Intel-McAfee Deal Gets OK from FTC

The FTC has cleared Intel's $7.68 billion purchase of McAfee, just days after reports arose about EC concerns around the deal.

Days after reports surfaced that European regulators were voicing antitrust concerns about Intel's $7.68 billion bid for security software maker McAfee, a U.S. agency has given its blessing to the deal.

Intel reported on its Website Dec. 21 that the Federal Trade Commission has OK'd the acquisition, and that Intel officials are continuing to work with the European Commission-the antitrust arm of the European Union-during its review.

Intel announced its intention to buy McAfee in August, with officials saying they intend to incorporate more security capabilities into their processors. Under Intel's plans, McAfee would continue to be run as an independent company and would continue selling security software to other partners.

However, Intel officials have been vocal in their desire to integrate greater security features onto their processors, particularly as the company looks to expand its reach beyond its core PC and server businesses, into such areas as mobile and embedded devices. At the company's Intel Developer Forum in September, President and CEO Paul Otellini, as well as other executives, talked about the ability to make PCs and other devices more secure by integrating more security capabilities onto the chips.

The idea is that hardware-based capabilities run faster than software-based solutions and, in terms of security software, are more difficult for hackers to break into.

Renee James, senior vice president and general manager of Intel's Software and Services Group, talked about improvements in such areas as anti-theft protection. Otellini said combining Intel's vPro security solution with McAfee's offerings would enable PC and other device makers to build more proactive security features.

"Only the combination of hardware and software ... can yield this kind of innovation, and that's the reason for buying McAfee," Otellini said during a keynote speech at the event.

Late last week, the Wall Street Journal, quoting unnamed sources, said that European regulators are worried that Intel's plans to use McAfee technology to build greater security into its chips will unfairly hurt competition from McAfee rivals. McAfee is the world's second largest security software maker behind Symantec, and Intel owns more than 80 percent of the world's processor market, which makes the chip maker a key partner for other security software vendors.

The real worry, according the sources quoted by the WSJ, is whether the McAfee-based security functions that Intel will embed into its chips will be designed in such a way to only work-or only work best-with McAfee products, which could hurt the ability for other security software makers to compete.

That concern was similar to those voiced the FTC, when it filed suit against Intel last year claiming the chip maker engaged in anti-competitive business practices designed to unfairly hurt the ability of Advanced Micro Devices and Nvidia to compete in the market. Among the complaints was that Intel altered some of its technologies-such as compilers-so they wouldn't work as well with AMD processors.

Intel settled the lawsuit with the FTC, and executives have said that while the company may compete aggressively, it does so within the borders of the law.