FTC files suit against Qualcomm, citing anti-competitive deal it struck with Apple

FTC files suit against Qualcomm, citing anti-competitive deal it struck with Apple
The FTC today filed a suit against Qualcomm, charging the chip maker with using unfair anti-competitive tactics in order to gain advantages from its competitors. According to the FCC, Qualcomm reached a deal with Apple that would make Qualcomm the exclusive supplier of certain baseband chips to Apple, in exchange for reduced royalty payments. The deal ran from 2011 to last year and prevented Apple from using baseband processors on the iPhone made by any other manufacturer except for Qualcomm. Currently, Qualcomm and Intel share the job of producing modem chips used on the Apple iPhone 7 and Apple iPhone 7 Plus.

While Apple did lock itself into taking these chips from Qualcomm, it was able to work out lower royalty costs allowing it to save money on the production of the iPhone. The deal came about as a result of Apple's request to Qualcomm to lower the royalty payments it had to pay the chip maker. Qualcomm agreed to lower those payments with the provision that Apple would use its chips exclusively. The FTC says that this violates U.S. competition law and is asking the court to bar Qualcomm from entering into future anti-competitive deals.

Qualcomm responded with a statement denying any wrong doing on its part. In addition, it said that the central thesis to the FTC's case is incorrect. You can check out the court filing by clicking on the sourcelink.


source: FTC.gov (PDF) via PCMag

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17 Comments

1. combatmedic870

Posts: 982; Member since: Sep 02, 2015

Now they have jacked Intel chips.

7. Mxyzptlk unregistered

This is just a bs move by the government.

11. NoToFanboys

Posts: 3231; Member since: Oct 03, 2015

The government itself is bs.

13. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

Both should be punished, Qualcomm and Apple! As it take both hands to clap.

15. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

I agree! The feds will simply have to prove it in court. If the Feds lose which they will, they will have to pay any costs that Qualcomm incurred. If they don't, if I was Qualcomm,I'd make a model that goes into Gov't phones that will all explode in their face on a given day!

2. piyath

Posts: 2445; Member since: Mar 23, 2012

This anti-competitive bull s**t is soooooooooooo ANNOYING!!! wtf.. If I want to, I could be able to strike a deal with any company I like. That's the free trade. That's how businesses work. That's how businesses can profit more and thus can lower their production costs and give good price for the consumer.

3. sabretigger

Posts: 80; Member since: Sep 15, 2012

Agree. But in Apple's case, there is no benefit to the consumer, only higher margins for themselves.

4. AlikMalix unregistered

What does hat have to do with anything. Companies can make contracts and deals all they want. So when Apple decided to pay Samsung less than other competitors and Samsung gladly accepted (yes it happened) is that also anticompetitive? I make deals with suppliers all the time "I buy only from you - and you keep those prices cheap" but continue to charge customers the same in order to gain more profit at the end for myself - is that anticompetitive. Anyone can reach out to anyone at anytime and make deals like that - that's free market and free trade. I could use the cheaper supplies to drop my prices if I need more customers - but while I'm busy, why should I?

8. willard12 unregistered

Not sure what Samsung getting awarded a contract as the lowest bidder has to do with this. This is one of those times (of many) that Apple probably wishes you weren't defending them since they are actually the victim this time. "When Apple sought relief from Qualcomm’s excessive royalty burden, Qualcomm conditioned partial relief on Apple’s exclusive use of Qualcomm baseband processors from 2011 to 2016. Qualcomm’s exclusive supply arrangement with Apple denied other baseband processor suppliers the benefits of working with a particularly important cell phone manufacturer and hampered their development into effective competitors." With QC doubling as Apple's chip maker and FRAND license holder, there is a better anecdote to your supplier contract narrative. If your supplier doubled as your landlord, and said get rid of the competition and make me your exclusive supplier and I won't triple your rent, is this still just the "free market"? The FTC is accusing Qualcomm of abusing FRAND patents to eliminate competition.

16. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

What the heck is wrong with you? How is Apple the victim?! Did you even read the article. It states in simple terms. Qualcomm offered Apple a price for its chips. Apple says the cost is to high. Qualcomm says, we will reduce the cost if you are willing to exclusively use our chips for X amount of time. APPLE AGRREED TO THE TERMS OF THE DEAL and use Qualcomms chips only for whatever time that was. Please explain how Apple was a victim? Or do you not understand business? What Qualcomm did was equal to the movie Indecent Proposal. Qualcomm did not withhold any product. Apple could have went to anyone. APple wanted to pay a certain price and to get that pirce they had to agree to exclusive usage only. That si not anti-competive based on the Feds own definition. Qualcomm did not bar Apple from shopping elsewhere. They main a simple term. You wnat this price, then use only use for this time period. DONE! Please explain how this "tending to stifle or suppress competition". Qualcomm is competeing again Intel in this market of mobile chips. Both are expensive as they are the 2 leading parties capable of meeting Apple's product yield demands. This deal did not prevent Apple from goign to Intel and trying to possibly get a better deal. Suppress competition? How does it? Apple needs a vender that can handle their yield requirements. Only Qualcomm with the help of Samsung and Intel cn produce such quantities, so Apple only has to choice. Qualcomm was willing to offer APple a price on Apple terms, with the only thing they had to use Qualcomm. That si not anti-competive because they simple met APple's demands with a caveat. The US Gov't in this case is full of shyte and I think you need to reread the article.

17. willard12 unregistered

Yeah....as long as you are the guy that claims Samsung subsidiaries simply "pay for the name", I've got little use for you. Of course, ironically, the Vice Chairman of Samsung GROUP is on trial for trying get approval to allow some of his subsidiaries to merge. And , you simply ran from that discussion when trying to teach me about how business works. But , I digress. Simply put, you (of all people) attacking my intellect and reading comprehension, with your complete lack of writing comprehension is a complete joke. You are a laughing stock on this site. No one reads your comments in their entirety. Allowing you to have the internet is a waste of bandwith. Do us all a favor and go away. While you're gone, since you'll be done lecturing me with all my degrees, you can go and lecture the FTC with all of their law and business degrees about how much smarter you are than them. But, in the event you talk like you write, be sure to get yourself a translator.

9. NarutoKage14

Posts: 1297; Member since: Aug 31, 2016

Apparently companies must abide by certain rules when doing business to ensure that other/smaller companies have a chance to grow/survive. If the entity in charge of enforcing and perhaps writing those rules thinks you violated them, you probably did.

10. vincelongman

Posts: 5611; Member since: Feb 10, 2013

You make similar deals with suppliers But you (presumably) dont run a multinational corporation with a monopoly over that certain market That's the problem, Qualcomm has a monopoly The FTC are trying to bring more competition Lots of companies have "anti-competitive"/"anti-consumer" practices But only companies with monopolies get hit with antitrust suits

5. willard12 unregistered

Though Martin Shkreli and the pharmaceutical industry approve your message, free trade is between 2 different international markets, not an agreement between 2 companies in California. Less competition and higher business profits usually leads to higher prices for the consumer, not lower. This is especially if Qualcomm no longer has to worry about competition from Intel. You may also have loved the time, before fracking, when OPEC members "struck deals" with each other on output and ensured oil prices stayed high. Before fracking, they had no fear of "anti-competitive bull s**t". But, in the US, an OPEC -like conglomerate or deals would be illegal. Competition should occur in the marketplace, not the offices of Comcast and Time-Warner.....or Apple and Qualcomm. Fortunately, there are people who are a lot smarter than you and me adjudicate these issues.

6. ph00ny

Posts: 1985; Member since: May 26, 2011

If that were the case than you will end up with a monopoly. One company to rule them all. What do you think will be the end result of this? Company X with more money and bandwidth can potentially make the playing field so unfair that smaller company Y will never be able to compete in the same field

12. xondk

Posts: 1904; Member since: Mar 25, 2014

anti-competitive is an insanely good thing for consumers, while you may or may not agree in the practice, I think we can all agree if they didn't exist, companies with near monopoly would increase their prices insanely so.

14. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Include Apple as well, for even agreeing to the deal. After all, it took both of them to do it. Apple no longer has the cloak of the US Gov't protection. They may as well be a deer crossing the road...FREE GAME!

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