Qualcomm Gets $1.2 Billion EU Fine for Apple Chip Payments
Qualcomm Inc. was fined 997 million euros ($1.2 billion) by the European Union for paying Apple Inc. to shun rival chips in its iPhones.
The largest maker of chips that help run smartphones "paid billions of U.S. dollars to a key customer, Apple, so that it would not buy from rivals," EU Competition Commissioner Margrethe Vestager said in an emailed statement on Wednesday. "This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were."
Qualcomm struck a deal with Apple in 2011 that pledged significant payments if Apple only used Qualcomm chipsets for the iPhone and iPad devices. That agreement was renewed in 2013 until 2016. Qualcomm warned it would stop these payments if Apple sold another product with a rival chip. This effectively shut out competitors such as Intel Corp. from the market for LTE baseband chipsets used in the 4G mobile phone standard for five years, the EU said.
European Commission press release. Also at Reuters.
Previously: EU Investigates Qualcomm For Antitrust Activities
U.S. Federal Trade Commission Sues Qualcomm for Anti-Competitive Practices
Apple Could Switch From Qualcomm to Intel and MediaTek for Modems
Related: Apple vs. Qualcomm Escalates, Manufacturers Join in, Lawsuits Filed in California and Germany
Qualcomm Files New Lawsuit Against Apple, Alleging it Shared Confidential Information with Intel
Broadcom Offers $105 Billion for Qualcomm; Moves HQ Back to the USA
Related Stories
Qualcomm is under investigation by the European Union's antitrust authority, which suspects the company of abusing its dominant position in the market for 3G and 4G chipsets used in smartphones and tablets.
The European Commission has initiated proceedings against Qualcomm in two investigations, it said Thursday. The first concerns whether Qualcomm breached EU antitrust rules by offering financial incentives to phone manufacturers on condition that they buy chipsets exclusively, or mostly, from the company; the second, whether Qualcomm engaged in predatory pricing, selling below cost to force competitors out of the market.
Mobile processors and baseband chipsets, which handle the communications protocols used in wireless networks, form a significant proportion of the cost of a mobile phone and, at least at the low end of the market, margins are getting thinner, leaving phonemakers more vulnerable to pricing pressures from their suppliers.
The EU Commissioner in charge of competition policy, Margrethe Vestager, said "We are launching these investigations because we want to be sure that high tech suppliers can compete on the merits of their products. Many customers use electronic devices such as a mobile phone or a tablet and we want to ensure that they ultimately get value for money. Effective competition is the best way to stimulate innovation."
Qualcomm's business practices have come under antitrust authorities' scrutiny before. Earlier this year, Chinese regulators fined Qualcomm $975 million for overcharging device makers there.
[...]
Qualcomm said it had been notified that the Commission had initiated proceedings against it in the two ongoing investigations. It will continue to cooperate with the Commission, but believes the concerns are without merit, it said.
More coverage of this story can be found at The Register and ITWorld.
Original Submission
The U.S. FTC is going after Qualcomm:
The Federal Trade Commission filed a complaint in federal district court charging Qualcomm Inc. with using anticompetitive tactics to maintain its monopoly in the supply of a key semiconductor device used in cell phones and other consumer products. Qualcomm is the world's dominant supplier of baseband processors – devices that manage cellular communications in mobile products. The FTC alleges that Qualcomm has used its dominant position as a supplier of certain baseband processors to impose onerous and anticompetitive supply and licensing terms on cell phone manufacturers and to weaken competitors.
[...] According to the complaint, by threatening to disrupt cell phone manufacturers' supply of baseband processors, Qualcomm obtains elevated royalties and other license terms for its standard-essential patents that manufacturers would otherwise reject. These royalties amount to a tax on the manufacturers' use of baseband processors manufactured by Qualcomm's competitors, a tax that excludes these competitors and harms competition. Increased costs imposed by this tax are passed on to consumers, the complaint alleges. By excluding competitors, Qualcomm impedes innovation that would offer significant consumer benefits, including those that foster the increased interconnectivity of consumer products, vehicles, buildings, and other items commonly referred to as the Internet of Things.
