Earlier this year, the Federal Trade Commission leveled a lawsuit against Qualcomm for resorting to anti-competitive tactics to maintain its position in the semiconductor segment. According to the lawsuit, Qualcomm imposed "onerous and anti-competitive supply and licensing terms on cell phone manufacturers" in a bid to weaken competition. Qualcomm has since filed a motion to dismiss the lawsuit, but Intel and Samsung — Qualcomm's main rivals in the semiconductor category — are throwing their support behind the FTC.
In a statement on its blog, Intel said that Qualcomm's "abusive patent and commercial practices" hurt competition and innovation in this segment:
Intel is ready, willing, and able to compete on the merits in this market that Qualcomm has dominated for years. But Qualcomm has maintained an interlocking web of abusive patent and commercial practices that subverts competition on the merits. These practices have illegally coerced mobile phone manufacturers into purchasing the chipsets they need from Qualcomm and Qualcomm alone.
Today, Intel filed an Amicus Brief in opposition to Qualcomm's motion to dismiss the FTC's complaint. Because the FTC's attempt to shed light on Qualcomm's anticompetitive practices is of great importance to the industry as a whole, several other companies and trade associations also have filed briefs supporting the FTC. Intel's brief, in particular, illuminates the adverse impact that Qualcomm's conduct is having on competition and innovation, and explains how that conduct violates the antitrust laws in several different ways.
Despite having requested a license from Qualcomm, Samsung cannot sell licensed Exynos chipsets to non-Samsung entities because Qualcomm has refused to license Samsung to make and sell licensed chipsets.
The main argument is that Qualcomm is leveraging its position in the semiconductor industry to create a monopoly by refusing to share its patents with other chip manufacturers. With its chipsets and LTE modems, Qualcomm collects a percentage of a device's retail cost as royalties, a move that has led Apple to sue the chip maker to the tune of $1 billion over "royalties that they had nothing to do with."
For its part, Qualcomm is trying to get the FTC lawsuit dismissed, stating that there's no "coherent theory of competitive harm" from its patents licensing model:
The Federal Trade Commission's latest submission to the court does nothing to cure the fundamental flaws in its complaint against Qualcomm: no coherent theory of competitive harm and no allegations of the type of conduct that the antitrust laws are designed to address. The complaint therefore should be dismissed.
With the company fighting litigation on several fronts, it will be a tough year for Qualcomm. The manufacturer has slashed profit projections for Q2 2017, and its stock is down 15% from earlier this year. The FTC's hearings are scheduled for June 15, which is when we'll hear more on the lawsuit.
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