FTC Targeting Qualcomm for Forcing Apple to Use its Modems [Updated]

The United States Federal Trade Commission today filed a complaint against Qualcomm, accusing the company of violating the FTC Act by using anticompetitive tactics to remain the dominant supplier of baseband processors (aka LTE chips) for smartphones.

According to the FTC, Qualcomm uses its position and its portfolio of patents to impose "onerous and anticompetitive supply and licensing terms on cell phone manufacturers," negatively impacting its competitors.

iphone-7-plus-colors
The complaint specifically addresses a deal with Apple in which Qualcomm required Apple to exclusively use its modems from 2011 to 2016 in exchange for lower patent royalties.

Qualcomm precluded Apple from sourcing baseband processors from Qualcomm's competitors from 2011 to 2016. 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.

Up until 2016, Apple only used Qualcomm modems in its line of iPhones, deviating from the norm with the iPhone 7. Both Intel and Qualcomm modems were adopted for the iPhone 7 and the iPhone 7 Plus, leading to some compatibility and performance discrepancies.

Qualcomm is also accused of refusing to license its standard-essential patents to competing suppliers and implementing a "no license, no chips" tax policy where it supplies its baseband processors only when manufacturers agree to Qualcomm's preferred licensing terms, causing smartphone makers to pay higher royalties to Qualcomm when a competitor's modem chips are used.

The FTC has asked the court to order Qualcomm to put a stop to its anticompetitive conduct and take action to "restore competitive conditions."

Update: According to Qualcomm, the FTC's complaint is based on "flawed legal theory, a lack of economic support and significant misconceptions about the mobile technology industry." Qualcomm says it has never withheld or threatened to withhold chip supply to obtain unfair licensing terms.

"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," said Don Rosenberg, executive vice president and general counsel, Qualcomm Incorporated.

"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."

Top Rated Comments

(View all)
Avatar
48 months ago

They should stick their nose somewhere else, the Intel modems were shown to be slower than the Qualcomm ones...

By using these practices, they were able to spend more on r and

Awwww.... as if Apple probably doesn't bully companies into only using their products.

I didn't know apple licensed its tech.
When did this happen.
Score: 13 Votes (Like | Disagree)
Avatar
48 months ago

How about targeting 'Intel' as well for their 'x86' architecture? It's killing the Macs.

No, Tim Cook is.
Score: 12 Votes (Like | Disagree)
Avatar
48 months ago
They should stick their nose somewhere else, the Intel modems were shown to be slower than the Qualcomm ones...
Score: 10 Votes (Like | Disagree)
Avatar
48 months ago

They should stick their nose somewhere else, the Intel modems were shown to be slower than the Qualcomm ones...

What does that have to do with Qualcomm anti-competitive practices?
Score: 10 Votes (Like | Disagree)
Avatar
48 months ago
Hard to believe anyone "forces" Apple to do anything.
Score: 9 Votes (Like | Disagree)
Avatar
48 months ago

They should stick their nose somewhere else, the Intel modems were shown to be slower than the Qualcomm ones...

This has nothing to do with what's better. The issue is Qualcomm basically unfairly prevented competition by improperly licensing standard essential patents.
Score: 6 Votes (Like | Disagree)

Top Stories

Here's How You Can Download iOS 14 and iPadOS 14 Around the World [It's Out]

Wednesday September 16, 2020 2:36 am PDT by
Apple's official public release of iOS 14 and iPadOS 14 dropped on Wednesday, September 16, just a day after the company released the Golden Master to third-party developers. Also set to be made available to the general public for the first time are watchOS 7 and tvOS 14. Getting Started With iOS 14 Video Click image to watch iOS 14 Getting Started While that's left a lot of developers...

Apple Updates AirPods 2 and AirPods Pro Firmware to Version 3A283

Monday September 14, 2020 11:24 am PDT by
Apple today released new 3A283 firmware updates for the second-generation AirPods and the AirPods Pro. The second-generation AirPods are being updated from the 2D15 firmware they were previously running, while the AirPods Pros are being updated from the 2D27 firmware they had installed previously. Apple does not provide details on what's included in refreshed firmware so we don't know what's ...

