EU Regulator Fines Qualcomm $1.2 Billion for Paying Apple to Use Its Mobile Chips

[MacRumors]

Qualcomm has been hit with a 997 million euro ($1.2 billion) fine by EU antitrust regulators for paying Apple to use its LTE chips in iOS devices, Reuters reported on Wednesday. According to the European Commission's investigation, the payments to Apple occurred from 2011 to 2016, and were made with the sole aim of blocking Qualcomm's LTE chipset market rivals, such as Intel.

"Qualcomm paid billions of U.S. dollars to a key customer, Apple, so that it would not buy from rivals. These payments were not just reductions in price - they were made on the condition that Apple would exclusively use Qualcomm's baseband chipsets in all its iPhones and iPads," European Competition Commissioner Margrethe Vestager said in a statement.

"This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were," she said.

The EU fine - said to represent 4.9 percent of Qualcomm's 2017 turnover - is particularly bad news for the company, as it could put it at increased risk of a $103 billion hostile takeover bid by rival U.S. chipmaker Broadcom. Separately, Qualcomm is also in an ongoing legal battle with Apple over smartphone chips.

The troubles began for Qualcomm in January 2017 when the Federal Trade Commission complained that it had engaged in anticompetitive patent licensing practices. Soon after, Apple sued the chipmaker for $1 billion, accusing it of charging unfair royalties for "technologies they have nothing to do with" and refusing to pay quarterly rebates. A Qualcomm countersuit followed in April, and the dispute escalated throughout the year with expanded lawsuits and claims lodged by both sides.

The last legal volley between the two came in November, when Apple countersued Qualcomm with a patent infringement claim, after the latter company sought iPhone and iPad import bans in the United States last summer.

Article Link: EU Regulator Fines Qualcomm $1.2 Billion for Paying Apple to Use Its Mobile Chips

 

[Menel]

Good!
But they'll appeal.

 

[JosephAW]

Apple didn't buy exclusively from Qualcomm, they also bought Intel's chips creating both fast and slow LTE iPhone devices for their consumers.

 

[VulchR]

This story sounds a little strange, particularly in light of the Apple/Qualcomm spat.

 

[Abazigal]

In case anyone is wondering why Apple isn’t being faulted for accepting what might be construed as a bribe, at the time Qualcomm demanded these terms of Apple, there were no other LTE modems for Apple to buy, so the choice for Apple was to either go with the contract Qualcomm offered, or not make any phones. The whole point of Qualcomm’s restrictive practices was to stop companies like Intel from developing LTE modems by restricting who Intel could strike a deal with for supply.

Apple is as much a victim here.

 

[foobarbaz]

Apple didn't buy exclusively from Qualcomm, they also bought Intel's chips

And before they bought from Intel, they didn't buy from Intel.

 

[bsolar]

Apple didn't buy exclusively from Qualcomm, they also bought Intel's chips creating both fast and slow LTE iPhone devices for their consumers.

As far as I understand this happened only after the “exclusivity” deals were not renewed after the EU investigation started.

http://europa.eu/rapid/press-release_IP-18-421_en.htm

In fact, internal documents show that Apple gave serious consideration to switching part of its baseband chipset requirements to Intel. Qualcomm's exclusivity condition was a material factor why Apple decided against doing so, until the agreement came to an end.

 

[Madhava]

In case anyone is wondering why Apple isn’t being faulted for accepting what might be construed as a bribe, at the time Qualcomm demanded these terms of Apple, there were no other LTE modems for Apple to buy, so the choice for Apple was to either go with the contract Qualcomm offered, or not make any phones. The whole point of Qualcomm’s restrictive practices was to stop companies like Intel from developing LTE modems by restricting who Intel could strike a deal with for supply.

Apple is as much a victim here.

Thanks for the details. I had the same doubt when I read the article.

 

[Massimo1926]

This is great. They paid Apple and now they’re paying again! Kudos to their lawyers!!

 

[jav6454]

I wonder how the market will react to this story.

 

[kirk.vino]

Why would Qualcomm pay anyone? Their modem chips are way superior to the ones from Intel. The iPhone 7/8/X with Intel is absolute garbage in low signal areas!

 

[whooleytoo]

In case anyone is wondering why Apple isn’t being faulted for accepting what might be construed as a bribe, at the time Qualcomm demanded these terms of Apple, there were no other LTE modems for Apple to buy, so the choice for Apple was to either go with the contract Qualcomm offered, or not make any phones. The whole point of Qualcomm’s restrictive practices was to stop companies like Intel from developing LTE modems by restricting who Intel could strike a deal with for supply.

Apple is as much a victim here.

Maybe... but I'd like to be that kind of victim..

Qualcomm: Take this 'discount', and never buy these chips from anyone else!
Apple: Err, there isn't anyone else to buy from...
Qualcomm: We don't care. Take the discount anyway!
Apple: Ok...

 

[makingdots]

Why would Qualcomm pay anyone? Their modem chips are way superior to the ones from Intel. The iPhone 7/8/X with Intel is absolute garbage in low signal areas!

