Qualcomm Accused of Forcing Deal on Apple

Qualcomm forced Apple to use its chips exclusively in return for lower licensing fees, unfairly cutting out competitors, the U.S. said in a lawsuit against the biggest maker of mobile phone chips, according to Bloomberg. Exclusive deal was detailed in a Federal Trade Commission lawsuit accusing the chipmaker of illegally maintaining a monopoly for semiconductors used in mobile phones and pocketing elevated royalties from customers.

“Qualcomm recognized that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors,“ the FTC said in the lawsuit. The lawsuit presents yet another regulatory challenge to Qualcomm’s most lucrative business, technology licensing. The chipmaker gets most of its profits from selling the rights to use patents that are essential to all modern mobile phone systems. Qualcomm has argued that its licensing follows industry standards that have been in place for more than 20 years and are used by other companies.

Last month, South Korea, home to two of Qualcomm’s largest customers, fined the San Diego-based company $890 million and described its practices as monopolistic. Qualcomm has said it would appeal that decision. The chipmaker is also the subject of investigations by the European Union and Taiwanese authorities. Qualcomm said in a statement that it would fight the FTC’s complaint, which it said is based on flawed legal theory and seeks to advance the interests and bargaining power of mobile-phone manufacturers.