Business Tech

Amazon.com is opening up its Virtual Private Cloud to all users of its EC2 cloud-computing services as part of a public beta launched Monday.

The full beta of Virtual Private Cloud follows a limited public test that began in August. At the time of that launch, Amazon said virtual private clouds were the most popular feature request from enterprise customers.

VPC is an enterprise-oriented feature that allows users to connect to Amazon's cloud-computing services via an IPsec virtual private network (VPN) link. The feature builds on other Amazon enterprise-friendly cloud efforts introduced over the past two years, such as reserved EC2 instances, longer-term deals, and volume pricing. It also integrates service-level agreements and partnerships with big enterprise software vendors such as IBM, Oracle, BMC and Red Hat.

Read more of Amazon's virtual private cloud goes public at ZDNet UK.

Amazon on Monday rolled out spot pricing for cloud computing so customers can buy capacity at any price on the open market.

The concept is an interesting one since Amazon Web Services is making computing capacity available on the market just like any other commodity (see Amazon statement, Werner Vogels, and Amazon Web Services blog).

Dubbed Spot Instances, Amazon customers can bid on unused Elastic Compute Cloud (EC2) capacity and run those instances as long as their bid exceeds the spot price. The rub is that you can be outbid.

Read more of "Amazon creates cloud computing spot market at ZDNet's Between the Lines.

Neelie Kroes

(Credit: EC)

Competition commissioner Neelie Kroes and telecommunications commissioner Viviane Reding will take on new duties under a European Commission lineup announced Friday.

Kroes is designated as the digital agenda commissioner, with oversight of the European Network and Information Security Agency (Enisa) and the Information Society Directorate General, which supports IT activities. As such, she is responsible for increasing online access to content and for the digital economy. She has also been named a vice president of the European College, the group of all the commissioners.

At the start of her five years as competition commissioner, Kroes handled the EU's antitrust investigation into Microsoft, which ended in a 497 million euro fine for the software giant.

Read more of "EC reshuffle bumps Kroes out of antitrust seat" at ZDNet UK.

At the same time that Intel settled Advanced Micro Devices' antitrust lawsuit for $1.25 billion, the chipmaker settled another legal matter as well by hiring A. Douglas Melamed as its new top lawyer.

Melamed, who most recently worked as a partner at the law firm of WilmerHale, is expected to assume his new role this month, said a source familiar with the situation. Melamed has been based in Washington, D.C.

He has extensive antitrust experience, which could come in handy given Intel's remaining legal issues with the European Commission, the New York attorney general, and the Federal Trade Commission. From 1996 to 2001, he was acting assistant attorney general in charge of the Justice Department's Antitrust Division. Before that, he was the Justice Department's principal deputy assistant attorney general, where he was responsible for "civil non-merger and merger investigations and litigation involving most of the division's litigating sections; the division's appellate matters; policy matters involving, among others, the communications, electricity and tobacco industries; and international antitrust enforcement matters," according to WilmerHale.

Intel declined to comment on the matter. The Wall Street Journal reported the new hire Thursday.

Intel's previous general counsel, Bruce Sewell, left Intel to take the top legal job at Apple in September.

Even for a company as powerful as Intel, with $13 billion in cash on the books, $1.25 billion is a lot of money. So why drop that huge quantity of money in the lap of its biggest rival, Advanced Micro Devices?

The payment is, of course, to settle the antitrust suit AMD brought against Intel five years ago. AMD's stock surged 22 percent Thursday after the chipmakers announced the agreement, but Intel's share price dropped 1 percent, indicating which company the investors thought got the better deal.

Paul Otellini, speaking in September and holding a wafer of silicon chips

(Credit: Stephen Shankland/CNET)

AMD does indeed come away with some serious perks--not just the cash, but also a new patent cross-license agreement that removes Intel's objections to AMD spinning off its chip-manufacturing business, enables multiple manufacturers to build AMD's chips, and eliminates the earlier patent agreement's payments to Intel. And it has Intel's agreement not to violate a list of restraints on its business practices.

But Intel gets something out of this, too.

Spend now, save later
Let's start with the money. Sure, shareholders likely frowned when they heard Intel's fourth-quarter expenses are expected to climb from $2.9 billion to about $4.2 billion. But Intel could have been out a lot more money if things had gone south.

