Apple files suit against Qualcomm

We’ve reached out to Qualcomm for its side of the story. It wants a court to change how Qualcomm charges for its technology in the future.

In July 2015, the European Commission, the European Union’s merger and anti-trust watchdog, also launched two antitrust investigations into “possible abusive [behavior]” by Qualcomm in connection with its pricing and licensing practices for modem chipsets.

Following news yesterday that Apple has filed suit against LTE modem supplier Qualcomm for engaging in anticompetitive licensing practices, the chipmaker hit back on Sunday by calling Apple’s claims “baseless” and accusing it of “encouraging regulatory attacks”. For more of Apple’s statement read the full CNBC report here. It typically sources the same component from several suppliers, which helps secure lower prices by forcing the manufacturers to compete on price.

After Apple’s announcement of the lawsuit filed against Qualcomm, the chip maker’s stock dropped by nearly 2.5 percent. Apple rose less than 1% to $120. In fact, Apple notes that this is only the most recent of the “radical steps” that Qualcomm has resorted to.

A major part of the FTC’s allegations centered around Qualcomm’s relations with Apple. Qualcomm responded to the lawsuit, saying it lacks evidentiary and economic support; and there is no way the alleged company charges more than reasonable and fair royalties, said Mr. Chin.

Apple is also seeking almost $1 billion in rebate payments, which it claims have been wrongfully withheld. Qualcomm is fighting this decision.

While the legal case alleges exclusionary contracts and the idea of being overcharged for licensing, it may well be powered by Apple wanting to ramp up competition to Qualcomm so it can negotiate better deals, the analyst said. The problem stems from Qualcomm attempting to strong arm those same companies and penalizing them if they chose to work with other companies by not issuing the aforementioned rebates.

USA federal trade commission (FTC) has sued Qualcomm after it faced a lot of similar charges from across the world. An amount of money, Apple says, that runs up to $1-billion in unpaid royalty rebates.

Qaulcomm stock dropped by 2.5 per cent before closing bell this Friday.

The chip maker has faced similar complaints in South Korea, the United States, and Europe. Now licensing is a percentage of the price of the entire phone, which is usually in the hundreds of dollars. Those technologies were incorporated into telecom industry standards, making them essential for 3G and 4G communications. Submitting those patents to ETSI obligates Qualcomm to license them on a “fair, reasonable, and non-discriminatory” (FRAND) basis.