Yep. The topic here is all about modem chip's performance. You're the only one here who thought of that! That's awesome!

 

[69Mustang]

In case anyone is wondering why Apple isn’t being faulted for accepting what might be construed as a bribe, at the time Qualcomm demanded these terms of Apple, there were no other LTE modems for Apple to buy, so the choice for Apple was to either go with the contract Qualcomm offered, or not make any phones. The whole point of Qualcomm’s restrictive practices was to stop companies like Intel from developing LTE modems by restricting who Intel could strike a deal with for supply.

Apple is as much a victim here.

No. Just no. No. That's not how strong-arming works.
If Apple had no choice but to use Qualcomm... you know where the question is going don't you... why in heck would Qualcomm offer Apple rebates? As you said, it was either go with Qualcomm or make no phones.


Apple is a victim here? Ha! I think you misspelled complicit.

 

[supremedesigner]

Maybe... but I'd like to be that kind of victim..

Qualcomm: Take this 'discount', and never buy these chips from anyone else!
Apple: Err, there isn't anyone else to buy from...
Qualcomm: We don't care. Take the discount anyway!
Apple: Ok...

I think this one makes sense. Good point.

 

[BvizioN]

Qualcomm: Take this 'discount', and never buy these chips from anyone else!
Apple: Err, there isn't anyone else to buy from...
Qualcomm: We don't care. Take the discount or no deal!
Apple: Ok...

Fixed for you.

 

[Abazigal]

No. Just no. No. That's not how strong-arming works.
If Apple had no choice but to use Qualcomm... you know where the question is going don't you... why in heck would Qualcomm offer Apple rebates? As you said, it was either go with Qualcomm or make no phones.


Apple is a victim here? Ha! I think you misspelled complicit.

Because in time, Qualcomm would license their technology to other companies.

And when this happened, Apple would still be contract-bound to continue buying its models from Qualcomm even when other alternatives existed.

It was a deal with the devil. Apple’s hand was forced, which is why they are fighting back now.

 

[69Mustang]

Because in time, Qualcomm would license their technology to other companies.

And when this happened, Apple would still be contract-bound to continue buying its models from Qualcomm even when other alternatives existed.

It was a deal with the devil. Apple’s hand was forced, which is why they are fighting back now.

You're jumping around the timeline to try to make your point valid. Apple's hand wasn't forced when they signed the contract. I agree, it was a deal with the devil. A deal they willingly made. This was a deal between two tech behemoths where they both benefited tremendously.

The contract being less attractive in the later years doesn't negate Apple's part in the deal. There were no victims in this. Apple being bound by a contract - one they willingly signed and benefited from for years - doesn't make them victims. There is no circumstance in this situation that makes Apple a victim. I'm honestly not sure how you see a victim here.

 

[Juicy Box]

Apple is as much a victim here.

Oh, Poor Apple.....

Somebody should start a Go Fund Me for them for being victimized....

 

[ke-iron]

Good for them.

 

[Wags]

Apple didn't buy exclusively from Qualcomm, they also bought Intel's chips creating both fast and slow LTE iPhone devices for their consumers.

2016 first Intel model ?

 

[Abazigal]

You're jumping around the timeline to try to make your point valid. Apple's hand wasn't forced when they signed the contract. I agree, it was a deal with the devil. A deal they willingly made. This was a deal between two tech behemoths where they both benefited tremendously.

The contract being less attractive in the later years doesn't negate Apple's part in the deal. There were no victims in this. Apple being bound by a contract - one they willingly signed and benefited from for years - doesn't make them victims. There is no circumstance in this situation that makes Apple a victim. I'm honestly not sure how you see a victim here.

At the time Apple signed the contact, it was either agree to Qualcomm’s terms or have no modems to manufacture iPhones. What were you expecting Apple to do? Walk away and jeopardise the entire company?

 

[Plutonius]

It seems like every time the EU needs money, they sue / fine a company ?

 

[asdavis10]

This is kind of silly to me. So what if Qualcomm paid Apple to use their chips. If they were the better product then it seems like Apple (and consumers) got a good deal. Only if the chips from rivals were superior could I see this being an issue.

 

[CaTOAGU]

In case anyone is wondering why Apple isn’t being faulted for accepting what might be construed as a bribe, at the time Qualcomm demanded these terms of Apple, there were no other LTE modems for Apple to buy, so the choice for Apple was to either go with the contract Qualcomm offered, or not make any phones. The whole point of Qualcomm’s restrictive practices was to stop companies like Intel from developing LTE modems by restricting who Intel could strike a deal with for supply.

Apple is as much a victim here.

Perhaps but there was another choice here - not make a phone and report Qualcomm to the appropriate authorities. It wouldn't have made Apple as much money but increasingly this seems to be the problem with all companies, prioritising making money over other concerns. Apple maybe better behaved than some (and worse the others) but that doesn't make it right.

At the end of the day capitalism is an excellent mechanism for distributing limited resources and encouraging innovation but without a moral foundation, we're all just animals, it's just we're hunting "dollar bills" instead of other, wild-er animals.