Get in line:
EU Investigates Qualcomm For Antitrust Activities
Qualcomm Faces EU Antitrust Charges Over "Predatory Pricing"
Qualcomm Fined $853 Million by South Korea for Antitrust Violations
Also at Bloomberg and The Verge.
Companies manufacturing iPhones for Apple have filed lawsuits against Qualcomm Inc., as Qualcomm has filed new patent suits against Apple in the EU:
Apple Inc. and its Asian contract manufacturers are hitting back at Qualcomm Inc. with legal claims that try to undermine the chipmaker's attempt to force them to pay licensing fees.
Qualcomm is asking for payments in excess of what it would normally receive, Apple, Compal Electronics Inc., Hon Hai Precision Industry Co. and others said early Wednesday in court filings. If successful, the counter-claims could cost Qualcomm billions of dollars in refunded fees and damages, Apple said.
Also Wednesday, Qualcomm said it had filed two new patent-infringement suits against Apple, this time in Germany. The patents, for ways to transmit information without draining battery life, are the European counterparts to those that are part of a case Qualcomm filed with a trade agency in Washington seeking to halt imports of Apple products into the U.S. market.
The filings, in California as well as Germany, represent the latest escalation in the dispute between Apple and Qualcomm over fees the San Diego-based company charges on all modern phones, even if the device doesn't have one of its chips. That revenue stream has made it one of the richest companies in the industry.
Also at ITWorld, The Register, and 9to5Mac.
Apple is considering completely switching away from Qualcomm components, such as modems, in future iterations of the iPhone. Intel modems have already been used in some iPhones, and MediaTek is also under consideration:
Apple Inc has designed iPhones and iPads that would drop chips supplied by Qualcomm Inc, according to two people familiar with the matter. The change would affect iPhones released in the fall of 2018, but Apple could still change course before then, these people said. They declined to be identified because they were not authorized to discuss the matter with the media.
The dispute stems from a change in supply arrangements under which Qualcomm has stopped providing some software for Apple to test its chips in its iPhone designs, one of the people told Reuters.
The two companies are locked in a multinational legal dispute over the Qualcomm's licensing terms to Apple.
Qualcomm told Reuters it is providing fully tested chips to Apple for iPhones. "We are committed to supporting Apple's new devices consistent with our support of all others in the industry," Qualcomm said in a statement.
Apple and other companies are suing Qualcomm over licensing fees. Apple has had similar hardware-level disputes with Samsung in the past. Apple designs its own ARM chips but has to have them manufactured by Samsung or TSMC.
Also at Bloomberg and 9to5Mac.
Qualcomm accuses Apple of helping Intel with chip software
The patent licensing battle between Apple and Qualcomm keeps getting more heated. Wednesday, Qualcomm filed another lawsuit against Apple, this time alleging Apple shared confidential Qualcomm software information with its chip rival, Intel. The breach of contract lawsuit said Qualcomm gave Apple "unprecedented access to Qualcomm's very valuable and highly confidential software, including source code." In return, Apple agreed to take steps to keep the software confidential and secure. But Qualcomm said instead it found that Apple shared information with Intel.
In one instance, Apple requested confidential software information from Qualcomm and cc'd an Intel engineer on the message, Qualcomm said.
Qualcomm wants a court to declare Apple breached the agreement and award damages, among other demands. "As the direct and proximate result of Apple's conduct, Qualcomm has suffered significant damages in an amount to be proven at trial," the filing said.
Apple also hasn't complied with Qualcomm's rights to audit Apple's compliance with the provisions of their software agreement, Qualcomm said in its lawsuit. It wants to do so to make sure Apple hasn't shared more information with Intel.
Also at Bloomberg, AppleInsider, and MacRumors.
Previously: U.S. Federal Trade Commission Sues Qualcomm for Anti-Competitive Practices
Qualcomm's Good Quarter
Intel Hints at Patent Fight With Microsoft and Qualcomm Over x86 Emulation
Apple vs. Qualcomm Escalates, Manufacturers Join in, Lawsuits Filed in California and Germany
Apple Could Switch From Qualcomm to Intel and MediaTek for Modems
Broadcom Considering Unsolicited $105 Billion Bid to Acquire Qualcomm
Broadcom is deciding whether to proceed with the largest-ever attempted acquisition of a chipmaker:
Broadcom Ltd. is considering a bid of more than $100 billion for Qualcomm Inc., according to people familiar with the matter, in what would be the biggest-ever takeover of a chipmaker. Broadcom is speaking to advisers about the potential deal, said the people, who asked not to be identified because talks are private. The offer of about $70 a share would include cash and stock and is likely to be made in the coming days, the people said. A final decision on whether to proceed has not been made, they said.