In the European Union, Intel is wrestling with an antitrust case that produced a fine of 1.06 billion euros, or $1.6 billion at today's exchange rate. Intel appealed the European Commission fine, but it's a very concrete example of just how severe the Intel punishment could be.

There are other financial factors, too. Intel and AMD were set to begin their jury trial in March, and jury trials are famously unpredictable. Add on top of that risk the fact that antitrust suits can come with triple damages.

"It was a small multiple of the damage that could be awarded in a jury trial," Intel Chief Executive Paul Otellini said of the price tag in a conference call earlier Thursday.

Treble damages of the scale of just the European Commission fine would have been more than $4 billion, Technology Business Research analyst John Spooner observed. Facing that prospect, "Intel chose to control its own destiny and settle up front."

Taking commercial cases to a jury trial is indeed risky, said Richard Brosnick, who's involved in antitrust law at the firm of Butzel Long.

"Any complex commercial case going to the jury phase is challenging, and antitrust, given the economics, is probably more challenging," Brosnick said. "Trial is expensive overall, not in billions, but in terms of the risk you'll be able to explain these issues in a way that will be understood by and persuasive to a jury."

Goodwill in other antitrust cases
AMD's antitrust case isn't the only one Intel faces. It's also got the European Commission fine discussions, a new antitrust lawsuit from New York Attorney General Andrew Cuomo, and an antitrust investigation from the Federal Trade Commission.

The AMD settlement doesn't make those cases evaporate, but Intel hopes it'll help.

"We hope that having this major litigation settled with AMD would be viewed favorably by these regulatory bodies and eventually the cases would be dropped," Intel spokesman Tom Beerman said.

Certainly those regulators won't face as much of AMD's active prodding. Among the terms of the settlement is this, regarding all the regulatory actions AMD is involved in:

AMD agrees to promptly...notify in writing each authority...that except as provided in Section 3.5 AMD has resolved its disagreements with and complaints concerning Intel contained in that Administrative Complaint and believes that this Agreement provides AMD with fair compensation for any and all actual or alleged harm and damages that AMD did or may have suffered in connection with matters discussed in the Administrative Complaint. In addition, AMD agrees that it will not ghost-write or edit any other briefs, pleadings, or "friend of the court" or "friend of the tribunal" materials or briefs in any Administrative Action.

But whether Intel will actually get what it wants isn't certain.

"It's certainly possible that the public agencies will view this as a compromise they can live with, but it's equally possible not," Brosnick said.

One issue is Intel practices described in the section 3.5 mentioned above, where AMD and Intel still disagree. Brosnick said the governmental agencies still might be concerned about any of those practices--called "retroactive discounts," "accused bid bucket," and "accused end-user discounts" in the settlement.

Intel digging in its heels?
Though the agreement didn't preclude those practices as it did some others, it did agree not to defend them as hard as it might in settlement talks with the government organizations.

"Intel agrees that in the event it enters into voluntary settlement discussions with a government authority in the EC litigation, New York litigation, or the FTC investigation, and if such government authority proposes to include in a consent judgment or other governmental order a prohibition against Retroactive Discounts, Accused Bid Buckets or Accused End-User Discounts, Intel will not challenge such a prohibition as a general matter, although it may challenge the scope or specific language of the prohibition," the settlement agreement said.

Just how deeply Intel will dig in its heels in the other cases remains to be seen. Although it settled a big case, Otellini hardly sounded contrite. He reiterated on several occasions his belief that Intel didn't do anything illegal. He said airing the full context of seemingly incriminating e-mail would show Intel in a better light. And he vehemently attacked the New York case.

"We strongly disagree with the New York attorney general case and believe the complaint is entirely without merit," Otellini said. "Discounts and rebates are entirely fair business practices, and it's unfortunate the New York attorney general chose to distort the facts. We would have preferred to engage in a dialog with the New York attorney general."

Then again, Intel spoke in strong terms about the AMD trial. Perhaps Intel's pragmatic side will show in the other cases next.

Amazon.com is blaming the latest outage to hit its Elastic Compute Cloud service on a lightning strike at one of its data centers.

