A US judge UU Failed in favor of the Federal Trade Commission (FTC) in its dispute with Qualcomm. As a result of the resolution, Qualcomm must stop bundling patent licensing agreements with its hardware (often referred to as the "no license, no chips" policy) and agree to grant patents on fair terms to other modem chip providers. Qualcomm is expected to appeal the ruling.
In the ruling, Judge Lucy H. Koh says that "Qualcomm's licensing practices have strangled competition" in parts of the modern market, harming "rivals, MOEs, and final consumers." In the end, Koh decided that the royalty of the company's rates were "unreasonably high".
The judge also disagreed with Qualcomm's exclusivity agreements, in which customers agree to exclusively use Qualcomm's chips in exchange for a discount. Apple agreed to exclusively use Qualcomm modems on their iPhones between 2011 and 2016 as part of a similar agreement. The chip maker has already received a fine of $ 1.2 billion in the European Union for this practice.
To ensure that it complies with the new rules, Qualcomm must agree to be monitored for seven years.
Many of these practices were also the subject of a recent lawsuit between Apple and Qualcomm, which Apple filed following the original FTC announcement of its intention to sue Qualcomm. However, less than a week after the court proceedings began, Apple and Qualcomm announced that they had reached an agreement and that they would be ending all ongoing litigation between the two companies. In response, Qualcomm's main rival in chip manufacturing, Intel, said it would come out of the 5G modem business.
The chipmaker must also not prevent its clients from cooperating with government investigations, and not retaliating against any cooperating partner. As part of its lawsuit, Apple argued that Qualcomm retained $ 1 billion in retaliation for its cooperation with South Korean regulators investigating Qualcomm.
Qualcomm declined to comment on the ruling, but during the hearing argued that the cellular market is healthy and competitive, and said its clients were large enough to withstand any alleged anti-competitive practice. However, Judge Koh pointed out to numerous suppliers that have had to exit the market due to these practices, and that those who have remained, such as MediaTek, have been harmed by them, because anyone who has purchased them will also have to pay rights to them. patent to Qualcomm. .
The FTC is only the last regulator to sue Qualcomm for its alleged anti-competitive practices. Qualcomm was forced to pay $ 975 million in China, $ 853 in South Korea and $ 93 million in Taiwan.
CNBC notes that Qualcomm shares fell 13% in response to the news. In the past, three quarters of the earnings of chip makers came from its licensing division.