Intel Sues Former Employee For Alleged Theft of Xeon Data

Stealing data on your way out the door is a great way to guarantee consequences — a lesson that various individuals in Silicon Valley have had to learn the hard way. Despite occasional enthusiast rumor-mongering around the idea that Nvidia, AMD, or Intel would steal technology from each other, the practical impacts of such a finding in a court of law would outweigh any potential gain.

Intel has accused Dr. Varun Gupta of stealing trade secrets when he accepted a job with Microsoft as Principal for Strategic Planning in Cloud and AI. After a decade at Intel, Dr. Gupta had access to documents regarding processor pricing and product strategies. Intel alleges that he copied some 3900 documents on to a mixture of Seagate external drives and USB sticks, including files marked “Intel Confidential” and “Intel Top Secret.”

As an aside, files marked “Intel Confidential” aren’t always all that confidential, at Intel or anywhere else. “Intel Confidential” gets stamped on just about every press deck or product announcement that goes out to press prior to NDA. Obviously the restrictions matter, but “Confidential” is a pretty low bar on the secrecy totem pole. AMD and Nvidia follow similar labeling patterns. The theft of “Top Secret” documents carries a bit more weight.

Microsoft is now working on its own ARM CPU designs, but Gupta isn’t accused of stealing any information related to the physical design of Intel processors. Rather, Intel claims Gupta stole pricing and strategy documents in order to give Microsoft an edge “in head to head negotiations with Intel concerning customised product design and pricing for significant volumes of Xeon processors.”

Why Does Microsoft Need Xeon Pricing Information?

In its filing, Intel also claims that Gupta “used that confidential information and trade secrets to gain an unfair advantage over Intel in the negotiations concerning product specifications and pricing.”

This raises the question of why Intel is negotiating Xeon pricing with Microsoft in the first place, given that the software giant isn’t in the server construction business. Roughly a decade ago, major cloud companies like Google, Facebook, Microsoft, and Amazon began to shift their server-buying strategies. Instead of relying solely on servers built by the likes of Dell and HPE, cloud compute companies began working directly with vendors to design and customize hardware. Secondary companies like Supermicro, Wistron, Foxconn, and Quanta began to play a more direct role in server sales, rather than merely building boxes for other companies.

The “ODM Direct” category now accounts for 28 percent of all server sales, larger than any other single vendor. The big-name brands still account for 52.71 percent of the market, but ODM Direct sales is growing rapidly. The reason why Intel is unhappy about Microsoft having access to this information is because, thanks to the ODM Direct market, Microsoft is probably making more decisions about the customization and pricing of the hardware in its servers than it was 10+ years ago, when companies were more likely to buy whatever HP and Dell were selling.

Intel and Microsoft conducted a forensic analysis of the data files, including when and how Gupta accessed them, claiming that he plugged the drives in 114 times between February 3, 2020 and July 23, 2020, and that he accessed specific documents, including a slide deck related to Intel’s engagement strategies and its product offerings for “Xeon customised processors.”

Gupta denies claims that he stole the information, while Intel wants a jury trial and damages of at least $75,000, along with payment of its legal fees.

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