Earlier in the week, San Diego-based chipmaker Qualcomm had a suit filed against it by the US Federal Trade Commission (FTC) for unfair business practices. Today, Apple is now suing the company for $1 billion.
Even if you are only mildly interested in smartphones or other mobile devices, chances are you've heard the name Qualcomm before. Its technology can be found in a variety of different products on the market today and it also holds many patents for various cellular technologies.
So it comes as no surprise that brands like Samsung, LG, Sony, Motorola, and more rely on Qualcomm a great deal not only for its chips but also licensing deals. As mentioned previously, the FTC found that Qualcomm had been conducting some odd business, granting special rebates to companies like Apple in return for exclusively using its technology in its products. The problem stems from Qualcomm attempting to strong arm those same companies and penalizing them if they chose to work with other companies by not issuing the aforementioned rebates.
This is the official statement that was provided by Apple to the media:
For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with. The more Apple innovates with unique features such as TouchID, advanced displays, and cameras, to name just a few, the more money Qualcomm collects for no reason and the more expensive it becomes for Apple to fund these innovations. Qualcomm built its business on older, legacy, standards but reinforces its dominance through exclusionary tactics and excessive royalties. Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined.
To protect this business scheme Qualcomm has taken increasingly radical steps, most recently withholding nearly $1B in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them.
Apple believes deeply in innovation and we have always been willing to pay fair and reasonable rates for patents we use. We are extremely disappointed in the way Qualcomm is conducting its business with us and unfortunately after years of disagreement over what constitutes a fair and reasonable royalty we have no choice left but to turn to the courts.
Qualcomm will undoubtedly protect itself to the best of its ability, but this will more than likely become a very curious case that will unfold during the course of the year.