Image credit – iFixit
For the longest time ever, Apple has typically relied on Qualcomm’s chips for its iPhones. While Apple does have multiple suppliers for some components, there are some that they do work with exclusively, so this did not really come as a surprise. However the FTC has recently filed a lawsuit against Qualcomm (via Bloomberg) alleging monopolistic behavior.
According to the FTC’s lawsuit, they allege that Qualcomm had “forced” Apple to use their chips exclusively in their products in exchange for lowering licensing fees, which in turn cut out competitors looking to get a slice of the iPhone pie. The lawsuit reads, “Qualcomm recognized that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors.”
This is actually not the first time that Qualcomm has run afoul of antitrust regulators. Last year the company was hit with a $854 million fine in South Korea over its patent licensing practices, and in 2015 they also faced a $954 million fine after China launched an antitrust probe of their own.
That being said, we should note that with the iPhone 7 and 7 Plus, Apple is now using both Qualcomm and Intel’s chipsets for its modem depending on which network you are planning on using the phone on. Qualcomm has since responded with a press release in which Don Rosenberg, executive vice president and general counsel of Qualcomm says in part:
“This is an extremely disappointing decision to rush to file a complaint on the eve of Chairwoman Ramirez’s departure and the transition to a new Administration, which reflects a sharp break from FTC practice. In our recent discussions with the FTC, it became apparent that it still lacked basic information about the industry and was instead relying on inaccurate information and presumptions. In fact, Qualcomm was still receiving requests for information from the agency that would be necessary to an informed view of the facts when it became apparent that the FTC was driving to file a complaint before the transition to the new Administration. 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. We look forward to defending our business in federal court, where we are confident we will prevail on the merits.”