Displaying items by tag: US Federal Trade Commission
The US manufacturer of superchips that powers our smartphones has seen its shares plummet following an antitrust ruling.
US chipmaker Qualcomm has robustly defended its business practices as the antitrust lawsuit against them draws to a close.
In their closing testimony Qualcomm declared that the US Federal Trade Commission (FTC) had ultimately failed to prove that the chipmaker’s business practices had harmed its competitors during the course of the trial.
FTC have alleged that Qualcomm used its market dominance in its smartphone chip development to force phone suppliers to pay higher patent licensing fees, in other words it claims the company which is headquartered in San Diego had an unfair monopoly.
Both parties now must wait for the ruling from the judiciary, although reports have suggested that the decision is not likely to be delivered any time soon.
In a statement which summarized Qualcomm’s closing argument in court, the company’s EVP and general counsel Don Rosenberg said the FTC hasn’t come close to meeting its burden of proof in this case.
Rosenberg said, “All real-world evidence presented at trial showed how Qualcomm’s years of R&D and innovation fostered competition, and growth for the entire mobile economy to the benefit of consumers around the world.”
In addition to this, Rosenberg highlighted that Qualcomm’s licensing rates were established long before it had set up its lucrative chip business and accurately reflected the value of its comprehensive patent portfolio.
The FTC closed their arguments by stressing to the judiciary that the powerful chipmaker had used its muscle and dominance in the 3G and 4G chip market to force smartphone manufacturers like Apple to sing licensing agreements with excessively high royalties.
Prosecutors on behalf of FTC argued this approach would continue in the 5G era if Qualcomm isn’t stopped.
During the trial, the FTC called witnesses from a number of handset companies including Apple, Samsung, Intel and Huawei to testify that Qualcomm had used unfair practices, harming competition in the industry.
Qualcomm has fired back at Apple after it sued the company on Friday, 20 January, over allegations of monopoly abuse. Some analysts suspect Apple is taking advantage of the monopoly abuse lawsuit filed against Qualcomm by the US Federal Trade Commission, to pave the way for other mobile chipset makers, in order to forge more deals. Analyst Patrick Moorhead said he believes Apple “is not comfortable in feeling that they have only one [chipset] source and are taking this opportunity to go after Qualcomm.”
Apple claims Qualcomm owes it a billion dollars and says the company is refusing to pay since Apple cooperated with South Korean antitrust regulators looking into antitrust claims against Qualcomm in the country. However, the iPhone maker is being accused of hypocrisy since the company is facing its own monopoly abuse accusations regarding its App Store.
A lawsuit filed against Apple, Inc. in 2011, seeking hundreds of millions of dollars in damages for monopoly abuse regarding Apple’s App Store, was revived recently. A US appeals court received the civil suit on January 12. Apple has been accused of creating a monopoly by making its App Store the only place to purchase iPhone applications.
Lack of competition has thus pushed App Store prices higher. Google now holds a considerable market share over Apple in terms of how many apps and users it has, according to a 2016 report by App Promoters; in fact, it’s estimated to be as much as 75% market share for the Play Store.
Qualcomm has rejected Apple’s monopoly abuse claims as baseless, and insisted the iPhone maker “intentionally mischaracterized” agreements between the two companies as well as the value of Qualcomm’s technologies.
“While we are still in the process of reviewing the complaint in detail, it is quite clear that Apple’s claims are baseless,” responded Qualcomm general counsel Don Rosenberg in a statement. “Apple has intentionally mischaracterized our agreements and negotiations, as well as the enormity and value of the technology we have invented, contributed and share with all mobile device makers through our licensing program.”
The statement continues, “Apple has been actively encouraging regulatory attacks on Qualcomm’s business in various jurisdictions around the world, as reflected in the recent KFTC decision and FTC complaint, by misrepresenting facts and withholding information. We welcome the opportunity to have these meritless claims heard in court where we will be entitled to full discovery of Apple’s practices and a robust examination of the merits.”
Some analysts suspect Apple is trying to pave the way for other rival chipset makers to flourish, by taking advantage of the monopoly abuse claims being made against Qualcomm. Apple relies on Qualcomm for chip-based modems that enable iPhones and iPads to communicate with telecommunication networks. By playing into the antitrust claims against Qualcomm, Apple could forge better deals with its competitors, says Patrick Moorhead of Moor Insights and Strategy.
“I think Apple is not comfortable in feeling that they have only one source and are taking this opportunity to go after Qualcomm,” said Moorhead. “Qualcomm is being looked at on every continent on the planet; this is probably, strategically, the right time for Apple to do this.”
Mobile phone chip manufacturer Qualcomm was hit with an antitrust lawsuit by the US Federal Trade Commission on January 17 alleging it abused its dominant position in the market for processors used in mobile phones and other devices. Qualcomm responded to the allegations saying the “complaint is based on a flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry.”
The lawsuit against Qualcomm was filed in a federal court in California by the US Federal Trade Commission, claiming that the vendor’s business practices amount to “unlawful maintenance of a monopoly in baseband processors,” which describes the devices of Qualcomm manufacturers which enable cellular communications in mobile phones and other products.
In a statement, the Commission said Qualcomm used its position to impose “onerous and anticompetitive supply and licensing terms on cell phone manufacturers and to weaken competitors.”
The lawsuit details how, by threatening to disrupt other makers’ supply of baseband processors, Qualcomm obtained “elevated royalties and other license terms for its standard-essential patents that manufacturers would otherwise reject.”
The complaint further adds that Qualcomm “consistently refused to license those patents to competing suppliers of baseband processors,” despite its commitment to license standard-essential patents on fair, reasonable and non-discriminatory (FRAND) terms.
In addition, Qualcomm has been accused of extracting “exclusivity from Apple in exchange for reduced patent royalties”. The Commission alleges 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”. Simply put, this prevented Apple from getting processors from Qualcomm's competitors from 2011 to 2016.
Qualcomm, however, hasn’t taken the accusations lightly. In a statement the company said it “believes the complaint is based on a flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry.”
"In our recent discussions with the FTC [Federal Trade Commission], it became apparent that it still lacked basic information about the industry and was instead relying on inaccurate information and presumptions," Qualcomm general counsel Don Rosenberg said in a released statement.
The company has faced similar antitrust investigations in the European Union and China, and last month was hit with a record fine of $850 million by South Korean enforcement regulators, AFP reported.
In 2015, California-based Qualcomm agreed to pay $975 million to settle antitrust charges in China. The company is currently challenging a EU competition inquiry which could result in a fine of up to 10 percent of its annual sales, which amounted to $26.5 billion for Qualcomm in 2015.
Taiwan-based Via Technologies, which was acquired by Intel in 2015, claims to have been affected by Qualcomm’s actions, as well as another Taiwan firm, MediaTek Inc.
In its defense, Qualcomm’s general counsel Rosenberg says the FTC deliberately sped up the investigation, filing the lawsuit just days before a change in the US presidential administration and with only three of five agency commissioners in place.
“This is an extremely disappointing decision to rush to file a complaint,” said Rosenberg. “It became apparent that the FTC was driving to file a complaint before the transition to the new administration.”
Rosenberg added: “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.”
The Commission’s ambition is to seek a court order to prevent Qualcomm’s alleged unfair methods of completion which it says violates the FTC Act. The FTC asked the court to order Qualcomm to cease its anticompetitive conduct and take actions to restore competitive conditions in the market.