Hamilton's problems all began as a bad start allowed Vettel to easily get ahead with Bottas also squeezing up the inside into Abbey. He was 0.093 seconds faster than Ferrari's Raikkonen and 0.642 better than Mercedes teammate Valtteri Bottas.
In their official ruling, stewards said Hamilton had "clearly left significant room on the inside" of the corner and that Raikkonen "locked up his right front tyre, understeered and caused a collision".
Raikkonen apologised for his first lap brush with Hamilton which earned the 38-year-old Finn a 10-second penalty.
Lewis Hamilton lead Sebastian Vettel eaely in the race before things started falling apart.
Vettel made a cracking start from second place to beat Hamilton to the first corner.
Hamilton now trails Vettel by one point as he looks to create history and become a five-time F1 world champion.
But he surged back into contention and thanks to the safety auto being deployed on two occasions late on in the race surged into second place. "So that's fine. I deserve it, I took the 10 seconds and kept fighting".
Hamilton had surged back with a display of overtaking pace the watching Lord Coe, would have been proud of in his athletics heyday to take second place behind Sebastian Vettel in the other Ferrari. Unexpectedly, Ricciardo made a second stop after 31 laps, lifting Hamilton to fifth as the Australian rejoined sixth, but on softs.
After the race, Hamilton had pointed out that twice in three races a Ferrari driver had collided with a Mercedes on the first lap.
That was an unfortunate decision as Marcus Ericsson promptly smashed his Sauber at the Abbey corner, causing a 33rd lap safety auto which prompted both Ferraris to pit for soft rubber. I'm really really happy, ' the German said.
Vettel entered the race one point ahead of Hamilton in the drivers' championship standings.
Bottas resisted Vettel again at the restart before coming under attack into the Brooklands left-hander at the end of the Wellington Straight three laps in row. "I will not give up".
"It's easy to say after the last couple of races that we're suddenly doing something against them, but we've been hit pretty many times also, so that's how it goes, unfortunately".
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