Apple have taken the bold step of taking out a lawsuit against Qualcomm, suing them for around $1 billion.
The reason behind this is that Apple claims Qualcomm have been charging royalties for technologies they don’t actually have the right to. It appears that Qualcomm uses practices of patent licensing so they can limit competition – basically preventing companies that use their chips to switch to better, more cost effective options. These practices in effect ‘lock in’ companies such as Apple, and prevent healthy competition.
Apple used Qualcomm models in both the iPhone and iPad right up to the maufacture of the iPhone 7, where they switched over to Intel as a supplier in certain models. Apple accuses Qualcomm of charging “at least five times more in payments that all the other cellular patent licensors we have agreements with combined”
Qualcomm withheld $1 billion from Apple, after Apple assisted South Korean authorities who were investigating Qualcomm for anti-competitive behaviour.
Apple released this statement about the lawsuit :
“For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with. The more Apple innovates with unique features such as TouchID, advanced displays, and cameras, to name just a few, the more money Qualcomm collects for no reason and the more expensive it becomes for Apple to fund these innovations. Qualcomm built its business on older, legacy, standards but reinforces its dominance through exclusionary tactics and excessive royalties. Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined.
To protect this business scheme Qualcomm has taken increasingly radical steps, most recently withholding nearly $1B in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them.
Apple believes deeply in innovation and we have always been willing to pay fair and reasonable rates for patents we use. We are extremely disappointed in the way Qualcomm is conducting its business with us and unfortunately after years of disagreement over what constitutes a fair and reasonable royalty we have no choice left but to turn to the courts.”
Recently, Qualcomm were fined more then $850 million in South Korea, which they are contesting. Qualcomm paid a whopping $750 million fine in China in 2015, also for antitrust violations.
The Korea Fair Trade Commission said Qualcomm abused its dominant market position and forced handset makers to pay royalties for an unnecessarily broad set of patents as part of sales of its modem chips.
The U.S. firm also hindered competition by refusing or limiting licensing of its standard essential patents for modem chips to rival chipmakers, the regulator said.