What’s $1bn between friends? Apple and Qualcomm fall out

23 Jan 2017

iPhone. Image: nixki/Shutterstock

Another major patent dispute has emerged between tech giants, after Apple upped the pressure on Qualcomm with a lawsuit, claiming the latter charges it “five times” more than rivals.

Qualcomm is not happy. Apple is not happy. The Federal Trade Commission (FTC) in the US is not happy.

Last week, the FTC filed charges against Qualcomm, alleging the latter uses anticompetitive tactics to stop rivals supplying components to handset companies.

The claims were big and included one notable name: Apple. The FTC alleges that Qualcomm goes into deals with notably low licensing fees, harming rivals, while also extracting high royalties from device manufacturers for patented technologies that are “essential to industry standards”.

It stems from a major deal that Qualcomm and Apple struck for the former to provide chips from 2011 to 2016. “The FTC alleges that Qualcomm has used its dominant position as a supplier of certain baseband processors to impose onerous and anticompetitive supply and licensing terms on cell phone manufacturers and to weaken competitors,” said the US body.

Not to be left behind, Apple responded with a suit against Qualcomm to the tune of $1bn, claiming the chip provider charges onerous royalties for unrelated technologies.

For example, Apple said that for adding touch ID to iPhones, “which enables breakthrough technologies like Apple Pay”, Qualcomm charges royalties. When Apple “spends billions redefining the concept of a smartphone camera”, royalties go up. It even claims an iPhone with additional memory means higher royalties.

This is, according to Apple, despite the fact that all of these technologies “had nothing to do with” Qualcomm.

However, the processor giant disputes the claims in the US. According to a statement given to TechCrunch, Qualcomm said the FTC case revolves around how Apple “intentionally mischaracterised” their agreements, claiming the iPhone maker is “actively encouraging” similar cases elsewhere in the world.

Qualcomm is also in trouble in South Korea and China.

“We welcome the opportunity to have these meritless claims heard in court, where we will be entitled to full discovery of Apple’s practices and a robust examination of the merits,” said the company.

iPhone. Image: nixki/Shutterstock

Gordon Hunt was a journalist with Silicon Republic