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FTC sues Qualcomm over anti-competitive practices

It reportedly pushes companies into accepting unfair sales and licensing terms.
FTC sues Qualcomm over anti-competitive practices
Devindra Hardawar
Devindra Hardawar|@devindra|January 17, 2017 5:29 PM

The U.S. is the latest country to target Qualcomm over anti-competitive behavior. The FTC announced this afternoon that it was suing the company over monopolistic tactics around its baseband processor business -- the hardware that smartphones and tablets rely on for network connectivity. In particular, the FTC claims Qualcomm "engaged in exclusionary conduct that taxes its competitors' baseband processor sales, reduces competitors' ability and incentive to innovate, and raises prices paid by consumers for cell phones and tablets," according to a court filing.

The lawsuit comes after South Korea charged Qualcomm $854 million for its patent licensing practices, and China fined it $954 million after an antitrust probe of its own. The FTC found that Qualcomm threatened the supply of baseband processors to customers that didn't agree to its patent licensing terms. The company reportedly pushes a licensing "tax" on companies when they purchase baseband processors might by competing firms.

Additionally, Qualcomm also refuses to license its patents to competitors, which goes against its commitment to "FRAND" (fair, reasonable and non-discriminatory) licensing tactics. And, perhaps most damning, Qualcomm also offered reduced royalty fees to Apple in exchange for using its baseband processors exclusively.

"Qualcomm believes the complaint is based on a flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry," the company said in a statement. "The complaint seeks to advance the interests and bargaining power of companies that have generated billions in profit from sales of products made possible by the fundamental 3G and 4G cellular technology developed by innovators like Qualcomm."

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At this point, Qualcomm's chips can be found in the vast majority of mobile devices. Its Snapdragon SoCs (system-on-chips) power most high-end Android phones. Moving forward, it aims to be just about everywhere, including the IoT and connected car business.

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FTC sues Qualcomm over anti-competitive practices