FTC drops Qualcomm antitrust lawsuit, ends four-year saga

Posted:
in General Discussion edited March 2021
The U.S. Federal Trade Commission on Monday said it will abandon its long-running antitrust lawsuit against Qualcomm and has no plans to seek a Supreme Court review of a federal appeals court ruling in favor of the chipmaker.




The decision not to move forward with the case caps off a four-year saga in which the federal government sought to prove that Qualcomm abused its dominant position in the chipmaking industry to extract exorbitant licensing fees from cellphone manufacturers.

As reported by Bloomberg, FTC Acting Chairwoman Rebecca Kelly Slaughter in a statement said she agreed with an initial trial court ruling that found Qualcomm unlawfully suppressed competition, but claims the FTC faces "significant headwinds" to overturn a subsequent appeal.

"The FTC's staff did an exceptional job presenting the case, and I continue to believe that the district court's conclusion that Qualcomm violated the antitrust laws was entirely correct and that the court of appeals erred in concluding otherwise," Slaughter said. "Now more than ever, the FTC and other law enforcement agencies need to boldly enforce the antitrust laws to guard against abusive behavior by dominant firms, including in high-technology markets and those that involve intellectual property."

Charges were first leveled in 2017 when the FTC accused Qualcomm of foisting unfair wireless chip licensing provisions on Apple. Judge Lucy Koh subsequently found Qualcomm in violation of antitrust law in 2019. The jurist attached a number of remedial actions to her ruling including a restructuring of licensing agreements and a modification of the company's stance on licensing terms.

Qualcomm successfully appealed Koh's decision last August, arguing that its licensing strategy drove acceleration and improvement within the smartphone modem industry and was therefore beneficial to the market.

Apple was among the companies allegedly impacted by Qualcomm's actions, and in testimony called the chipmaker's demands "onerous."

The tech giant was also embroiled in litigation against the chipmaker over similar issues, though the sprawling court battle between the two companies was ultimately settled in 2019. As part of the deal, Apple paid Qualcomm between $4.5 billion and $4.7 billion, and entered into a six-year chip licensing agreement for iPhone and iPad modems.

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Comments

  • Reply 1 of 11
    wizard69wizard69 Posts: 13,377member
    Boy talk about dropping the ball!



  • Reply 2 of 11
    sflocalsflocal Posts: 6,095member
    To this day I believe QC abused its position and violated FRAND rules.  QC's management are probably cracking a bottle of champagne right now and giving everything the middle-finger knowing it dodged a massive bullet.

    QC's success will be short lived.  Apple is working full-speed to get off of QC's chips so in a few years - like Intel - QC will be booted out of Apple's products like a bad habit.
    Beatsjony0
  • Reply 3 of 11
    danoxdanox Posts: 2,858member
    sflocal said:
    To this day I believe QC abused its position and violated FRAND rules.  QC's management are probably cracking a bottle of champagne right now and giving everything the middle-finger knowing it dodged a massive bullet.

    QC's success will be short lived.  Apple is working full-speed to get off of QC's chips so in a few years - like Intel - QC will be booted out of Apple's products like a bad habit.

    Queue Qualcomm Simp coming up....
    edited March 2021
  • Reply 4 of 11
    BeatsBeats Posts: 3,073member
    sflocal said:
    To this day I believe QC abused its position and violated FRAND rules.  QC's management are probably cracking a bottle of champagne right now and giving everything the middle-finger knowing it dodged a massive bullet.

    QC's success will be short lived.  Apple is working full-speed to get off of QC's chips so in a few years - like Intel - QC will be booted out of Apple's products like a bad habit.

    I told people here that we’d have an A-chip(now M1) situation with Apple’s focus and reasoning. One particular poster (haven’t seen him in a while) was arguing to his death bed that Apple couldn't outdo QC because of 5G and other dumb crap.

