U.S. FTC v. Qualcomm set to begin; case could upend Qualcomm’s predatory business model

“Two years after the U.S. Federal Trade Commission sued Qualcomm Inc., unleashing a series of existential challenges to the company’s business model, the chipmaker is about to get its chance to square the record,” Ian King and Kartikay Mehrotra report for Bloomberg. “Lawyers for the regulatory agency and the company are set to begin presenting arguments on Jan. 4 in a 10-day jury trial over claims that Qualcomm is abusing its strength in the market for smartphone components to force Apple Inc. and others to pay inflated license fees.”
“The case challenges San Diego-based Qualcomm’s business model, casting a shadow over one of the fundamental reasons it’s been so successful in the smartphone era. Losing to the FTC would threaten billions of dollars the company makes in licensing fees,” King and Mehrotra report. “After the FTC filed its complaint in January 2017, Apple quickly followed with a similar suit, accusing Qualcomm of holding the industry ransom with patents that underpin how modern phone systems work.”
“The FTC contends that Qualcomm’s refusal to license patents to competitors including Intel and Samsung Electronics Co. was part of a scheme to maintain its monopoly,” King and Mehrotra report. “None of its opponents deny that Qualcomm came up with innovative technology that is key to industry standards. They challenge the extent to which Qualcomm uses its patents on those inventions to extract fees. Currently, the company gets paid a percentage of the total selling price of each phone sold.”
“Qualcomm’s adversaries claim that’s unfair because there’s so much other technology that makes a phone attractive and useful to consumers that comes from elsewhere,” King and Mehrotra report. “They argue the company should set fees based on the price of the component that uses its technology. That’s a drop to the low tens of dollars from a basis in the hundreds of dollars.”
Read more in the full article here.
MacDailyNews Take: Hopefully, the jury does the right thing here.
Qualcomm’s unreasonable, illogical, and irrational licensing scam, which charges a percentage of the total cost of all components in the phone, even non-Qualcomm components, must end.
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