Apple tried to use Qualcomm modems in the iPhone XS and iPhone XR, but was refused

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Comments

  • Reply 21 of 27
    carnegiecarnegie Posts: 1,078member
    airnerd said:
    mhback55 said:
    This is such a joke. $7.50 sounds more than fair. The fees Apple charges to sell in the App Store now that's is just wrong.
    Whataboutism. Two different matters.

    And, keep in mind, that's $7.50 for FRAND patents, on top of what Qualcomm charges for the chips. Thus, the double-dipping that the Federal Trade Commission is worried about in this particular action.
    I don't follow how this idea of "double dipping" is illegal or punishable.  I pay a vehicle registration fee to drive my car on the roads.  I pay a roads tax via fuel, to operate that car I paid a fee to operate on a road, on a road.  I pay numerous other taxes and fees for road upkeep just to drive my car on safe roads.  No one has an issue with double dipping there.  

    I have a PS4 that I bought outright.  I bought complete games for it as well.  Guess what happens if I want to use any of the online features?  I have to pay a yearly PSN fee...to use the system I already own to play the game I already own using the internet I already pay for.  


    To me it seems there is double dipping everywhere in society.  If a company has a model that allows them to extract more fees, why is it all of a sudden wrong here?  
    Double dipping in itself wouldn't be illegal. (*See below for further clarification on that point.) But the double dipping which people refer to Qualcomm doing was part of a larger scheme employing a number of tactics which worked together. The FTC as well as, e.g., Taiwan's FTC and Korea's FTC believe that scheme violated antitrust laws in a number of ways. Qualcomm had monopoly power AND engaged in anticompetitive conduct, and those are the basic elements of a violation of, e.g., the Sherman Act. I can go into other aspects of the scheme if you're interested, but for now I'll try to explain the relevance of the double dipping.

    This is what various regulatory bodies think about Qualcomm's supposed double dipping. They believe it allowed Qualcomm to effectively charge higher royalties for its own IP (to include SEPs) when licensees bought modems from other suppliers. It's a way in which Qualcomm sought to artificially raise the effective cost, for device makers, of buying modems from Qualcomm's competitors.

    I'll use some made up numbers to demonstrate the concept. Let's say Qualcomm asks Apple (or another device maker) to pay $30 per device as a licensing fee. (That might be a set per unit cost, or it might represent a percentage of each unit's wholesale cost.) Apple thinks that number is too high and wants a lower number. Qualcomm knows it won't be able to get that high a licensing fee, but for reasons that will soon become clear it doesn't want to actually lower the fee. Instead, it offers Apple (or another device maker) a rebate of $20 for each modem it buys from Qualcomm. The reality is that is a way of lowering license fees to a reasonable level. But it's structured as a discount on modems.

    In this way, Qualcomm can charge a higher effective license fee if Apple purchases modems from another modem supplier (because Apple won't get the rebate) while charging a lower effective license fee if Apple purchases modems from Qualcomm (because Apple will get the rebate). Qualcomm wouldn't actually be willing to sell the modems at the price it's supposedly now selling them at (e.g., $30 for a modem minus a $20 rebate) because it wouldn't be able to make money that way. But with the extra $20 that's counted as a licensing fee, it is able to make money.

    Qualcomm's competitors can't afford to sell modems for $10 any more than Qualcomm can. They would need to sell them for the same $30 that Qualcomm, in reality, is selling them for. So the cost to Apple (or another device maker) would be $30 for a modem from a Qualcomm competitor plus the $30 supposed license fee from Qualcomm, or $10 (which is really $30) for a modem from Qualcomm plus the supposed $30 (which is really $10) license fee from Qualcomm. Qualcomm has effectively increased the cost of buying a modem from its competitors by $20. That is, in simplified terms, what, e.g., the FTC has alleged that Qualcomm was doing.

    If Qualcomm wasn't charging separately for modems and for the IP which goes into those modems (along with other IP), it wouldn't be able to structure what it charges modem customers and licensees that way.