In a statement on the Amazon Web Services "health dashboard," the online retailer and cloud-computing provider addressed concerns from some U.S. customers whose EC2 service had been disrupted around 6:20 p.m. Pacific Daylight Time on Wednesday.

"A lightning storm caused damage to a single Power Distribution Unit (PDU) in a single Availability Zone. While most instances were unaffected, a set of racks does not currently have power, so the instances on those racks are down," the company said initially on the health dashboard.

The disruption lasted about seven hours, during which time Amazon asked any affected customers to use alternative parts of the network. "Users with affected instances can launch replacement instances in any of the U.S. Region Availability Zones or wait until their instance(s) are restored," Amazon said.

The company later attributed the outage to a problem on one "availability zone" and that the outage was localized. "We would like to reconfirm that this issue was limited to the single Availability Zone where this power issue occurred, and that a very small percentage of instances in that AZ were affected; this was not a generalized service issue," Amazon said.

Despite acknowledging that Amazon had dealt with the issue fairly efficiently, one user was concerned that a single lightning strike was able to bring down the service, if only in a limited way.

"I was under the impression that your architecture had more resiliency built into it. Yes we can use multiple availability zones to help with a single point of failure, but I thought that even within a single availability zone there was not a single point of failure for hardware/power," the user posted to an Amazon forum on the issue.

The EC2 service provides customers with virtual access to Amazon's computing infrastructure, using virtual machines that can be created using the Xen virtualization platform. First launched in a limited beta in August 2006, the EC2 service went fully live in October 2008.

Not including the latest issue, the service has suffered two major disruptions during that time in February 2008 and October 2007. In June 2008, Amazon's main retail site suffered an outage that the company blamed on the complexity of its own systems.

A series of outages that have hit other online or cloud computing services including Google's Gmail and other applications over recent months have led some critics to question whether the cloud approach to computing is really capable of providing the resilience required by enterprise users.

In mid-May, Google services were hit by an outage which apparently affected one in 10 of its users. In January, software-as-a-service pioneer Salesforce.com experienced an outage that disrupted all its customers for about an hour.

Here is the string of messages from Amazon about this week's outage.

(Credit: Amazon.com)

Andrew Donoghue of ZDNet UK reported from London.

The world of open-source development could be divided, if the European Commission succeeds in passing a law extending consumer protection rules to software, according to experts.

The Commission proposes that software companies be held liable in the European Union for the security and efficacy of their products.

David Mitchell, senior vice president of IT Research at Ovum, thinks that this may lead to a situation boosting current open-source vendors' business models but making it more difficult for independent developers to thrive.

The proposal is likely to make vendors force customers into support and maintenance agreements upon each purchase, in order to help the former fulfill warranty obligations, Mitchell said.

This is already in line with the business models of current open-source vendors such as Red Hat and Canonical, which sell support services. On the other hand, the "garage open-source model" of independent developers, who do not have the scale to guarantee their products at that level, will likely suffer, Mitchell said in an interview with ZDNet Asia.

Bryan Tan, director of Singapore-based Keystone Law, had predicted in an earlier blog post the "caving in" of open-source software due to similar worries over liability on the parts of independent developers.

"Gone are the days (when) software could be written in a garage by two guys," Tan wrote.

Tan also told ZDNet Asia that the proposed law would likely inflate prices for consumers outside the EU--including the Asia-Pacific region, as a result of the vendors' need to provide insurance. Furthermore, the "death" of some smaller vendors (and an ensuing dearth of competition) would lead to increased prices, he added.

While the Commission has said the proposal is in the interest of consumers, Ovum's Mitchell thinks that a "huge amount of market uncertainty" will be created.

"Customers will find that their existing support and maintenance agreements are now ambiguous, or in contradiction with any new legislation," he said. Businesses would also have to undertake longer testing cycles, resulting in project delays, Mitchell added.

Realistically, liability will be hard to pinpoint because of the interdependency between hardware and software, Mitchell noted. The failure of a piece of software could be blamed on another installed software or hardware portion.

"(The legislation) promises to be a lawyer's dream (come true) but not to deliver any tangible benefit for the customers," he said.

However, Stanley Lai, partner at Allen & Gledhill, thinks that consumers will benefit. While he agrees that software prices will likely rise, "it remains to be seen whether consumers will consider that the price to be paid in return for quality assurance is an adverse effect."

