Qualcomm is Anticompetitive – Tech Narratives

Narrative: Qualcomm is Anticompetitive

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Narrative: Qualcomm is Anticompetitive (Jan 28, 2017)

Written: January 28, 2017

Timeline:

27.03.2017

Qualcomm blocked Samsung from selling Exynos chips: Korean Regulator – ZDNet

Another crazy wrinkle in the ongoing set of regulatory and legal actions against Qualcomm over anticompetitive practices: the Korean regulator responsible for the fine against Qualcomm last year says that one of the conditions of the contract between the companies was that Samsung would not be allowed to sell its own Exynos chips to any other vendors. What's particularly crazy here is that Samsung is both Qualcomm's biggest customer for chips and a contract manufacturer of those chips, so the two are inextricably intertwined here but are still going through this painful process. Samsung isn't suing Qualcomm as Apple is, but it's still likely cooperating with the authorities who are looking into its dealings in various markets. Just another sign of how far relationships between Qualcomm and some of its biggest customers have got, that they're willing to start airing their grievances despite their close ties. via

04.03.2017

Apple’s U.K. Suit Against Qualcomm Adds to Global Patent War – Bloomberg

Just a quickie here – Apple has now sued Qualcomm in the UK too, on top of its existing suits in China and the US. There's not a lot more detail in this article or, apparently, in the court filing itself, but the thrust of the UK case seems to be the same as in the other cases already filed. via Bloomberg

25.01.2017

Apple sues Qualcomm in Beijing seeking 1 billion yuan – Reuters

The Apple-Qualcomm saga continues. Qualcomm was investigated by the Chinese authorities a couple of years back and although that investigation ended in 2015, Apple appears to be using it in much the same way as it is using the FTC's action against Qualcomm in the US, as a basis for its own legal action. It's still almost impossible for any outsider to know how much merit there is on each side of this argument, let alone how individual court systems might ultimately rule, but this fight just keeps getting uglier. via Reuters

21.01.2017

Qualcomm Comments on Apple Complaint – Qualcomm

This is Qualcomm's official statement on Apple's lawsuit filed yesterday in San Diego, and it predictably pushes back on the key points in Apple's filing. It argues that Apple has been the instigator of the various investigations of alleged anticompetitive behavior by Qualcomm in various jurisdictions, and that Apple has been misleading in its statements to the various authorities involved. Unlike some patent disputes, many of which are ultimately settled out of court, this one looks set to go the distance, given the sheer acrimony involved and the fact that this goes beyond a mere dispute over royalties. Combined with the FTC and Korean case, Qualcomm has plenty on its hands here. via Qualcomm Comments on Apple Complaint | Qualcomm

20.01.2017

Apple Sues Qualcomm Over Patent Royalties in Antitrust Case – Bloomberg

First we had the FTC taking action against Qualcomm, and now Apple is joining the fray, and I'd argue that's not at all coincidental. Apple would obviously dearly love to pay Qualcomm less money for licensing and chips, and the FTC has given it the perfect ammunition by highlighting alleged wrongdoing on Qualcomm's part. Intriguingly, it appears that Qualcomm has been withholding rebates due to Apple in retaliation for Apple assisting the South Korean authorities with their recent investigations into anticompetitive practices by Qualcomm. But Apple is also going a lot further, by making some of the same arguments put forth in the FTC case about overcharging for essential FRAND patents. This is going to get ugly. I'm seeing – both in this Bloomberg piece and elsewhere – suggestions that this lawsuit stems from high pressure Apple feels around iPhone growth and margins, but that's nonsense – Apple will always try to get the best margins possible, and when it's given a way to apply

17.01.2017

FTC Charges Qualcomm With Monopolizing Key Semiconductor Device Used in Cell Phones – Federal Trade Commission

