FTC Accuses Qualcomm of Forcing Apple to Use its Baseband Processors

On Tuesday, the U.S. Federal Trade Commission launched a lawsuit against Qualcomm, accusing the company of forcing Apple into an exclusive deal to buy its baseband processors.

When Apple was looking to lower the patent royalties it was paying Qualcomm, the semiconductor manufacturer said that in order to do that Apple must buy Qualcomm chips exclusively between 2011 and 2016. The iPhone 7 and 7 Plus still use Qualcomm chips in some configurations, while others are now based on Intel modems.

The FTC has been investigating Qualcomm since 2014, concerned that it was abusing FRAND (Fair, Reasonable and Non-Discriminatory) patent commitments with clients. Apple remains one of the company’s more important customers. In December Qualcomm was hit with an $853 million fine in South Korea, accused of similar abuses.

Despite being a major chip supplier of the Snapdragon processors in many Android smartphones, Qualcomm makes most of its profits from licensing. If the company is forced to loosen its grip on patent deals, Qualcomm could see a significant hit to its bottom line.

MacRumors has obtained a statement from Qualcomm regarding the matter. Qualcomm is quick to say that the FTC’s complaint is based on a “flawed legal theory”. In a statement, Qualcomm’s executive vice president and general counsel Don Rosenberg said:

“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.

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.”

The FTC has asked the court in charge of this case to put a stop to Qualcomm’s anticompetitive conduct.

[via Daring Fireball]

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