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

Discussion in 'MacRumors.com News Discussion' started by MacRumors, Jan 17, 2017.

  1. MacRumors macrumors bot


    Apr 12, 2001

    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.
    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.
    Article Link: FTC Targeting Qualcomm for Forcing Apple to Use its Modems [Updated]
  2. DVNIEL macrumors 6502a

    Oct 28, 2003
    Awwww.... as if Apple probably doesn't bully companies into only using their products.
  3. DrumApple macrumors 6502a

    Jan 30, 2009
    They should stick their nose somewhere else, the Intel modems were shown to be slower than the Qualcomm ones...
  4. Derekuda macrumors 6502


    Oct 2, 2004
    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.
  5. Brandhouse macrumors 6502

    Aug 6, 2014
    Why? You buy a device you accept certain things, you don't start crying and having a big sook.
  6. tubeexperience macrumors 68040

    Feb 17, 2016
    What does that have to do with Qualcomm anti-competitive practices?
  7. diegov12 macrumors member

    Dec 29, 2015
    By using these practices, they were able to spend more on r and
    I didn't know apple licensed its tech.
    When did this happen.
  8. WarHeadz macrumors 6502a


    Aug 30, 2015
    Long Beach, California
    Hard to believe anyone "forces" Apple to do anything.
  9. entropys macrumors 6502a


    Jan 5, 2007
    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.
  10. daveak macrumors 6502

    Jun 28, 2009
    Durham, UK
    Based on performance of the modem in the UK iPhone 7 compared to the 6S I think it is Intel forcing Apple to use Qualcomm.
  11. oneMadRssn macrumors 601


    Sep 8, 2011
    New England
    This has nothing to do with what's better. The issue is Qualcomm basically unfairly prevented competition by improperly licensing standard essential patents.
  12. diegov12 macrumors member

    Dec 29, 2015
    Can we sue companys for not letting us replace the CPUs on them?
  13. Mascots macrumors 68000


    Sep 5, 2009
    They effectively used Apple's massive production as a proxy to lock out competition.
    --- Post Merged, Jan 17, 2017 ---
    No, it is not possible because Apple controls the entire stack.
  14. Defthand macrumors 65816

    Sep 1, 2010
    It will be interesting to see if the same posters who defend Apple's anticompetitive practices will defend Qualcomm's...
  15. Zoboomafoo macrumors 6502

    May 22, 2002
    That's what I don't get, isn't that the point of patents?
  16. djcerla macrumors 68000


    Apr 23, 2015
  17. Avieshek Suspended


    Dec 7, 2013
    How about targeting 'Intel' as well for their 'x86' architecture? It's killing the Macs.
  18. jdillings macrumors 68000

    Jun 21, 2015
    No, Tim Cook is.
  19. cmwade77 macrumors 65816

    Nov 18, 2008
    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.
  20. oneMadRssn macrumors 601


    Sep 8, 2011
    New England
    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.
  21. apolloa macrumors G5

    Oct 21, 2008
    Time, because it rules EVERYTHING!
    Well considering the speed fiascos reported with Intels efforts I'm not complaining about this. It's actually a shame you now have pot luck which modem you get in an iPhone.
  22. GeneralChang macrumors 65816

    Dec 2, 2013
    Well, it is Qualcomm, so... is anyone surprised?
  23. daveak macrumors 6502

    Jun 28, 2009
    Durham, UK
    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
  24. DrumApple macrumors 6502a

    Jan 30, 2009
    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.
  25. BootsWalking macrumors 65816

    Feb 1, 2014
    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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