founded. Consumers are not being tricked or misled into buying computers with Intel processors.

Protecting consumers?
The commission can blow all the smoke it wants to about ensuring "freedom of choice" for consumers, but for better or worse, this litigation and all the rest of it is being brought for the benefit of Intel's competitors. Which is not to say that Intel hasn't violated anticompetition laws and that those violations, if left unremedied, "will have an adverse effect on competition and hence consumers," as the FTC delicately puts it.

Perhaps they will. But there is another, greater danger here, and that is the harm to the entire semiconductor industry that will result from regulators stepping in to resolve what are, in essence, private fights between Intel, its competitors, and some of its biggest customers.

The commission, along with its counterparts abroad and judges fashioning remedies in the public and private antitrust cases, might somehow get it right and fix the semiconductor market--or at least make it more efficient than it is under Intel's dominance. On the other hand, they might make things much worse.

The worst-case scenario seems increasingly likely. The FTC, in any event, is weighing in far too late on Intel's battles with AMD, and too soon in its fight with Nvidia and other GPU manufacturers. The remedies it intends to visit are breathtaking in their expansiveness and would leave Intel unable to compete, let alone compete fairly. The only beneficiaries of this latest chapter in the antitrust saga would be Intel's competitors, not consumers.

As Posner noted with characteristic understatement, an FTC untethered from its role of protecting consumers is little more than a tool for unhappy competitors. "If the competitor files a lawsuit, he must bear the expense of the suit," Posner wrote, "but if he can get the FTC to proceed against the seller, he incurs no cost. This opens up the possibility of using the FTC as a weapon against competition."

Even worse, it's a weapon that has the unfortunate habit of regularly backfiring on those who employ it.

Microsoft's apology Tuesday about a contractor copying blogging site software from a small company called Plurk might not be enough to take the lawyers off alert.

"We are still thinking of pursuing the full extent of our legal options available due the seriousness of the situation," Plurk co-founder Alvin Woon said in a statement posted Thursday. "Basically, Microsoft accepts responsibility, but they do not offer accountability."

Microsoft accepted responsibility for the copying, blaming it on a third-party company. It suspended access indefinitely to the site at MSN China, called Juku. "We apologize to Plurk and we will be reaching out to them directly to explain what happened and the steps we have taken to resolve the situation," Microsoft said Tuesday.

The FTC wants Intel to grow up and start acting like a responsible company.

At least that's the goal behind the agency's lawsuit against the chipmaker. Filed on Wednesday, the FTC's suit charges Intel with a host of offenses, including using threats and rewards to convince PC makers not to buy chips from the competition, altering its compiler to weaken the performance of rival chips like those made by AMD, and preserving its CPU monopoly by stifling the market for GPUs (graphics processing units) made by Nvidia and other manufacturers.

On Wednesday, the FTC held a press conference in Washington in which it discussed why it launched the lawsuit now and what it hopes to gain.

Fielding questions from reporters, Richard Feinstein, director of the FTC's Bureau of Competition, explained that the allegations against Intel have been bubbling for the past 10 years. During that time, at each point in which Intel perceived a threat to its dominance, the company responded not by competing aggressively on its own merits but by behaving in a way that was exclusionary and detrimental to the competition and ultimately detrimental to consumers, said the FTC.

Federal officials said they chose now to file the suit in part because the allegations have continued and evolved over time, and also because many of the charges are fairly recent, such as Intel's perceived attacks on the GPU market.

Unlike other complainants against Intel, the FTC is not imposing any fines or financial penalties. Instead, the agency simply wants the company to try a little behavior modification. The government said it is looking for changes in Intel's conduct to help restore market competition.

In its complaint, the FTC provided a laundry list of remedies that it plans to impose on Intel if the company is found to have violated any laws.