    (*) And to clarify what I said earlier: It isn't necessarily illegal to double dip in the way Qualcomm is alleged to have done, i.e. to sell items and also collect licensing fees for IP which is substantially embodied in those items. But, under U.S. law, a patent holder doesn't have a legal right to collect such licensing fees in addition to selling such items. If you sell an item which substantially embodies patents which you own, then your patent rights (for those patents) in that item are exhausted. The purchaser isn't infringing on your patents if they use the item or resale it. You chose to sell the item and in doing so extinguish (what would otherwise be ongoing) patent rights.

    edited January 2019
  • Reply 22 of 27
    gatorguygatorguy Posts: 24,356member
    carnegie said:
    airnerd said:
    mhback55 said:
    This is such a joke. $7.50 sounds more than fair. The fees Apple charges to sell in the App Store now that's is just wrong.
    Whataboutism. Two different matters.

    And, keep in mind, that's $7.50 for FRAND patents, on top of what Qualcomm charges for the chips. Thus, the double-dipping that the Federal Trade Commission is worried about in this particular action.
    I don't follow how this idea of "double dipping" is illegal or punishable.  I pay a vehicle registration fee to drive my car on the roads.  I pay a roads tax via fuel, to operate that car I paid a fee to operate on a road, on a road.  I pay numerous other taxes and fees for road upkeep just to drive my car on safe roads.  No one has an issue with double dipping there.  

    I have a PS4 that I bought outright.  I bought complete games for it as well.  Guess what happens if I want to use any of the online features?  I have to pay a yearly PSN fee...to use the system I already own to play the game I already own using the internet I already pay for.  


    To me it seems there is double dipping everywhere in society.  If a company has a model that allows them to extract more fees, why is it all of a sudden wrong here?  

    (*) And to clarify what I said earlier: It isn't necessarily illegal to double dip in the way Qualcomm is alleged to have done, i.e. to sell items and also collect licensing fees for IP which is substantially embodied in those items. But, under U.S. law, a patent holder doesn't have a legal right to collect such licensing fees in addition to selling such items. 
    I don't think US law makes selling an item and additionally collecting licensing fees connected to it is illegal as such is it? It's all in the details AFAICT. But perhaps you're correct and there is some specific law that makes it illegal under any circumstances. IANAL.
    edited January 2019
  • Reply 23 of 27
    carnegiecarnegie Posts: 1,078member
    gatorguy said:
    carnegie said:
    airnerd said:
    mhback55 said:
    This is such a joke. $7.50 sounds more than fair. The fees Apple charges to sell in the App Store now that's is just wrong.
    Whataboutism. Two different matters.

    And, keep in mind, that's $7.50 for FRAND patents, on top of what Qualcomm charges for the chips. Thus, the double-dipping that the Federal Trade Commission is worried about in this particular action.
    I don't follow how this idea of "double dipping" is illegal or punishable.  I pay a vehicle registration fee to drive my car on the roads.  I pay a roads tax via fuel, to operate that car I paid a fee to operate on a road, on a road.  I pay numerous other taxes and fees for road upkeep just to drive my car on safe roads.  No one has an issue with double dipping there.  

    I have a PS4 that I bought outright.  I bought complete games for it as well.  Guess what happens if I want to use any of the online features?  I have to pay a yearly PSN fee...to use the system I already own to play the game I already own using the internet I already pay for.  


    To me it seems there is double dipping everywhere in society.  If a company has a model that allows them to extract more fees, why is it all of a sudden wrong here?  

    (*) And to clarify what I said earlier: It isn't necessarily illegal to double dip in the way Qualcomm is alleged to have done, i.e. to sell items and also collect licensing fees for IP which is substantially embodied in those items. But, under U.S. law, a patent holder doesn't have a legal right to collect such licensing fees in addition to selling such items. 
    I don't think US law makes selling an item and additionally collecting licensing fees connected to it is illegal as such is it? It's all in the details AFAICT. But perhaps you're correct and there is some specific law that makes it illegal under any circumstances. IANAL.
    That’s what I said, it isn’t illegal.

    But your patent rights are exhausted when you sell the item. The buyer isn’t infringing your patents by, e.g., using or resaling the item, even if they don’t separately pay for a license. And that’s true, btw, even if you require them to sign an agreement to the contrary. You can’t, by contract, preserve patent rights in items you choose to sell. You can create contractual obligations, but you can’t preserve patent rights with all they entail.
    muthuk_vanalingam
  • Reply 24 of 27
    knowitallknowitall Posts: 1,648member
    Apple should have its own modem now (A’tegrated) instead of relying on Qualcomm mafia or Infineons bag of hurt.
  • Reply 25 of 27
    airnerdairnerd Posts: 693member
    airnerd said:
    mhback55 said:
    This is such a joke. $7.50 sounds more than fair. The fees Apple charges to sell in the App Store now that's is just wrong.
    Whataboutism. Two different matters.