The link below is to the FTC's official statement on this action. This isn't the first time Qualcomm has been accused by authorities of anticompetitive practices, but it's been possible to dismiss the Chinese action as the action of a country trying to keep a foreign competitor in check. That obviously isn't the case here, with the FTC taking aim at a home-grown company. The allegations are serious – that Qualcomm illegally ties licensing and chip purchases, that it refuses to license so-called FRAND patents on reasonable terms to competitors, and that it forced Apple into an exclusive arrangement that squeezed out competitors. This won't be easily dismissed, and the stock price took a quick tumble by about 4% late in the session, though it's relatively stable after hours so far. Qualcomm has dominated portions of its key markets, but if some of the strategies it's used to achieve that dominance are undone by regulators, things might open up in interesting ways to competitors. via

28.12.2016

South Korea slaps Qualcomm with record-setting $850M fine – Ars Technica

Following action in China in early 2015, Korea initiated similar action against Qualcomm in late 2016, with similar allegations about anticompetitive practices with regard to patent licensing. The Chinese action was easily (perhaps too easily) dismissed a being part of a Chinese government crackdown on US companies, but similar action in Korea is slightly less so, and of course subsequent action by the US FTC has no similar explanation. Yes, Samsung and LG are two of Qualcomm's biggest customers, and so there may have been an element of protectionism in Korea too, but this was the first real sign of fire behind the smoke. via Ars Technica

09.02.2015

China Hits Qualcomm With Fine – The New York Times

The context for this fine against Qualcomm is a broader crackdown by the Chinese authorities on US-based companies which compete with local ones or which are perceived to be gaining an overly dominant position in China. It would therefore also be easy to dismiss this action as more representative of a broader Chinese policy than of any wrongdoing on Qualcomm's part. However, given all that's happened since in Korea, the US, and China, it's now somewhat harder to dismiss this case as being utterly without merit. There's still the question of whether Qualcomm has genuinely done something wrong or whether Apple is merely flexing its muscles through seeking common cause with friendly regulators, but this Chinese action can now be seen as the beginning of something much bigger rather than a one-off, even if it took quite some time for that to become clear. via New Yo

This is an a new narrative, but also an unusual one – few in the industry had made the argument that Qualcomm was behaving anti-competitively unless very recently, and it was mostly regulatory authorities in Asia who had made this argument. The initial action in China in early 2015 was dismissed by many as protectionism on the part of the Chinese authorities in the context of a broader set of actions against US companies. Until the end of 2016, when Korea slapped Qualcomm with a similar fine, I don’t think that perception changed much. Even then, there were arguments to be made that Korean authorities were trying to help homegrown Qualcomm customers Samsung and LG.

But then came the US FTC’s lawsuit against Qualcomm in January 2017, and there was no longer any argument to be made about protectionism. With the Apple lawsuits that followed in the US and China later in the month, it suddenly became clear that Apple was likely behind a lot of the other regulatory actions, perhaps together with other device vendors, and that this was the beginning of what might turn out to be a long drawn out battle between the two over patents and licensing.

Although we now have three regulatory bodies and one private company alleging anticompetitive behavior on Qualcomm’s part, neither of Apple’s lawsuits nor the FTC’s action have yet reached a conclusion, and so the only definitive statements we have are those from the Asian authorities. It remains to be seen whether the FTC or Apple will win in court, and therefore whether similar conclusions will be drawn in the US. The fact is, though, that these various regulatory authorities have seen enough evidence to warrant serious allegations against Qualcomm, and that there has to be at least a 50/50 chance that it will lose.

This Bloomberg piece does a great job of explaining the ins and outs of the case in a way that’s fairly easy to understand, and I recommend if it you want to understand more about what’s really at stake here. Ultimately, Qualcomm and the various device vendors have been licensing technology on a basis which the vendors no longer feel is fair, and they are now challenging the system in the courts and through these various regulatory authorities. At stake is Qualcomm’s massively profitable licensing business, which makes up much of its overall profits, and so it’s likely to defend itself vigorously. In the meantime, Qualcomm will keep selling its chips to Apple and others on the existing basis while all this gets worked out.