The full list of 26 different dos and don'ts can be found in the FTC's complaint, but to name just a few:

• Intel can't directly or indirectly require customers to purchase only its CPUs or GPUs.
• Intel can't require a customer to buy a minimum or fixed number of processors from Intel.
• Intel can't withhold payments or other compensation to OEMs (original equipment manufacturers) just because the companies are not exclusively doing business with Intel.
• Intel can't directly price its processors so its customers pay below cost just to thwart the competition.
• Intel can't make hardware or software designed to inhibit processors made by competing companies.
• For customers who bought "defective" compilers, Intel must provide them with a working compiler at no cost and compensate them for the cost of recompiling their software using the new compiler.
• Intel can't coerce benchmarking organizations to adopt benchmarks that are deceptive or misleading.
• Intel must file periodic compliance reports with the FTC and for a period of time make available any advertisements, tests, reports, studies, and other documents that relate to the charges against it.

In charging Intel, Feinstein said that the FTC is relying on principles from Section 2 of the Sherman Act, which deals with monopolies, and Section 5 of the Federal Trade Commission Act, which covers deceptive or anticompetitive actions that affect consumers.

Section 5 also specifies that the outcome of the FTC's case can't be used to establish liability on Intel's part in any other antitrust actions. That may work in Intel's favor as its lawyers have certainly been putting in overtime dealing with the barrage of lawsuits against the company.

Intel recently closed the books on a 2004 antitrust lawsuit filed against it by AMD. As part of the settlement, the company agreed to pay its rival chipmaker $1.25 billion and promised to refrain from offering incentives to customers to keep them from doing business with AMD.

Intel is still appealing the record $1.45 billion fine imposed on it in May by the European Commission after the company was found guilty of violating European antitrust laws.

And in November, New York Attorney General Andrew Cuomo filed a federal lawsuit against Intel, accusing it of paying off computer makers like Dell with rebates to retain its monopoly and shove AMD out of the marketplace. Though this case is separate and distinct from the FTC's suit, Feinstein did acknowledge that he spoke to and compared notes with the state attorney general.

With Intel already facing severe financial penalties from these other lawsuits, Feinstein said he didn't feel another fine was essential for the FTC's case. But he said that in theory the FTC can go into federal court and seek financial penalties if necessary.

Last-minute allegations
In response to the FTC's action, Intel held its own conference call Wednesday in which the company discussed the allegations in greater detail..

Intel spokesperson Chuck Mulloy told CNET that substantial common ground had been reached in the discussions between the company and the FTC, especially after Intel settled its suit with AMD. But negotiations broke down because the commission raised certain last-minute allegations, such as the benchmarking issue and the GPU matter, and because Intel felt some of the suggested remedies were over the top.

Mulloy said that the benchmarking and GPU concerns had never been addressed in the two years that the FTC had been investigating Intel, both formally and informally, and were added a few weeks prior to the lawsuit being filed. He said the commission issued a subpoena to Intel requesting information on the GPU issue on December 8, about a week before the suit was launched, and did not wait for a response from Intel.

The chipmaker was also unhappy with a couple of the remedies proposed by the FTC. One sticking point in particular was the notion of compulsory licensing, in which the commission would have required Intel to license its x86 architecture to other companies, which includes those trying to make their own chips compatible with Intel processors. But Intel objected because it considers the technology to be its own intellectual property worth tens of billions of dollars.

Mulloy also said that talks broke down because Intel felt the FTC was trying to micromanage the company's pricing schemes--dictating how and under what circumstances it could offer discounts to certain customers. He added that Intel did make some proposals to the commission on discounting schemes, but this issue was never resolved.

Intel's view is that this is overreach on the part of the FTC, said Mulloy. He feels Intel was on track to settle and was disappointed that it couldn't get it done.

To move the case along quickly, the FTC decided to have it heard before an administrative judge rather than a slower federal court. The speedier process of the administrative court will begin with a trial in September, which Feinstein believes will conclude by the end of the year. Depending on the outcome, there may or may not be further proceedings before the FTC. But ultimately, the case would be reviewed by the FTC for a final decision. If the judge rules against Intel and the company appeals, that could take the case to the middle of 2011.

Ultimately, Feinstein believes that Intel's actions have deprived the marketplace of the vigorous competition it needs, affecting innovation, prices, and consumer choice. Despite the gains in the microprocessor market, Feinstein said he believes it's hard to know what the market might have done over the past 10 years had it not been for Intel's conduct.