    And, keep in mind, that's $7.50 for FRAND patents, on top of what Qualcomm charges for the chips. Thus, the double-dipping that the Federal Trade Commission is worried about in this particular action.
    I don't follow how this idea of "double dipping" is illegal or punishable.  I pay a vehicle registration fee to drive my car on the roads.  I pay a roads tax via fuel, to operate that car I paid a fee to operate on a road, on a road.  I pay numerous other taxes and fees for road upkeep just to drive my car on safe roads.  No one has an issue with double dipping there.  

    I have a PS4 that I bought outright.  I bought complete games for it as well.  Guess what happens if I want to use any of the online features?  I have to pay a yearly PSN fee...to use the system I already own to play the game I already own using the internet I already pay for.  


    To me it seems there is double dipping everywhere in society.  If a company has a model that allows them to extract more fees, why is it all of a sudden wrong here?  
    You’re not paying for the PS4 internet, you’re paying for general internet access.  If you’re using it only for gaming then you might think you’re being double dipped, but you aren’t in that case.

    diyble dipping is about paying twuce for the same thing, not some other thing that might be necessary to get the thing you intend to pay for.   
    So like paying for a chip and then paying a fee to use it via a licensing fee?  
  • Reply 26 of 27
    chasmchasm Posts: 3,382member
    mhback55 said:
    This is such a joke. $7.50 sounds more than fair. The fees Apple charges to sell in the App Store now that's is just wrong.
    If you think 30 percent markup for providing the store and payment infrastructure on a worldwide scale is excessive, I have some terrible news for you about the prices you've been paying for everything from food to clothing to power to jewelry, and the markup on them from wholesale.
  • Reply 27 of 27
    maestro64maestro64 Posts: 5,043member
    airnerd said:
    mhback55 said:
    This is such a joke. $7.50 sounds more than fair. The fees Apple charges to sell in the App Store now that's is just wrong.
    Whataboutism. Two different matters.

    And, keep in mind, that's $7.50 for FRAND patents, on top of what Qualcomm charges for the chips. Thus, the double-dipping that the Federal Trade Commission is worried about in this particular action.
    I don't follow how this idea of "double dipping" is illegal or punishable.  I pay a vehicle registration fee to drive my car on the roads.  I pay a roads tax via fuel, to operate that car I paid a fee to operate on a road, on a road.  I pay numerous other taxes and fees for road upkeep just to drive my car on safe roads.  No one has an issue with double dipping there.  

    I have a PS4 that I bought outright.  I bought complete games for it as well.  Guess what happens if I want to use any of the online features?  I have to pay a yearly PSN fee...to use the system I already own to play the game I already own using the internet I already pay for.  


    To me it seems there is double dipping everywhere in society.  If a company has a model that allows them to extract more fees, why is it all of a sudden wrong here?  
    Here is what you fail to understand, governments can make your pay 10 times for the same things they are not in competition with anyone, and their existence is to make sure no one challenges their dominance. Also you have no right to drive on roads paid for by tax dollar, you are fee to walk or bike all your like and not pay the tax.

    You pay the online fee not to use the game console but to pass data through their systems so you can play with others. Like the car thing, if you do not want to sit in a dark basement and play with yourself  no one is stopping you. however, if you want access to others who want to play with you have to pay. Prior to this everyone had to show up at each others house and set up a network and a server. Yes I had friends who use to do this.

    But in reality FRAND fee usually are less then a $1 per unit sold, The case of QCAM they were more than double dipping, Apple paid for the chips with the IP so the IP cost should be in the chip costs, then Apple paid a licensing fee to essentially turn on the chip. Then the CM's (Contract Manufactures) paid a Licensing Fee to allow them to buy and put the chip on the board and load firmware to enable the chip. Apple was only challenging the last one, which is why Foxconn has not paid the apple portion of the licensing fee.

    Keep in mind that this all came about because Apple cooperating in the Anti-Trust case in Korea whether QCOM was found to be in violation of the Korea law, which QCOM turned around and with held over $1B in rebates. In the end it looks like this is going to cost QCOM more than the $1B they withheld from Apple.
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