Samsung, Intel Join FTC’s Antitrust Suit Against Qualcomm

Intel and Samsung have both joined the FTC’s lawsuit against Qualcomm, accusing the smartphone SoC and wireless modem manufacturer of engaging in practices that violate antitrust law. Fair disclosure requires me to note that Intel’s brief is impossible to read without chortling. Anyone who recalls AMD’s antitrust lawsuits against Intel may have a similar problem, given Intel’s smug dismissal of AMD’s complaints at the time, compared with the outraged tone it takes in its own court filing against Qualcomm.

According to Intel, Qualcomm has:

[M]aintained an interlocking web of abusive patent and commercial practices that subverts competition on the merits. These practices have coerced mobile-phone manufacturers (also known as “original equipment manufacturers” or “OEMs”) into purchasing the chipsets they need from Qualcomm and Qualcomm alone. The FTC’s detailed complaint documents the Qualcomm practices that have created that coercive business climate and stymied competition. Qualcomm’s behavior has inflicted and continues to inflict precisely the harms that the antitrust laws seek to protect against: harm to the competitive process, to consumer welfare, and to innovation and progress.

Specifically, Intel argues that Qualcomm refuses to sell chipsets unless manufacturers purchase patent licenses and agree to pay Qualcomm revenue on every chipset sold, whether that chipset contains Qualcomm processors or not. It also argues that Qualcomm refuses to license Standard Essential Patents (SEPs) to its competitors, that it has arranged an exclusive (and below market price) deal with Apple to corner the market, and that Qualcomm has used a combination of patent licensing and exclusivity deals to prevent the smartphone market from functioning as a free and independent market.

Now, don’t get me wrong — Qualcomm may well be found to have engaged in abusive behavior, and I’m not saying otherwise. But for Intel to complain about Qualcomm’s licensing and royalty structures after its own abuses is simply magical. Remember, Intel paid $ 1.2 billion to AMD to settle its antitrust case before it went to trial and was fined $ 1.45 billion by the EU. Its largest partner in crime, Dell, paid $ 100 million to settle SEC charges that the company misrepresented the impact Intel’s predatory rebate practices had on the OEM’s bottom line. Back then, Intel rebates were so critical to Dell earnings, that they were the only way the company could meet its consensus EPS estimates every single quarter from 2002 through 2006. In the first quarter of FY 2007, 76 percent of Dell’s operating profit came from Intel exclusivity payments — aka, Intel paying Dell not to use AMD products.

It is, therefore, hilarious that Intel would go to the FTC to declare its inability to compete with Qualcomm.

Samsung backs up Intel’s claims

That said, Samsung, Intel, and the FTC are making a cohesive set of claims about Qualcomm’s business practices that may well stand up in court. Both Samsung and Intel argue that Qualcomm refuses to license its patents to competitors, despite holding essential patents that are functionally required to build an LTE modem (we’ve covered FRAND and SEP patent licensing in previous stories on this topic). This could put Qualcomm in violation of the Sherman Act alone, since SEP licensing issues have been previously found to trigger such clauses. Samsung’s filing is more narrowly tailored than Intel’s, and focuses more specifically on whether Qualcomm is required to license its patents to competitors under the rules that govern SEP and FRAND licensing in the first place. Unsurprisingly, Qualcomm is arguing that it has no legal requirement to license its patents.

LTE market share, 2013

LTE market share, 2013. Qualcomm utterly dominated the LTE market back then.

It’s harder to make objective determinations about whether companies have complied with patent license requirements, compared with whether one company’s products are readily available on store shelves. It makes this situation quite different from the earlier Intel-AMD lawsuit we alluded to (schadenfreude notwithstanding). We have certainly noticed before that Qualcomm faced robust competition in 2G and 3G modems, but dominated the 4G / LTE space to an unprecedented degree. That has changed somewhat, now that Intel, Samsung, and a handful of other companies have their own radios in-market. But Qualcomm had the market all but locked up for quite some time. Qualcomm has requested that the suit be dismissed, but the FTC has yet to rule on that proposal.

Let’s block ads! (Why?)

ExtremeTechExtremeTech

Leave a Reply

Your email address will not be published. Required fields are marked *

Read previous post:
Trump 'asked FBI to halt Flynn inquiry'

President Donald Trump asked FBI chief James Comey to end an inquiry into links between his ex-national security adviser and

Close