[...] Qualcomm finds itself in a weakened state. A legal battle with Apple is costing revenue and jeopardizing a business model that for years made Qualcomm one of the most successful chipmakers. Before today, its shares had slumped 16 percent this year, compared with a 41 percent surge in the Philadelphia Semiconductor Index. A change of management at Qualcomm might help resolve the dispute with Apple more quickly, and thereby make Qualcomm's licensing and chip businesses more valuable, according to Sanford C. Bernstein & Co. analyst Stacy Rasgon. Earlier this week, Qualcomm executives said the legal process would "proceed under the court's schedule," indicating no resolution soon.
(Score: -1, Troll) by Anonymous Coward on Wednesday January 24 2018, @07:15PM (25 children)
This was a voluntary agreement; the government should butt out.
(Score: 5, Touché) by Tyrsal on Wednesday January 24 2018, @07:18PM (24 children)
I agree, if two people make an agreement, no matter *what* the terms are, who is the government to say that that agreement is invalid. What kind of silly laws are these!?
I mean, what's next, they'll say contract killing is illegal too? Where will all the jobs go then, think of the children!
(Score: -1, Troll) by Anonymous Coward on Wednesday January 24 2018, @07:21PM (8 children)
Paying Apple not to use competitors' chips is morally equivalent to contract killing. Got it.
The EU is about the only group of assholes that make me want to defend a shit company like Qualcomm.
(Score: 5, Informative) by ledow on Wednesday January 24 2018, @07:59PM (4 children)
And the difference between this and Microsoft paying PC manufacturers to only bundle DOS/Windows?
Exactly the same, they got fined the same by the EU (US conveniently ignored it) and it damaged the market for alternatives for decades while putting technically-superior systems out of consumer reach.
Maybe the EU and the US just view monopolistic practices differently? Like, we don't actually want Qualcomm deciding what chips we'll have in our products, or Apple deciding that they'll put whatever the highest-bidder wants in there.
I'm sure if Starbuck's paid a dollar for every coffee you DIDN'T buy from other small high street local cafes, you'd be right there collecting your dollars until nobody was left but Starbuck's who could then do what they liked and put any competitor out of business immediately by just repeating the trick?
If the only way you can sell a product is to bribe companies into using it instead of your competitors, what the hell makes you think that's a win for consumers in any way?
(Score: -1, Flamebait) by Anonymous Coward on Wednesday January 24 2018, @08:08PM
How is it any different from Amazon not selling Chromecasts?
How is it any different from Big Green Egg only distributing sellers who don't sell other Kamado style grills?
How is it any different from my insurance company only letting me see certain doctors?
There is no difference, Microsoft shouldn't have been fined back then either. Anti-trust laws have always been selectively enforced (spoiler: like every other law) when convenient, and the handful of times they've been levied against actual monopolies, those monopolies would be much easier broken by removing the government regulations (intellectual property law, legal barriers to entry for smaller competitors) that enabled the monopoly to form in the first place.
(Score: 4, Informative) by zocalo on Wednesday January 24 2018, @10:35PM (2 children)
Scenario 1: Apple asks several chip vendors to give them a price for the supply of chips. Qualcomm comes back with the best bang per buck, but adds a rider that the deal only applies if they are the sole supplier for a given period of time. Apple decides that Qualcomm's offer is the best value for money and signs up to the exclusivity deal. This is perfectly legal, and quite common - e.g. the selection of soft drinks in fast food outlets.
Scenario 2: Apple asks several chip vendors to give them a price for the supply of chips. Qualcomm responds with their offer, but also offers an additional chunk of cash in order to *become* Apple's sole supplier - a kickback, in otherwords. EU anti-corruption law is very clear on this, and that cash is seen as a bribe - even if the total amount of chips and cash to be exchanged was identical to Scenario 1. Apple should have been well aware of this and walked away from Qualcomm right there and then, regardless of how good the rest of Qualcomm's offer might have been.
