EU Fines Qualcomm $1.2B for Paying Off Apple

The European Commission has just hit Qualcomm with a fine of $1.2 billion after it concluded the company had paid Apple billions in order to stop it buying from Qualcomm's rivals.

As Reuters reports, the Commission found that, between 2011 and 2016 Qualcomm agreed a deal whereby it would pay Apple in return for Apple exclusively using Qualcomm's LTE baseband chips, which allow for 4G connectivity. That means all iPhone and iPads during that period would only ship with Qualcomm LTE chips. Rivals were completely shut out from Apple's products.

Such anti-competitive behavior cannot go unpunished, so the European Commission decided to fine Qualcomm the equivalent of 4.9 percent of its 2017 turnover, which amounts to $1.2 billion. The fine may just be the start of Qualcomm's problems, though. Another EU investigation is looking into Qualcomm's alleged predatory pricing behavior with regards to British phone software maker Icera (since acquired by Nvidia). The US Federal Trade Commission is also investigating the deal Qualcomm struck with Apple, which may bring a further huge fine.

Meanwhile, Qualcomm is currently locked in a legal battle with Apple regarding patent royalty rebates, and Apple's manufacturing partners regarding licensing fees. Qualcomm has also sued Apple for failing to protect the company's trade secrets. At the same time, Broadcom is attempting to acquire Qualcomm, but had its $105 billion offer rejected.

It's important that, while the focus here is on Qualcomm, we shouldn't forget Apple's role in the dealings. Qualcomm instigated the anti-competitive behavior, but Apple agreed to the terms and accepted the payments. It could have rejected Qualcomm's offer, but didn't.

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