FTC charges Broadcom with 'illegally monopolizing' the chip industry

The company is accused of striking deals that squeezed out competitors.

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Jon Fingas
July 3, 2021 2:06 PM
SAN JOSE, CALIFORNIA - JUNE 03: An employee walks through the parking lot at a Broadcom office on June 03, 2021 in San Jose, California. Chipmaker Broadcom will report second quarter earnings today after the closing bell and is expected to beat analyst expectations. (Photo by Justin Sullivan/Getty Images)
Justin Sullivan/Getty Images

Broadcom is facing a major antitrust crackdown. Gizmodo reports that the Federal Trade Commission has charged Broadcom with "illegally monopolizing" the markets for broadband and TV chips, including WiFi parts. The FTC claimed that Broadcom struck exclusive deals with vendors and service providers that prevented them from buying chips from rival suppliers.

The FTC also accused Broadcom of obtaining "exclusivity and loyalty commitments" for chip supplies, making it difficult for companies to compete on their own merits. The vote was near unanimous, although newly installed Commissioner Lina Khan bowed out.

The Commission's proposed action would forbid Broadcom from negotiating certain exclusivity and loyalty deals, bar the company from conditioning chip access based on commitments, and ban retaliation against customers who buy from Broadcom's competitors.

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Broadcom signalled to Engadget that it might cooperate on a settlement. It still disagreed with the FTC's portrayal and claimed that it didn't break the law. You can read the full statement below.

The chipset giant hasn't exactly won favor from regulators in recent years. It spent 2017 and 2018 aggressively trying to buy Qualcomm, only to give up after the White House blocked the deal. We wouldn't expect regulators to make too many concessions as a result, even if a settlement seems likely. Broadcom hasn't been shy about wanting to dominate the chip business — the FTC will want assurances the company won't push boundaries in the future.

"We are pleased to move toward resolving this Broadband matter with the FTC on terms that are substantially similar to our previous settlement with the EC involving the same products. While we disagree that our actions violated the law and disagree with the FTC’s characterizations of our business, we look forward to putting this matter behind us and continuing to focus on supporting our customers through an environment of accelerated digital transformation. We are equally pleased that the FTC investigation into our other businesses has been closed without action."

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FTC charges Broadcom with 'illegally monopolizing' the chip industry