There's also another aspect to this - the EU views offering a bribe *and* accepting a bribe as corruption, which means that if they're following their own rules then they will almost certainly be thinking about prosecuting both the Apple execs responsible for making the deal and Apple the company for not preventing them from doing so.
UNIX? They're not even circumcised! Savages!
(Score: 0) by Anonymous Coward on Thursday January 25 2018, @07:33AM (1 child)
and that is a problem. Offering a bribe should *never* be corruption. Taking a bribe should always. Only this way can we route out all corruption.
When both are illegal, there is no incentives for either side to report the crime.
(Score: 3, Insightful) by zocalo on Thursday January 25 2018, @07:58AM
UNIX? They're not even circumcised! Savages!
(Score: -1, Troll) by Anonymous Coward on Wednesday January 24 2018, @07:59PM
designed by gernams for gernams
(Score: 3, Insightful) by turgid on Wednesday January 24 2018, @09:11PM (1 child)
The quality of trolling around here is pretty awful these days.
I refuse to engage in a battle of wits with an unarmed opponent [wikipedia.org].
(Score: 2) by fido_dogstoyevsky on Wednesday January 24 2018, @11:22PM
The green site is now a civilised meeting place for sharing ideas, by comparison. Worth having a look at the same story over there.
It's NOT a conspiracy... it's a plot.
(Score: -1, Flamebait) by Anonymous Coward on Wednesday January 24 2018, @07:21PM (14 children)
In the case of contract killing, there is a third party whose resources (e.g., the third party's life) are being appropriated without that third party's consent; it's not applicable; it's not an example of a voluntary agreement; it's not an example of capitalism; it's not an example of anything worthwhile.
Try again.
(Score: 0) by Anonymous Coward on Wednesday January 24 2018, @07:23PM
Don't bother, he was never being intellectually honest to begin with and won't start now.
(Score: 3, Insightful) by Anonymous Coward on Wednesday January 24 2018, @07:42PM (12 children)
Ah yes, the simple minded folks chime in again. Do you disagree with anti-monopoly legislation? What about insider trading? As for the example of contract killing, Qualcomm is affecting the lives of many more people with this anti-competitive practice. The are proactively limiting their competitor's market share, and the analogy to a contract killer is extreme yet oddly similar.
I know! We need unfettered corporate freedom so they can achieve market dominance in any way possible! Like the US, if you want to carry Coke products you sure as hell better not carry Pepsi. Only large sellers like Safeway and WalMart can sell both products because they are in the more powerful bargaining position. Are you sure that letting corporations operate like feudal kingdoms is really the best choice?
Guess I shouldn't be surprised that the "try again" troll can't comprehend nuance or understand that limits on absolute freedom are absolutely necessary.
(Score: 0) by Anonymous Coward on Wednesday January 24 2018, @07:57PM
How much nuance is required for responding to an idiot comparing contract killing to anti-competitive business practices? Want to punish Qualcomm? Get rid of their intellectual property rights regarding 4G networking. That would be effective at creating a more competitive chipset environment while being the exact opposite of additional regulation.
Or you can compare being forced to use Qualcomm chips (because not owning an iPhone is simply unfathomable) to having someone put out a hit on you. And then pretend like you're the one making rational arguments.
(Score: -1, Spam) by Anonymous Coward on Wednesday January 24 2018, @07:59PM (7 children)
The only thing which matters is that society is as free as possible; the only thing which matters is that agreements are voluntary, where "voluntary" is defined by contracts; the enforcement of a contract is just another service in the world, and should therefore be implemented in the market along with every other service—the best Separation of Powers is competition between competing service providers, not a violently imposed, culturally blessed monopoly.
(Score: 2, Insightful) by Anonymous Coward on Wednesday January 24 2018, @08:46PM (6 children)
Moron troll chimes in again! So abusing top market share to undercut competitors and drive them out of business (war chest) and forming corrupt deals where CEOs are bribed to collude, THAT is what you imagine is best? As people have repeatedly pointed out, history is replete with examples of your preferred system, and we decided it was quite below ideal. What did we do? We created antitrust laws and broke up monopolies.
