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EU Fines Qualcomm $1.2 Billion for Paying Apple To Use Its Microchips (apnews.com)
The European Union on Wednesday slapped a $1.23 billion fine on U.S. chipmaker Qualcomm for abusing its market dominance in the lucrative sector of components in smartphones and tablets for half a decade. From a report: EU Commissioner Margrethe Vestager said that San Diego-based Qualcomm "illegally shut out rivals from the market" for more than five years by paying key customer Apple to not use chips made by Qualcomm's rivals. Vestager said Qualcomm paid "billions of dollars" to Apple and in the process helped establish itself as the dominant force.
It was in Qualcomm's interest to pay Apple billions because it obviously served to discourage the development of a competing designs by Qualcomm's competitors.
But it also served Apple's interests because getting such good terms meant they would get a parts-cost advantage vs all their smartphone competitors while at the same time assuring those competitors would not have a lower-cost alternative available to them from a Qualcomm competitor.
Monopolistic synergy.
Is it illegal to "pay to play"? How is Qualcomm paying to be an exclusive provider not just a contract agreement of service? I thought this happens in a lot of industries. How is it different to offering a bulk-discount if you buy x million chips from us? (essentially doing the same thing)
I know some grocery stores accept money from companies to guarantee certain shelf-space; for example.
If Qualcomm had paid to guarantee they be used for just 99% of chips supplied would that still be illegal (obviously Apple would just get all from them in that case, because wouldn't make sense to change hardware to allow a second chip for 1% of products).
"That's the way to do it" - Punch
So what harm really occurs to consumers when Qualcomm effectively sells its parts for low prices to Apple who then -- at least theoretically -- can pass the savings on to consumers? Now, I'm not saying Apple did pass the savings on to consumers, but that's out of Qualcomm's control.
The only people really harmed were Qualcomm's shareholders since Qualcomm was ostensibly losing profits vs. selling all these chips at full price.
This is once again the EU bureaucrats skimming money from non-EU companies with emotionalistic BIG IS BAD rhetoric.
Oh, and one more thing: If it's the end of the world that Apple won't sell you an iPhone with a non-Qualcomm modem, where the hell is the $100 Billion fine for Apple excluding Samsung, Mediatek, Intel, AMD, Nvidia, etc. from supplying the main SoC chips for every freakin' iPhone being sold?
I'm sorry, but I'm really struggling to figure out how this is wrong.
What part of "paying key customer Apple to not use chips made by Qualcomm's rivals" you didn't get?
Hint: it's not about "discounts" and it's not about beating the competition with a better product; it's about abusing your market dominance to prevent rivals from even competing in the market.
Or is competition good only when it fits your narrative?
RT.
They quite happily fine EU companies too. Though one suspects that EU companies are more aware what practices are illegal in the EU and are thus less likely to break them and consequently less likely to be fined. However Qualcomm are a multi billion dollar company operating globally, it is not unreasonable to expect them to be aware that what they where doing was illegal in what is the largest single market in the world, and I am not going to cry when they get fined for breaking the law.
The EU has no authority in the U.S.
It's normal business for a company to give a big discount to use their product. if the payout took place in the U.S. there is nothing the E.U. can do about it.
I would never pay their fine.
The EU absolutely has authority over what companies that operate within the EU do. There are many-many cases where the US has passed punitive measures against companies not based in the US too. This isn't something only the EU does.
"That's the way to do it" - Punch
Qualcomm's provision for exclusivity in exchange for the discount is what is anti-competitive, not the discount itself.
Yeah such a shithole - worlds richest economy and manages to give free healthcare, free university education in most member states, a minimum 20 days paid annual leave and many many other rights to every single one of its citizens that the USA doesn't.
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