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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
If this lump sum of money isn't going to help the others in the tech industry it's just a bribe for them to keep doing what they're already doing.
Throwing the asshole executives (all of them in big companies) who only see short term profits in jail for at least 20 years is better. Let's be real, it's not gonna be the upper management who pays for this, but the lower ranks.
Paying customers not to use a competitor's products is illegal when you have a dominant market position.
Well, The FTC is looking at Qualcomm and South Korea and China have also fined them for breaking rules on anti-competitive behaviour.
If you want to trade in the EU, read the rules and stick to them or get fined. Don't like the rules? Don't have to sell there.
The actual issue is that qualcom is cementing a market dominant position. If a tiny start up had agreed an exclusivity deal with Apple, that would not have broken the rules.
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Qualcomm will just file this under their expenses along with costs of labour, real estate, vendors and all other business expenses.
Their market position they gained from this behaviour is worth far more than 1.2 billion in the long run.
They should be forced to relinquish their patents in order to allow real competition to grow.
This was just a decision that was for the people made by the people.
Americans will find that attitude very un-American.
Don't fight for your country, if your country does not fight for you.
If you want to do business in the EU, you have to abide by EU law. It's that simple.
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
Is there an actual contract somewhere that says "we will pay you $OBSCENEAMOUNT if you do not use chips from vendor N", or was that inferred because there was a contract that said something like "we will give you $OBSCENEAMOUNT to use our chips exclusively"? Functionally, I admit - same result. However, the former I would agree would be illegal, the latter would be quite typical in just about every industry since Thag started making pointy sticks for Ug.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
In fact, the US even does it when the activity was not in US jurisdiction and did not affect operations in the US in any way. The EU does not.
It's a strange way of say that apple paid less than the full amount. Perhaps there is something in european law that forbids a discount to a customer, making the mechanism of giving a discount to a customer illegal. But surely, discounting for a large customer is in general legal???
I could imagine some possible conditions that might matter. Qualcom owns many of the standards it's parts implement. In come cases it licences those via FRAND rules in return for the adoption of proprietary methods as the standard. And it may well be that under FRAND one is not allowed to charge one customer more than another. In that case, for the portion of the chips value attributable to the licensed algorithms, they could not discount it to apple. But there's the actual chip itself too. that has some value and they could discount that.
So I'm really puzzled why this is not normal bussiness
Some drink at the fountain of knowledge. Others just gargle.
Didn't Apple sue Qualcomm because they were over charging? But now we find they were getting a discount... Sometimes I wonder how the accountants and lawyers at these big companies can be so bad at their jobs and still get paid a fortune! Qualcomm should have waived the royalties, as long as Apple didn't "use any other product that was using Qualcomm IP without a license"...
if they paid apple rather than apple paying them, what does it matter if their chips dominate if they paid rather than got paid? how do they pay their bills then? capitalism is weird.
It's the same thing IF the party making the proposal is already dominating the market.
A small player can't offer this kind of deal simply because they can't produce the volume of goods required by the other contract party (e.g., Apple). A big player isn't allowed to offer this kind of deal because they would shun competition through size alone. If regulatory bodies allow this, it would guarantee monopolies remain monopolies forever.
...gis sdrawkcab (usually not responding to ACs; don't bother posting as AC)
My Dell XPS 13 nagged me last night to update the BIOS and I declined on the basis I wanted to go to bed and not wait around to see it finish.
(I'm not brave enough to kick off a BIOS update and then leave the laptop alone for 8 hours)
Appears I dodged a bullet there.
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But ... it was not a discount.
It was a bribe.
If you don't pay, they seize your property ... good luck.
Cost free eBook I read (by iBook/Kobo/Amazon/ObookO/Gutenberg etc.): "The Green Odyssey" by Philip Jose Farmer.
EU says, "You have money, we want it.".
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.
I only please one person per day. Today is not your day. Tomorrow isn't looking good either. - Scott Adams
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.
You would be wrong. All the biggest fines have been awarded to EU companies. It just dont seem to hit US media when EU companies gets huge fines from the EU.
Wouldn't apple be just as guilty for excepting such an agreement knowing its against the eu laws? seems to me both party colluded.
Jack of all trades,master of none
Because all they had to do was simply give a lower price instead of getting paid, then giving money back.
Nonsense. If they had just offered Apple a lower price, that would have been legal. But they gave those lower prices with an explicit agreement that Apple would buy only from them. That is also NOT illegal in general, but it is illegal for a company that dominates its market.
When you have a monopoly, or near monopoly, then different rules apply.
The difference here seems to be the corruption angle; the EU is claiming that Qualcomm abused its position to lock out other vendors by sweetening the pot with cash, which is completely different from Apple approaching potential vendors in a kind of tender to see who offers the best bang for their buck then signing an exclusive supply deal as a result. Offering 100m chips at $1 each as a sole supplier is legal; offering 100m chips at $1.10 each plus $10m in cash to *be* the sole supplier is not - even though the total exchange (100m chips vs. $100m) is the same in both cases. My take is that if the EU just thought that Qualcomm was abusing their dominant market position then Apple may be able to get off the hook as being just another Qualcomm customer, but if they're pushing the corruption angle then the law on that is very clear; both offering and accepting a bribe are against the law and will be prosecuted - and Apple should have been *well* aware of the cash in hand / kickback part of the legislation.
UNIX? They're not even circumcised! Savages!
Getting paid billions for shit they'd be doing anyway (Google search default, Qualcomm devices) and making the other side feel like they're getting a deal.
If you assert that corruption is normal, I'm not in possession of facts to deny you. That doesn't keep it from being corruption. And doing reasonable things to stop it is entirely reasonable. (But they need to slap Apple's wrists, too.) It's my suspicion that this won't be sufficient to stop them, so they'll probably need to repeat it with an increased fine...say, 75% of the profits from now on until they stop the practice. Of course, they could avoid the fines by just not doing business in the EU, but I doubt they'd find that an attractive option. And if 75% of the profits isn't enough, use that money to subsidize local competition. (This wouldn't work for a small country, but I think the EU is large enough to handle it.)
I think we've pushed this "anyone can grow up to be president" thing too far.
The 8 hours is the time I got to sleep for, not the time the BIOS takes to update.
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If Qualcomm offers a fantastic price to be sole supplier, isn't that just good business? I see that in fast food joints all the time. What is so different here?
The difference was a contract term forbidding Apple from using parts from Qualcomm's competitors. This is no different than what Intel did by paying customers not to use AMD processors.
So if Qualcomm offers a fantastic price to be a sole supplier, isn't that simply good business on Apple's part to accept it? How is getting the part for lowest price a "crime"? Why should Apple be forced to use multiple vendors for the same part, AND pay a higher price? Fast food restaurants do that all the time, most notably for beverages.
Getting the part for the lowest price by itself was not a crime and Apple would not otherwise have been forced to use other vendors. The crime was being forbidden to use other vendors.