Qualcomm is Anticompetitive

Qualcomm Seeks iPhone Sales and Manufacturing Ban in China (Oct 13, 2017)

Qualcomm has announced that it’s filed lawsuits in China seeking a ban on iPhone sales and manufacturing in the country, the latest salvo in the ongoing dispute between the two over patent royalty payments. Qualcomm previously requested the International Trade Commission to ban the import of Intel-based iPhones into the US, and importantly the Chinese government earlier fined Qualcomm on antitrust grounds, so it’s not necessarily disposed to siding with it in this case. However, Qualcomm has been among a set of companies looking to curry favor with the Chinese government, so it’s possible that the Chinese government might look more favorably on such a request. On balance, though, I think it’s unlikely that Qualcomm will prevail here given its history not only in China but elsewhere around these antitrust issues, though of course a successful ban would be a huge blow to Apple in China, so it’s understandable why Qualcomm would seek it as a way to gain leverage in the case.

via Bloomberg

Qualcomm is Anticompetitive

Qualcomm Fined $773m by Taiwan for Antitrust Violations (Oct 11, 2017)

Following existing investigations and/or action over antitrust issues against Qualcomm in the US, South Korea, and China, Taiwanese authorities have issued a $773m fine against the company over the same issues. The government’s Fair Trade Commission found that Qualcomm acted anticompetitively when it forced licensees for its standards-essential patterns to accept onerous terms as a condition of licensing. The fine relates to a 7-year period in which the FTC says Qualcomm was paid around $13 billion by Taiwanese manufacturers (presumably HTC and contract manufacturers like Foxconn). This antitrust situation is going more and more badly for Qualcomm, but the biggest outstanding case is of course its fight with Apple, which is withholding its own and contractors’ royalties from the company pending the outcome of various lawsuits. It’s hard to see this all going Qualcomm’s way at this point, and it feels like it’s mostly a question of how much the royalty rate will end up being reduced, and therefore what the financial hit will be.

via Bloomberg

Qualcomm

Qualcomm is Anticompetitive

Apple Wins First Small Battles in Court Against Qualcomm (Sep 22, 2017)

I haven’t seen much coverage of this today, but it appears that Apple won a first couple of small battles in its various lawsuits with Qualcomm. A California judge ruled that Apple’s supply chain partners don’t have to pay the royalties they’re currently withholding until such a time as the proper amounts to be paid have been determined, and Qualcomm was also denied its request to end the litigation being pursued separately by Apple in other countries. These are initial steps in what’s going to be a potentially long and complex set of court cases between the companies, but it’s possible that the companies will end up settling once it becomes clearer which way the legal wind is blowing, and they would then likely drop all outstanding litigation. By themselves, these first decisions aren’t indicative of which way things are going to go, but they do put increased financial pressure on Qualcomm, which has seen reported revenues drop as Apple’s partners withhold royalties, which will likely push it to move to settlement sooner rather than later, something that’s probably good news for Apple.

via Apple Insider

Qualcomm is Anticompetitive

Qualcomm Announces Next-Generation AR and 3D-Capable Image Signal Processor (Aug 15, 2017)

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Qualcomm is Working Closely with Chinese Government to Win Favor (Aug 7, 2017)

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Qualcomm

Qualcomm’s Financial Results Heavily Impacted by Various Disputes and Fines (Jul 19, 2017)

Qualcomm reported its results for the June 2017 quarter today, and revenues and profits were both down, in large part because of the various antitrust and other disputes and legal proceedings in which it’s involved. Shortfalls in revenue from Apple, several of its suppliers, and a Chinese customer each caused problems, but it also had to pay out to both BlackBerry and the Korean government over separate disputes. It’s impossible to look at Qualcomm today without noticing the massive cloud of uncertainty and potential financial liability associated with these various cases. On a non-GAAP basis, the company’s results are holding up rather better, though still not stellar. As with Samsung, its semiconductor business was an area of strength, but its core MSM chip sales continue to decline over time as the smartphone market matures, while the broader opportunity it has in CDMA and related technologies continues to grow. Meanwhile, Apple, its suppliers, and Qualcomm all filed new suits over the last couple of days in relation to their dispute, even as Qualcomm’s CEO was quoted earlier this week as saying he expected the case eventually to end in a settlement.

via Financial Times