Qualcomm might have some of the most battle-hardened legal experts in the technology world, but it can’t win every fight.

Jamie Davies

May 22, 2019

2 Min Read
Legal gavel and smartphone

Qualcomm might have some of the most battle-hardened legal experts in the technology world, but it can’t win every fight.

In a ruling coming out of the District Court for the Northern District of California, Judge Lucy Koh has ruled the chipset giant had violated the Federal Trade Commission Act. The judgment could have a significant impact on the Qualcomm business model, with Judge Koh suggesting it used its dominant position to impose excessive licensing fees.

While this certainly won’t be the end of Qualcomm dominance in the chipset market, the firm houses too much competence and smarts, it might have a drastic impact on the spreadsheets. And investors seem to be fearing the worst also, with Qualcomm’s share price declining almost 12% in pre-market trading at the time of writing.

“Qualcomm’s licensing practices have strangled competition in the CDMA and the premium LTE modem chip markets for years, and harmed rivals, OEMs, and end consumers in the process,” Judge Koh said in the ruling.

“We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,” said Don Rosenberg, General Counsel of Qualcomm.

In a filing made in 2017, the Federal Trade Commission argued Qualcomm was employing anticompetitive tactics, using its dominant position in certain segments of the semiconductor market to hamper competition and effectively hold customers to random. The FTC suggested some components licenced by Qualcomm were standard essential parts, meaning they would have to be licenced on ‘fair, reasonable and non-discriminatory terms’. In short, Qualcomm should not have been charging such a handsome premium on the licences.

The FTC also claimed it was not reasonable for Qualcomm to enter into an exclusive agreement for some components with Apple, shutting other smartphone manufacturers out of the equation.

The Qualcomm business model has been under fire for some time, with the business facing numerous legal challenges in different markets worldwide. Although this is only a single ruling, it remains to be seen whether this sets a precedent and a subsequent domino effect around the world. Qualcomm is on the ropes here, though it will be interesting to see how the firm reacts to this latest antitrust blow.

You May Also Like