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FTC Targeting Qualcomm for Forcing Apple to Use its Modems [Updated]

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The United States Federal Trade Commission today filed a complaint against Qualcomm, accusing the company of violating the FTC Act by using anticompetitive tactics to remain the dominant supplier of baseband processors (aka LTE chips) for smartphones.

According to the FTC, Qualcomm uses its position and its portfolio of patents to impose "onerous and anticompetitive supply and licensing terms on cell phone manufacturers," negatively impacting its competitors.


The complaint specifically addresses a deal with Apple in which Qualcomm required Apple to exclusively use its modems from 2011 to 2016 in exchange for lower 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.
Up until 2016, Apple only used Qualcomm modems in its line of iPhones, deviating from the norm with the iPhone 7. Both Intel and Qualcomm modems were adopted for the iPhone 7 and the iPhone 7 Plus, leading to some compatibility and performance discrepancies.

Qualcomm is also accused of refusing to license its standard-essential patents to competing suppliers and implementing a "no license, no chips" tax policy where it supplies its baseband processors only when manufacturers agree to Qualcomm's preferred licensing terms, causing smartphone makers to pay higher royalties to Qualcomm when a competitor's modem chips are used.

The FTC has asked the court to order Qualcomm to put a stop to its anticompetitive conduct and take action to "restore competitive conditions."

Update: According to Qualcomm, the FTC's complaint is based on "flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry." Qualcomm says it has never withheld or threatened to withhold chip supply to obtain unfair licensing terms.
"This is an extremely disappointing decision to rush to file a complaint on the eve of Chairwoman Ramirez's departure and the transition to a new Administration, which reflects a sharp break from FTC practice," said Don Rosenberg, executive vice president and general counsel, Qualcomm Incorporated.

"In our recent discussions with the FTC, it became apparent that it still lacked basic information about the industry and was instead relying on inaccurate information and presumptions. In fact, Qualcomm was still receiving requests for information from the agency that would be necessary to an informed view of the facts when it became apparent that the FTC was driving to file a complaint before the transition to the new Administration. We have grave concerns about the two Commissioners' decision to bring this case despite a lack of evidence supporting the allegations and theories in the complaint. We look forward to defending our business in federal court, where we are confident we will prevail on the merits."

Article Link: FTC Targeting Qualcomm for Forcing Apple to Use its Modems [Updated]
 

diegov12

macrumors member
Dec 29, 2015
93
184
They should stick their nose somewhere else, the Intel modems were shown to be slower than the Qualcomm ones...
By using these practices, they were able to spend more on r and
Awwww.... as if Apple probably doesn't bully companies into only using their products.
I didn't know apple licensed its tech.
When did this happen.
 
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entropys

macrumors 6502a
Jan 5, 2007
729
1,143
Brisbane, Australia
Interesting, I would have thought Qualcomm is justified a period of exclusivity for its unique R&D, although it seems they might have gone too far down the track of using their patents as a weapon to kill off competing technology. Only Intel had deep enough pockets to break the roadblock.
 
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diegov12

macrumors member
Dec 29, 2015
93
184
I often wonder if it's possible to sue Apple for forcing people to use iOS on the iPhone. On Android hardware it's possible to load different OS's.
You
I often wonder if it's possible to sue Apple for forcing people to use iOS on the iPhone. On Android hardware it's possible to load different OS's.
Can we sue companys for not letting us replace the CPUs on them?
 
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Mascots

macrumors 68000
Sep 5, 2009
1,625
1,318
They effectively used Apple's massive production as a proxy to lock out competition.
[doublepost=1484691900][/doublepost]
I often wonder if it's possible to sue Apple for forcing people to use iOS on the iPhone. On Android hardware it's possible to load different OS's.

No, it is not possible because Apple controls the entire stack.
 
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Defthand

macrumors 65816
Sep 1, 2010
1,351
1,711
It will be interesting to see if the same posters who defend Apple's anticompetitive practices will defend Qualcomm's...
 
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cmwade77

macrumors 65816
Nov 18, 2008
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They should stick their nose somewhere else, the Intel modems were shown to be slower than the Qualcomm ones...
That's actually the point of this, if Qualcomm hadn't forced Apple to use only their modems, then Intel could have competed, meaning they would have had the incentive and money to improve their modems, possibly to be even faster and better than Qualcomms's, which would in turn drive Qualcomm to make a better product and the cycle would go on and on. In other words, competition is always a good thing.
 
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oneMadRssn

macrumors 603
Sep 8, 2011
5,408
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Europe
That's what I don't get, isn't that the point of patents?

It's a separate issue. Patents give the owner the right to exclude infringing products. Sometimes a patent owner willingly gives up part of that right in making their patent a standard essential patent; usually by joining a group of some kind where the agreement requires them to promise to always license that patent on fair and reasonable terms.

A totally other body of law (anti-competitive) says that a company cannot flex their monopoly power in a space to muscle-out a competitor.

Here, Qualcomm can't not license someone. They agreed to license anyone on fair and reasonable terms by agreeing to be part of a standard essential group. Instead, they secretly negotiated with their customers (Apple and others) where they they pay a certain license fee if they use only Qualcomm products, and a much higher license fee if they use Qualcomm and a competing product at the same time.

Qualcomm can't be allowed to do this. Qualcomm can try to compete on price, on features, etc. But it cannot undermine the relationship between its customers and it's competitors by leveraging patent licenses which it must give.
 
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daveak

macrumors 6502
Jun 28, 2009
292
325
Durham, UK
That's actually the point of this, if Qualcomm hadn't forced Apple to use only their modems, then Intel could have competed, meaning they would have had the incentive and money to improve their modems, possibly to be even faster and better than Qualcomms's, which would in turn drive Qualcomm to make a better product and the cycle would go on and on. In other words, competition is always a good thing.

Yep, no way a small company like Intel could possibly compete without being able to sell to Apple. They clearly couldn't afford to. o_O
 
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DrumApple

macrumors 6502a
Jan 30, 2009
536
1,381
That's actually the point of this, if Qualcomm hadn't forced Apple to use only their modems, then Intel could have competed, meaning they would have had the incentive and money to improve their modems, possibly to be even faster and better than Qualcomms's, which would in turn drive Qualcomm to make a better product and the cycle would go on and on. In other words, competition is always a good thing.
Sounds like a load of BS to me. Come on, Intel not having enough $$ to develop a good chip? That's a good one. Maybe they should have made a superior product to begin with and Apple would have more incentive to use them.
 
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BootsWalking

macrumors 65816
Feb 1, 2014
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Everyone wants to be a monopoly themselves but wants to be supplied by non-monopoly supply chains. Live by the sword, die by the sword.
 
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