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.

Comments

Apple is complicit here

[JoeyRox]

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.

Re:Apple is complicit here

[ShanghaiBill]

This is just normal business that we all engage in

No it isn't. It is NOT illegal to dominate a market. Exclusive agreements are also not illegal. It is the combination of the two that can be illegal.

Qualcomm was allegedly leveraging their dominant position to completely shut out competitors. This is not something that "we all engage in" because very very few of us dominate an industry.

Re:Is that illegal?

[Gaxx]

The key, I believe, is that there was an exclusivity clause in the contract. The EU are very wary of such things (with good reason if you believe that monopolizing practices are harmful).

Now - had the contract been that they would sell X number of chips for a given prices then I suspect that there wouldn't have been a case - whether that X amounted to 100%, 99% or 150% of what Apple used. The problem was that the agreement they reached excluded other manufacturers.

Exclusivity contracts are one of those things that fall into a bit of a market freedom paradox. In a truly free market then they should be possible (because you can sign a contract for anything, right?) but in being available they curtail market freedom once in place.

As a proponent of market freedom (or control) you can fall either side on whether they are a good or bad thing.

Patents?

[Anonymous Coward]

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.

Re:Nice bribe

[AmiMoJo]

Except that they are not allowed to continue doing it. If they do, there will be another bigger fine, and so on util they go bankrupt or stop.

Re:What is wrong with this?

[ReeceTarbert]

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.

Re:The EU sure loves to fine American companies

[jabuzz]

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.

Re:No authority

[Oswald McWeany]

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.

Re:How is this different than a customer discount?

[JoeyRox]

Qualcomm's provision for exclusivity in exchange for the discount is what is anti-competitive, not the discount itself.

Re:Friggin commies

[Computershack]

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.