Updated December 18, 5:45 a.m. PST with response from Intel

Vice President Joe Biden

(Credit: WhiteHouse.gov)

Vice President Joe Biden on Thursday is scheduled to announce $2 billion in grants that will be used to build broadband networks in underserved communities.

The funding, which is part of the $7.2 billion that was set aside for broadband in President Obama's $787 billion economic recovery deal earlier this year, will start with an initial $182 million investment in 18 broadband projects in 17 states. Biden is announcing the stimulus grants in Dawsonville, Ga.

The money is specifically meant to expand affordable broadband access to underserved areas of the U.S. Officials would not name which companies will be getting the grants that were announced on Thursday.

From BlackBerry smartphones to broadband Internet connections, President Obama understands that technology is an important economic and educational driver. High speed Internet access is seen as the cornerstone of the president's technology agenda, and he has emphasized the need for getting affordable broadband access to every American.

"The new broadband access will help underserved and often hard-hit communities overcome the distance and technology barrier by expanding connectivity between educational institutions, enabling remote medical consultations, and attracting new businesses as well as the jobs that come with them," the White House said in a statement.

The Federal Communications Commission is currently working on developing a national broadband plan that will provide a road map for achieving the goal of getting every American affordable access to high-speed Internet. A full report on the plan is due to Congress in mid-February.

Blair Levin, who is heading up the task force developing the national broadband plan for the FCC, has estimated that it could take as much as $20 billion to $350 billion to achieve the ultimate goal of ubiquitous broadband access. But he has acknowledged publicly on several occasions that the bulk of the investment will come from the private sector.

"The private sector is essential to this effort," Levin said. "Government spending will be limited. And competition is the best way to drive innovation. "

Still, at a meeting at the FCC on Wednesday, he said government funding will be necessary in places where the private sector is unable to find a viable business case. And he has proposed overhauling the $7 billion-a-year Universal Service Fund, which provides telephone access to rural communities, as one way to help fund such projects.

"Where funding is limited and where it's difficult to make a business case and where we don't want to go through the process of new legislation, there are ways to better utilize existing assets," he said.

But the USF alone will not be enough. And given that it will likely take years to expand the program, grants and government funding pumped into the system now will at least get the ball rolling on new deployments.

The Federal Trade Commission's complaint against Intel for alleged anticompetitive practices has a new twist: graphics chips.

To date, the antitrust actions of regulators worldwide toward Intel have focused on sale practices for central processing units, or CPUs, a market over which the company has fought heavily with Advanced Micro Devices. On Wednesday, however, the FTC spelled out a litany of allegations about Intel's alleged anticompetitive behavior in the market for graphics-processing units, or GPUs, in which Nvidia is a major player.

Nvidia is the world's leading supplier of "discrete," or standalone, graphics chips but takes a distant second place in overall market share to Intel, which supplies "integrated" graphics built into the chipsets that accompany all of its processors. Mercury Research estimates the total market for graphics chips, including integrated graphics, at almost $10 billion in 2009.

Why graphics, and why now? "It would be really hard to sell the public on expending resources to take Intel through administrative proceedings when it had already paid over a billion dollars to AMD," said Joshua D. Wright, a professor at George Mason University School of Law and a scholar in residence at the Federal Trade Commission until 2008.

"[The FTC] needed to be seen as doing something new," Wright said.

"[Nvidia] becomes the remaining star witness, now that AMD has left the field," said Roger Kay, principal at Endpoint Technologies. "And the FTC's focus, which begins to look toward the future, has to take into account how graphics will fit in as computer technology develops," Kay said.

Intel General Counsel Doug Melamed asserted in a statement that the FTC complaint "is based largely on claims that the FTC added at the last minute and has not investigated," referring to the GPU allegations. And Melamed added in a conference call that some of these GPU allegations were made as recently as December 8.

One of the areas the FTC case zeroes in on is the burgeoning competition for chipsets in Netbooks--small, inexpensive laptops that are typically priced around $350. Netbooks are powered by Intel's Atom processor--and integrated graphics silicon built into the chipset. In this market, Nvidia also sells its Ion chipset, which competes with Intel's integrated graphics product.