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posted by CoolHand on Tuesday January 15 2019, @03:05PM   Printer-friendly
from the Betteridge-says-ummmm-yes-and-no dept.

Submitted via IRC for Bytram

A billion-dollar question: What was really behind Qualcomm's surprise ten-digit gift to Apple?

The chip industry's strong-arm tactics have been laid bare this month in the anti-trust legal battle brought by America's Federal Trade Commission (FTC) against Qualcomm.

[...] Qualcomm had sought to hide the fact that it paid $1bn to Apple to secure a five-year exclusive agreement with the company to introduce its cellular broadband modem into the iPhone. Even the judge at one point wasn't sure whether that fact has been disclosed or not.

The payment is critical in that the FTC claims that it proves Qualcomm was using its position as the owner of several "standard-essential patents", or SEPs, on communications technologies to cut deals it would never have been able to negotiate otherwise.

Qualcomm has refused to license that technology to its competitors and, since the patents are critical for smartphones, has used that position to force companies into signing contracts that they would never agree to otherwise, i.e. it is using its monopoly position to distort the market and is damaging competition. That's the FTC's case.

But Qualcomm paints the payment quite differently: it says that Apple insisted on the $1bn payment as an "incentive" and to cover the costs of switching to its radio modem chips from Infineon to Qualcomm in its new phone designs.

Such payments are apparently relatively common in the industry but Qualcomm CEO Steve Mollenkopf admitted in court that it was far bigger than normal. As Mollenkopf tells it, Qualcomm only pushed to become a sole supplier of chips to Apple after that $1bn incentive was insisted upon in an effort to recoup such a massive outlay. It wasn't, he claims, an effort to shut out rivals.

[...] The FTC wants to be able to force Qualcomm to license its SEPs (standard-essential patents) to competitors at a reasonable rate: something that it says would force greater competition into the market and remove Qualcomm's monopolistic hold.

It's not clear yet whether the FTC has managed to make a strong enough case but truth be told it doesn't look good for Qualcomm. In the end, it may all revolve around how the court decides to view the fact that it paid Apple a billion dollars to get its chips into iPhones. ®


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  • (Score: 0) by Anonymous Coward on Tuesday January 15 2019, @05:41PM (3 children)

    by Anonymous Coward on Tuesday January 15 2019, @05:41PM (#786975)

    Which is supposedly 243 Billion (https://www.cnbc.com/2018/07/31/apple-q3-cash-hoard-heres-how-much-money-apple-has.html), how likely is Apple to be influenced by a bribe that is 1/243th (or only 0.4%) of their cash pile?

  • (Score: 0) by Anonymous Coward on Tuesday January 15 2019, @10:41PM

    by Anonymous Coward on Tuesday January 15 2019, @10:41PM (#787088)

    This is why you are posting on S/N, loser.

  • (Score: 0) by Anonymous Coward on Wednesday January 16 2019, @01:31AM

    by Anonymous Coward on Wednesday January 16 2019, @01:31AM (#787161)

    how likely is Apple to be influenced by a bribe that is 1/243th (or only 0.4%) of their cash pile?

    Dude, it's still a billion dollars. Sure, it may not be life changing money like it would be to a mom & pop grocery, or to Sears, but it's still one billion dollars.

  • (Score: 0) by Anonymous Coward on Wednesday January 16 2019, @02:41PM

    by Anonymous Coward on Wednesday January 16 2019, @02:41PM (#787382)

    How do you suppose they managed to hoard such a sum? By doing shady things like this. And a whole lot of tax dodging.