FTC Complaint Says Qualcomm Forced Apple to Use its Modems

BY Evan Selleck

Published 18 Jan 2017

A formal complaint registered today by the Federal Trade Commission alleges that Qualcomm may have use anti-competitive movements to keep Apple using its modems.

According to the complaint, Qualcomm has violated the FTC Act as it use anti-competitive techniques to remain the dominant supplier of baseband processors for smartphones. Those baseband processors are the 4G LTE modems inside those mobile devices, and the FTC says that the company uses its portfolio of patents, as well as its position as a global supplier, to level “onerous and anticompetitive supply and licensing terms on cell phone manufacturers.”

Apple is named specifically due to a deal between the two companies, where the former company was required to use Qualcomm’s modems inside their mobile devices between 2011 and 2016:

“Extracted exclusivity from Apple in exchange for reduced 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.”

It’s worth noting that, up until the launch of the iPhone 7, Apple did indeed exclusively use Qualcomm’s modems in the iPhone lineup. That finally changed when Apple included Intel modems inside some of its iPhone 7 and iPhone 7 Plus units, but not all of them.

As for the FTC, it is seeking a “court order to undo and prevent Qualcomm’s unfair methods of competition in violation of the FTC Act,” adding that it wants the court to “take actions to restore competitive conditions.” All of that to say, that, more than likely, Qualcomm will be hit with some major penalties here in the United States soon.

[via FTC]