The FTC just sued Qualcomm for being anti-competitive

The FTC just sued Qualcomm for being anti-competitiveā€

The U.S. Federal Trade Commission filed a complaint against Qualcomm, seeking a court order against what it alleges are unfair licensing practices for its cellular baseband patents.

Qualcomm is also accused of refusing to license its standard-essential patents to competing suppliers and implementing a "no license, no chips" tax policy where it supplies its baseband processors only when manufacturers agree to Qualcomm's preferred licensing terms, causing smartphone makers to pay higher royalties to Qualcomm when a competitor's modem chips are used. The agency's complaint, filed in the U.S. District Court in the Northern District of California, said the San Diego-based chipmaker used its dominant position to maintain an illegal monopoly over its phone partners like Apple. According to the FTC complaint, Qualcomm won't sell baseband processors unless a customer takes a license to Qualcomm's standard-essential patents, on Qualcomm's terms.

Ultimately, Qualcomm has few competitors for high-end baseband modems.

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"Qualcomm precluded Apple from sourcing baseband processors from Qualcomm's competitors from 2011 to 2016", reads the FTC announcement.

Qualcomm and Apple allegedly struck deals in 2007, 2011, and 2013 over these royalties.

Qualcomm is the dominant supplier of modem chips that enable phones to hook up to cellular networks, but the company also extracts a licensing fees for almost every modern phone in the world. According to the FTC, Apple was forced to exclusively use Qualcomm's baseband processors between 2011 and 2016.

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Another tactic Qualcomm used, the FTC said, is that it would threaten to limit phone manufactures' access to its cellular chips and then hike up royalties payments. The Commission voted 2-1 to file the complaint, with Commissioner Maureen K. Ohlhausen taking the unusual step of issuing a written statement (PDF) along with her dissent. It described the US complaint as a politically opportunistic move that got the facts wrong and is based on flawed legal theory.

"The complaint fails to allege that Qualcomm charges more than a reasonable royalty", writes Commissioner Ohlhausen. It said that it has neither withheld nor threatened to withhold its chips in order to get "unfair or unreasonable licensing terms".

"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", he said.

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According to Rosenberg, Qualcomm intends to fight the accusations in the federal court.

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