Qualcomm doesn't wield enough power to harm competition, says trial witness

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in iPhone
Testifying during the ongoing antitrust trial pitting the U.S. Federal Trade Commission against Qualcomm, an expert witness claimed that despite the FTC's allegations, the company doesn't have enough clout to harm the mobile chip industry.

Apple iPhone 6s


Qualcomm has for instance cut chip prices in response to MediaTek products, and Intel seeking orders from Apple in 2014, consultancy owner Tasneem Chipty said on Tuesday, according to CNet. While those actions won Qualcomm business, that's not anticompetitive, Chipty explained.

"Qualcomm doesn't have sufficient market power to coerce OEMs into onerous business terms that would rob them of billions of dollars," she argued, pointing to the fact that the company lost 50 points of marketshare in premium smartphones between 2014 and 2017, ceding ground not just to MediaTek and Intel but Huawei and Samsung. Since March 2018, all of the new premium phones from Apple and Huawei have used non-Qualcomm chips.

Apple's director of cellular systems architecture, Matthias Sauer, earlier testified that Intel modems were under consideration as far back as 2012, but that they didn't meet specifications. He also acknowledged, however, that an Intel modem might've made its way into 2014 iPads, but Qualcomm offered incentives to stay loyal.

Chipty further suggested that the FTC had failed to recognize the "dynamic competition" in the chip industry, and that Qualcomm's deals with Apple were forged out of solid business reasons.

The FTC's lawsuit dates back to 2017, and accuses Qualcomm of antitrust violations by forcing chip buyers to sign patent licenses at inflated rates. The Commission rested its case last week.

Qualcomm has defended its practices by a number of means, for example pointing to the high cost of innovation. Apple has called the chipmaker's demands "onerous," at one point asking Apple to cross-license all of its intellectual property to get a direct license for standards-essential patents, something it decided to eschew.

Apple's Chief Operating Officer Jeff Williams recently revealed that Apple wanted to return to a mix of Intel and Qualcomm modems for 2018 iPhones, but was shot down by Qualcomm CEO Steve Mollenkopf. The two companies have been engaged in a global legal war since 2017, instigated by Apple, which sued over nearly $1 billion in rebates allegedly withheld as retaliation for cooperation with antitrust investigators.

Comments

  • Reply 1 of 8
    wood1208wood1208 Posts: 1,959member
    Issue is double-dipping and non-fixed but % of product selling price charge. And one man or woman's opinion doesn't make it right or wrong.
    ronnchasmkevin keejony0
  • Reply 2 of 8
    MplsPMplsP Posts: 1,370member
    Wait - just yesterday we heard that Qualcomm's chips were the only viable option, now they're claiming that they 'don't have sufficient power to coerce OEMs.' Being the only viable option is an effective monopoly, so how could they not have enough power to coerce OEMs? This is also about more than just Apple - other manufacturers use QC processors and other chips, meaning QC could well force them into more unfavorable terms for one line of products by leveraging other more critical lines.
    ronnmdriftmeyerjbdragonjony0
  • Reply 3 of 8
    cornchipcornchip Posts: 1,313member
    Oh, Chipty says huh? Chipty makes no sense.
    doctwelve
  • Reply 4 of 8
    rob53rob53 Posts: 2,032member
    https://matrixeconomics.com

    Dr. Tasneem Chipty
    Ph.D., Economics, Massachusetts Institute of Technology
    B.A., Economics and Mathematics, Wellesley College

    Owner and two principals all Ph.D. in economics. Economics degree at MIT???? How does an economics degree qualify someone to make judgments on whether a computer product gives someone clout? As everyone on this forum knows, cell phones don't work (at least before cellular WiFi) without a cellular chip. Just because more companies have recently developed cellular chips doesn't mean Qualcomm wasn't anti-competitive before competition started. Also, Qualcomm owned all the CDMA patents didn't they? Therefore, Apple was required to use Qualcomm chips for Verizon. Apple had not choice.   
    chasm
  • Reply 5 of 8
    For a company to LOSE 50 points in three years, would generally be putting that said company in receivership... unless they had so much clout, margins or double charging, which is why we are here today. 
    chasm
  • Reply 6 of 8
    kevin keekevin kee Posts: 1,036member
    So basically Qualcomm was saying, 'you can't make iPhone without our tech, but you have options not to accept our terms.' Which basically screw you Apple if you do, and screw you Apple if you don't.

    How is that even fair?
  • Reply 7 of 8
    Since March 2018, all of the new premium phones from Apple and Huawei have used non-Qualcomm chips.

    And wasn't this, in the case of Apple, because of Qualcomm and not Apple? OK point to make to say they aren't a monopoly I guess.

    Anyway, I'll wait for the week to unfold and then for Carnige's explanation.

  • Reply 8 of 8
    avon b7avon b7 Posts: 3,796member
    For anyone interested in current state of 5G from a handset modem/router perspective, Huawei lifted the curtain on its Balong5000 plans in a pre MWC2019 briefing this morning and made direct comparisons to the Snapdragon X50:



    Jump to the 60 minute mark.

    Up to that point, they discuss 5G from a wider perspective and include a light hearted jab at AT&T and the 5GE marketing.
    edited January 24 muthuk_vanalingam
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