China has filed charges against Qualcomm, and they’ve had to pay a fine amounting to $945M. South Korea has filed charges against Qualcomm, and they’ve had to pay a fine amounting to $854M. Now, the Snapdragon manufacturer is facing charges yet again and this time it’s Uncle Sam’s Federal Trade Commission knocking on their door.
The FTC has hit the Qualcomm with a complaint, charging them for anti-competitive tactics in order to maintain its seat as the go-to SoC for mobile phones; this is the same reason they’ve been hit with major fines in other regions. Here’s a direct entry from the FTC’s Press Release regarding their allegations against Qualcomm Inc.
The FTC has charged Qualcomm with violating the FTC Act. The complaint alleges that Qualcomm:
Maintains a “no license, no chips” policy under which it will supply its baseband processors only on the condition that cell phone manufacturers agree to Qualcomm’s preferred license terms. The FTC alleges that this tactic forces cell phone manufacturers to pay elevated royalties to Qualcomm on products that use a competitor’s baseband processors. According to the Commission’s complaint, this is an anticompetitive tax on the use of rivals’ processors. “No license, no chips” is a condition that other suppliers of semiconductor devices do not impose. The risk of losing access to Qualcomm baseband processors is too great for a cell phone manufacturer to bear because it would preclude the manufacturer from selling phones for use on important cellular networks.
Refuses to license standard-essential patents to competitors. Despite its commitment to license standard-essential patents on FRAND terms, Qualcomm has consistently refused to license those patents to competing suppliers of baseband processors.
Extracted exclusivity from Apple in exchange for reduced patent royalties. Qualcomm precluded Apple from sourcing baseband processors from Qualcomm’s competitors from 2011 to 2016. Qualcomm recognized that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors.
Don’t get us wrong. We love Qualcomm SoC and usually prefer handsets with a Snapdragon processor running the show, but these allegations against the company do make a point. How can innovations be made if one company has the monopoly over an industry?
As of the moment, there has been no word if Qualcomm will face another hefty fine, but they have released this statement:
(Qualcomm) never withheld or threatened to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms. The FTC’s allegation to the contrary — the central thesis of the complaint — is wrong.
Reminds us of a quote from the old movie, A Guide for the Married Man: “Deny. Deny. Deny.”