Lai also said it is "premature and oversimplistic" to predict the demise of open-source software. He said with code open and more easily corrected--the oft-quoted "many eyeballs" effect--users and consumers of open-source software may be more likely to get errors fixed through the community and less likely to pursue direct recourse to liability under the proposed legislation.

Victoria Ho of ZDNet Asia reported from Singapore.

An Advanced Micro Devices executive claims that Intel and Apple cut a deal in 2005 that made Intel an exclusive supplier of processors to Apple, preventing AMD from gaining Apple business.

No AMD CPUs are currently used in Apple computers.

(Credit: Apple)

The claim, made in a phone interview with Tom McCoy, AMD's senior vice president of legal affairs, earlier this week, holds that Intel has had a longstanding deal to be Apple's sole supplier of microprocessors. To date, Apple has not used an AMD central processing unit (CPU) in any of its products. Currently, only Intel CPUs populate Apple's laptop, desktop, and server lineups.

This assertion by AMD comes in the wake of the EU decision last week to fine Intel $1.45 billion for violating antitrust legislation. Last week's EU decision centered on whether Intel used illegal tactics to deny processor business to AMD at PC makers.

McCoy said that a deal was struck when Apple moved from the PowerPC (IBM-Motorola) chip architecture to the x86 (Intel-AMD) architecture. The transition was announced by Steve Jobs at the Worldwide Developers Conference in 2005.

"They made a deal when they were porting over from PowerPC to x86 as to how much Intel was willing to pay for that port. My guess is that Intel asked for and won exclusivity in return for the help that they gave Apple to port," McCoy said.

McCoy continued: "That deal will not be exclusive forever and when that exclusivity is over, I'm sure they (Apple) will choose on the merits. We'll have a chance to compete for Apple's business when Apple is ready," he said. Intel denies this allegation.

Though McCoy did not make any direct charge of illegal activity regarding such a deal, the assertion is not that far removed from charges made in the July 2005 AMD complaint against Intel. AMD, in that filing, cited Dell, among other examples of exclusive Intel deals with PC makers. "In its history, Dell has not purchased a single AMD x86 microprocessor despite acknowledging Intel shortcomings and customer clamor for AMD solutions, principally in the server sector...Dell has been and remains Intel-exclusive. According to industry reports, Intel has bought Dell's exclusivity with outright payments and favorable discriminatory pricing and service." (Note: Dell, in 2005, offered no AMD-based products, though it does today.)

Whether the deal is exclusive doesn't in itself constitute a legal argument, according to Joshua D. Wright of the George Mason University School of Law, who has written about the EU decision in a blog, "Truth on the Market." "Under Section 2 of the Sherman Act, a plaintiff must show that the exclusive dealing arrangement harmed competition in the form of higher prices, lower output, or reduced innovation," Wright said, responding to an e-mail query.

Following the European Union's decision to fine Intel for "illegal" business practices, Nvidia is crying foul too, according to a report.

Nvidia CEO Jen-Hsun Huang said Intel's chip pricing is unfair but added that the graphics chipmaker will not seek antitrust action against Intel, according to a Reuter's report.

This is a beef that Nvidia has had with Intel ever since Nvidia's Ion graphics chipset debuted last year. The competitive backdrop is Intel's longstanding vision of a CPU-centric universe versus Nvidia's creed that graphics processing matters more and more in a multimedia-intensive world.

Inside every Acer, Asus, Hewlett-Packard, and Dell Netbook beats an Intel silicon core. Intel supplies both the central processing unit (CPU) and graphics processing unit (GPU)--the latter in the form of the Intel integrated Graphics Media Accelerator.

Nvidia wants in. It maintains that Intel-only Netbooks don't deliver the graphics horsepower that Nvidia graphics silicon can.

Huang said Intel sells an Atom chip by itself for $45, but sells a three-chip set for $25 to lure business away, according to Reuters. "That seems pretty unfair," he said to Reuters.

This accusation by Huang follows the European Commission's decision to fine Intel $1.45 billion for employing "illegal" tactics to compete against Advanced Micro Devices.

An Intel spokesman said that computer makers are free to purchase the Atom chip alone or bundled with other chips. "If you want to purchase the chip set, obviously there is better pricing," he told Reuters.