Moron moorrrooonnnn, he who is best put to work watching cows graze! Moron moron moron, oh by what other name shall you be more accurately described? Idiot? Say not! Forsooth I see a shit flower blooming in the darkness.
(Score: -1, Troll) by Anonymous Coward on Wednesday January 24 2018, @09:09PM (5 children)
Which mobile chipset competitor did Qualcomm force out of business? Intel?
Qualcomm owns the mobile industry because they have patents on 4G antenna technology that mobile device manufacturers have to license REGARDLESS of whether they even use Qualcomm chips.
Fine them however much you want, you're pissing in the wind because you haven't addressed the actual problem.
(Score: 0) by Anonymous Coward on Wednesday January 24 2018, @09:29PM (4 children)
Spreadtrum [wikipedia.org], initially listed on NASDAQ, is no longer. Also no longer producing for Western market.
CEVA [wikipedia.org] can't grow over $millions.
(Score: -1, Troll) by Anonymous Coward on Wednesday January 24 2018, @09:33PM (3 children)
So, two companies that still exist?
I noticed I've posted about Qualcomm's 4G patents nearly half a dozen times in this comment thread and nobody seems to want to address it. I don't like Qualcomm; I think there's a better way to deal with them.
(Score: 2) by MostCynical on Wednesday January 24 2018, @10:10PM (2 children)
Patents, in their current form, are not working. That you provide further evidence of this broken-ness doesn't help your other arguments.
"I guess once you start doubting, there's no end to it." -Batou, Ghost in the Shell: Stand Alone Complex
(Score: 0) by Anonymous Coward on Wednesday January 24 2018, @10:23PM (1 child)
The point is that without their 4G patents (which make Apple pay them even if they DON'T use their chips), Qualcomm would lack the negotiating power to have done this. Nobody bitched about slapping Apple with an anti-trust when they went exclusive to AT&T, and within a couple years they were forced to spread to other carriers because competition entered the market (though they too fought it using intellectual property law). Saying "This effectively shut out competitors such as Intel Corp. from the market for LTE baseband chipsets used in the 4G mobile phone standard" is incorrect; what shut them out is that Qualcomm effectively OWNS the 4G mobile phone standard.
All of this boils down to the ability to restrict other people from entering the market by saying you own an idea. You're treating a symptom and being willfully obtuse about it.
(Score: 0) by Anonymous Coward on Wednesday January 24 2018, @11:09PM
Partially correct.
More like:
Now, what we define as anti-competitive is the trickier part. Should we allow patents? Should we allow bribery? This is about more than patents or copyrights and you're being willfully obtuse about it.
(Score: -1, Troll) by Anonymous Coward on Wednesday January 24 2018, @09:27PM (1 child)
The only thing which matters is that society is as free as possible; the only thing which matters is that agreements are voluntary, where "voluntary" is defined by contracts; the enforcement of a contract is just another service in the world, and should therefore be implemented in the market along with every other service—the best Separation of Powers is competition between competing service providers, not a violently imposed, culturally blessed monopoly.
(Score: 1, Touché) by Anonymous Coward on Wednesday January 24 2018, @09:50PM
The only spam that matters is what this fool posts! The only way forward is a SEPARATION OF POSTS from their mods! We must listen to this tired fool because with a little blind faith we can fix all of humanity's problems!! We need more competition between good posts and shitty ones! Oh wait, hold on, isn't that what modding is for?
We need more competition in the market place!! WE MUST DO AWAY WITH ANTI-COMPETITIVE PRACTICES! Woops again, I guess we need to ALLOW anti-competitive practices or else the commies win. Fucking reds and their EEVVILLLLL ways.
(Score: 0) by Anonymous Coward on Thursday January 25 2018, @09:27PM
The only thing which matters is that society is as free as possible; the only thing which matters is that agreements are voluntary, where "voluntary" is defined by contracts; the enforcement of a contract is just another service in the world, and should therefore be implemented in the market along with every other service—the best Separation of Powers is competition between competing service providers, not a violently imposed, culturally blessed monopoly.