    Trust me Apple is gonna smash QC, M1-chip style.

    hmmmm... now that I think about it we’re coming full circle! Didn’t Apple buy Intel’s modem arm? Looks like Apple took what was working and dumped the rest!!
    jony0
  • Reply 5 of 11
    chasmchasm Posts: 3,303member
    I'm glad to see that the head of the FTC isn't taking this farcical Appeals Court ruling lying down. I think she made it very clear that she is just going to wait for Qualcomm to do ANYTHING that smacks of monopoly abuse or anti-competitive actions, and the FTC will pounce once again. The terms of Apple's settlement with Qualcomm has never been released in detail, as far as I'm aware, but I suspect Qualcomm caved on a lot of its usual business practices in order to gain a settlement, which it seems to me is the sole reason the Appeals Court ruled the way it did -- without Apple, the case was largely moot.

    I have no idea when Apple will unveil its own 5G chipset and/or add that ability straight into its own chips, but I will bet that a) it will happen a lot sooner than 2025, and b) that Apple has a clause in it that lets it end the contract when Qualcomm's services are no longer required.

    As I've said elsewhere, Qualcomm's engineering staff deserve a lot of praise for the innovation and technology they've achieved. The way the business is run by the management, however, is so abusive and corrupt that it makes Huawei look like an attractive option (if it were legal to do business with them in the US).
    StrangeDays
  • Reply 6 of 11
    Rayz2016Rayz2016 Posts: 6,957member
    Apple should buy Qualcomm’s legal department. 
    mike1jony0
  • Reply 7 of 11
    blastdoorblastdoor Posts: 3,290member
    Looks like this outcome must have been baked into the stock price — QCOM is actually down a bit pre-market.
  • Reply 8 of 11
    blastdoorblastdoor Posts: 3,290member
    sflocal said:
    To this day I believe QC abused its position and violated FRAND rules.  QC's management are probably cracking a bottle of champagne right now and giving everything the middle-finger knowing it dodged a massive bullet.

    QC's success will be short lived.  Apple is working full-speed to get off of QC's chips so in a few years - like Intel - QC will be booted out of Apple's products like a bad habit.
    Maybe so, maybe not, I have no idea. Laws involving anti-trust and patents seem only tangentially related to common sense. I thought both Samsung and Google were toast for copying the iPhone but I was clearly wrong. I thought Amazon was the book monopolist not apple, but I was wrong. 

    Heck maybe it turns out I’m a monopolist — who knows?
  • Reply 9 of 11
    DogpersonDogperson Posts: 145member

    Maybe so, maybe not, I have no idea. Laws involving anti-trust and patents seem only tangentially related to common sense. I thought both Samsung and Google were toast for copying the iPhone but I was clearly wrong. I thought Amazon was the book monopolist not apple, but I was wrong. 

    Heck maybe it turns out I’m a monopolist — who knows?
    Amazon was/IS the book monopolist.
    And I could Never figure out why iPhone and Apple watch could be copied by other companies...???
        Signed, Barnes&Noble customer
  • Reply 10 of 11
    gatorguygatorguy Posts: 24,213member
    FWIW I was one of the very few here who expected the verdict against Qualcomm to be reversed, and based on legal arguments.

    To me post-courtroom it appears Judge Koh had already decided what her finding would be and then tried to shoehorn case-law to support it. The Federal Court of Appeals agreed that the ruling was built on a foundation of sand, and the FTC recognizes they simply don't have arguments strong enough to merit reconsideration. 

    The case is simply over, with few changes to patent monetization strategies. Companies other than QC still insist on cross-licensing and basing royalties on selling cost (Huawei is the latest to announce both), the definition of FRAND and what it actually requires is still debated, and essential patents still qualify for injunctions depending on circumstance. I don't know that anything in particular was accomplished other than a relatively short-term agreement between QC and Apple being forced on the table. I could of course be missing something significant. 

    In any event Apple was going their own way no matter the outcome, so the lawsuit didn't change that. IMHO QC and Apple could have been fast friends and Apple would still have dropped them as soon as they could create a chip to replace them. They'll still need to take a license from Qualcomm of course but that's far less expensive than purchasing licensed chips. 
    edited March 2021 muthuk_vanalingam
  • Reply 11 of 11
    chadbagchadbag Posts: 2,000member
    The thing that disturbs me is that it seems the actual legal argumentation revolves around the end result being desirable (we can find more innovation) and that that then justifies the means.  Screw actual laws -- the end result is good so that is enough. 
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