New AirPods Pro Firmware Introduces Spatial Audio Support and Automatic Switching

Monday September 14, 2020 12:22 pm PDT by
The new 3A283 firmware that Apple released for the AirPods Pro today appears to introduce support for Spatial Audio, a new feature coming to the higher-end AirPods with iOS 14. Multiple reports on Twitter and the MacRumors forums indicate that the firmware update adds a "Spatial Audio" option to the Control Center, which can be activated to enable the feature. Note that using Spatial Audio...

Spotify Says Apple One Bundle Will Cause 'Irreparable Harm to Developer Community'

Tuesday September 15, 2020 12:26 pm PDT by
Apple today announced Apple One, a series of new subscription bundles that provide access to various Apple services at a combined monthly price. In response, Spotify sent out statements (via Peter Kafka) to the press decrying Apple's anti-competitive behavior and calling on "competition authorities" to stop Apple before it is able to cause "irreparable harm" to developers.Once again, Apple...

Bloomberg: Apple Watch Series 6 With SpO2 Tracking and All-Screen iPad Air Coming at 'Time Flies' Event, Apple Silicon Macs by November

Monday September 14, 2020 5:20 am PDT by
Apple is set to host a virtual event on Tuesday at 10 a.m. Pacific Time, and ahead of time, Bloomberg's Mark Gurman has outlined his expectations for new product announcements both tomorrow and in the months to follow. Gurman, who has a very strong track record, reiterated that this Tuesday's event will be focused on the introduction of new Apple Watch Series 6 and iPad Air models, adding...

iOS 14, iPadOS 14, watchOS 7, and tvOS 14 Will Be Released September 16

Tuesday September 15, 2020 11:06 am PDT by
Apple today announced that iOS 14, iPadOS 14, watchOS 7, and tvOS 14 will be officially released on Wednesday, September 16. Apple has seeded the final Golden Master beta versions of each update to developers in advance. ‌iOS 14‌ and iPadOS 14 introduce dozens of new features, including a redesigned Home Screen that supports widgets on the iPhone and iPad for the first time. For more...

When Will the iPhone 12 Launch? Here's What We Know

Wednesday September 16, 2020 6:12 am PDT by
Yesterday's "Time Flies" Apple event saw the release of the Apple Watch Series 6, Apple Watch SE, iPad 8, and iPad Air 4, but no new iPhone models. Rumors before the event strongly alleged that it would not see the unveiling of new iPhones, with many reports pointing to an October launch. The lack of new iPhone models yesterday seems to confirm that the iPhone 12 lineup will not appear...

Full Transcript of Apple's 'Time Flies' Event With Apple Watch and iPad Updates

Tuesday September 15, 2020 8:46 am PDT by
Apple's virtual "Time Flies" event kicks off today at 10:00 a.m. Pacific Time, with Apple expected to debut new Apple Watch and iPad models, but it appears we may not see the iPhone 12 until next month. While we're not expecting to see new iPhones today, Apple's software updates for its various platforms are likely nearly ready for launch, so we may be hearing more about them today. Check...

Apple Releases iOS 14 and iPadOS 14 With Home Screen Redesign, App Library, Compact UI, Translate App, Scribble Support, App Clips, and More

Wednesday September 16, 2020 12:48 pm PDT by
Apple has released iOS 14 and iPadOS 14, the newest operating system updates designed for the iPhone and iPad. As with all of Apple's software updates, iOS 14 and iPadOS 14 can be downloaded for free. iOS 14 is available on the iPhone 6s and later, while iPadOS 14 is available on the iPad Air 2 and later. The updates are available on all eligible devices over-the-air in the Settings app. To ...

Everything Apple Announced at Today's iPad and Apple Watch Event in Just Seven Minutes

Tuesday September 15, 2020 2:19 pm PDT by
Apple today held its annual September event, but this year was a bit different because no new iPhones were announced. The "Time Flies" event focused on the Apple Watch Series 6 and the iPad Air, and saw the debut of a new Apple One services bundle. Subscribe to the MacRumors YouTube channel for more videos. It took Apple an hour to introduce the new devices, but we've recapped the event in...