Qualcomm is a company that is like Google in its world. Let me remind you that it is engaged in the production of chips for electronics, including modern modems for communications and processors, which are used by almost all top smartphones on Android. Although in the light of recent events, it may be that everyone will switch to them. I want to say that the company is essentially a monopoly. Yes, there are other companies, but they usually fall far short of Qualcomm (Apple does not count). The only problem is that when you are a monopolist, you just have to fight off anti-monopoly services from all sides, and this is not easy. This time, Qualcomm won the high-profile case, but what happens next?
The position of this company in the world is very strong. This situation is inevitably accompanied by courts.
The current case against Qualcomm is pending in an appellate court. He concluded that the company did not violate antitrust laws and did not force companies to license patents to purchase chips.
The Wall Street Journal reports that the Ninth Circuit Court of Appeals overturned Qualcomm's verdict, saying the FTC had not proven the chip giant's non-competitive behavior. True, it should be noted that the court recognized the aggressiveness of the company's actions. He agreed that the company's actions were harsh, but that they did not violate the law. This was further proof that large companies are always trying to act on the brink of the law to increase profits.
The Federal Trade Commission (FTC) considered the decision 'disappointing' and said it continues to consider its options. When one of the parties to the dispute is dissatisfied with the court's decision, it starts a new trial – it has been and will always be so. However, the commission did not make it clear what these options would be. An amicable settlement is unlikely as the commission is at an impasse.
What Qualcomm is accused of
Officials accused Qualcomm of misusing the licensing system. This means that the company acted in a way to get its customers to agree to its royalty rates, which were sometimes too high.
In case of refusal to pay, the chip giant simply terminated relations with companies, although for some of them cooperation with such a company was very important. In the end, they had to choose: incur serious losses or simply agree with Qualcomm. Naturally, the latter was the lesser evil and, at least, allowed them to continue to produce their devices.
It's hard to imagine the modern smartphone industry without Qualcomm chips.
The terms also called for some companies to pay licensing fees to Qualcomm even if they did not use the chips. Apple, for example, disagreed with Qualcomm's licensing terms for years until both sides reached an agreement in 2019. After that, they immediately started talking about the fact that the new iPhone will receive 5G – a modem. Perhaps the need for this led the company to reconciliation. Both understand that it is easier to cooperate than to sue endlessly.
Qualcomm, meanwhile, has argued that it has achieved its position legally and that virtually every cell phone uses its patents, whether or not its chips are inside. This is really possible, because some technologies do not offer more variability.
If Qualcomm cannot find understanding in court, it will have to pay heavy fines.
As a result, chip makers have to resort to patented technologies, albeit unwittingly. It is as if someone patented the wheel. Then all manufacturers of bicycles, cars and other vehicles would have to pay royalties, since there is simply no such thing as an analogue. The example is a bit exaggerated, but you get the point.
The outcome of the current litigation will prevent the company from escaping close scrutiny by governments outside the United States. She may have other problems in the European Union, South Korea and Taiwan. These countries have already imposed some penalties on the company. However, they are not so serious against the background of the profit that the company receives from its core activities.
What processors do you think of first when you hear a 'flagship smartphone'? Snapdragon, of course.
Does Qualcomm have competitors
This whole situation is good for Qualcomm only for the time being, as many manufacturers are looking for ways to create their own solutions that will avoid pressure from Qualcomm. Even those small manufacturers who cannot create such technologies themselves are interested in someone succeeding along this path. If there are several chip suppliers and several technologies, it will be much easier to negotiate with their manufacturers.
If they collude to raise the price higher, it will be too serious a violation for them to get off as easily as Qualcomm did this time. Therefore, most likely, they will not do this, respectively, the current monopolist will receive a competitor and a decrease in profits. Maybe Qualcomm is to blame for this, having set such large royalties, or maybe this is just a stage in the development of the industry.