EC concerned about Intel's McAfee buyout, others don't care

The European Commission has expressed concerns over Intel’s acquisition of security software firm McAfee in a preliminary antitrust probe of the high-profile deal, but with McAfee’s rivals welcoming the buyout from Intel, what exactly is the EC worried about?

Sources close to regulators within the EC revealed to the Wall Street Journal that there were some concerns over Intel’s intention to incorporate security features into its processors, with the EC believing that it will prioritise the inclusion of McAfee security in the chips over that of rival security firms, thus creating a problem for competition.

One survey sent to Intel by the EC asked if a sleeper agent in the processor chips could launch advertisements of McAfee software or if maximum performance of the processor would need to be unlocked through the purchase of that software, both of which are clearly areas that would prevent proper competition in the market.

Why then are Kaspersky, Trend Micro, Symantec and others welcoming Intel’s entry into the security market, as TechEye revealed in August? Some of the McAfee rivals even going so far as to say that it will aid competition rather than hindering it.

Kaspersky told us at the time: “It is obvious that this will create more competition and drive the industry to grow more rapidly, and that is always a positive thing for the rest of the players involved.”

Even Symantec, which has a close relationship with Intel, said that the deal would not adversely affect it, despite the sheer size and money power Intel can push behind McAfee. In fact, it is Intel’s dominance that could help the security market, according to many of the top security firms, making investors wake up to the importance of security software.

The EC is seeking the opinions of security firms in its antitrust probe and these are likely to be a major factor in the decision to approve or reject the deal. On the surface the McAfee competitors should be telling the EC exactly what they told us, but chances are that some of them are publicly expressing joy at the acquisition news, while privately expressing their hidden worries to the EC. 

The deal, which is worth $7.68 billion, is expected to close in the frst half of 2011, despite earlier predictions that it could be finalised by the end of 2010, but the EC probe could delay this even further.

Or, if things go downhill for Intel with the EC, the deal could fall through altogether. This appears unlikely, as a compromise situation may be agreed between the two, with Intel giving assurance that it will not use its chip throne to prevent other security firms from competiting with McAfee.

Intel has previously been in hot water with the EC, receiving a $1.45 billion fine in 2009 when it was found to have abused its dominant market position, with its share accounting for around 80 percent of the processor market.

With so many giants like Intel and Google eating up the pygmies out there, it may be a dangerous time to be small. The EC clearly recognises this, even if the rival security firms are attempting to sound bigger than they really are.