Following FTC anti-competition suit against Qualcomm, now the company is reportedly sued by Apple for withholding $1 billion royalty rebates.
Qualcomm Is Sued By Apple
According to The Verge, the reason for Apple's lawsuit against Qualcomm filed in a federal district court in the Southern District of California is that the mobile chip maker has been dramatically overcharging it for the use of basic patents. The lawsuit comes just days after the US Federal Trade Commission (FTC) accused Qualcomm of anti-competitive practices.
These patents are supposed to be licensed out on fair, reasonable, and non-discriminatory terms because they are essential to industry-wide standards. The FTC argued that Qualcomm was using its dominant market position as smartphone modem supplier in order to force manufacturers into paying excessive fees.
Qualcomm denied the commission's claims as well as Apple's claims. However, these recent series of lawsuits pose a real problem for the chip maker. Even if the company is best known for its chips, in fact, most of Qualcomm's profits come from licensing patents. The chip supplier has a serious reason to be worried, with the with the potential that these allegations would disrupt its critical revenue stream.
The Reasons For The Lawsuit
Apple accuses Qualcomm of withholding nearly $1 billion as "retaliation" for responding to South Korean law enforcement agencies that investigated the company. The high-tech giant added that Qualcomm is charging it at least five times more than all the other cellular patent licensors combined.
For several years, Apple had a special deal with Qualcomm as a way to evade its excessive patent fees. The deal between the two companies was granting Qualcomm exclusivity as a modem supplier, while the company was giving rebates to Apple.
According to MacRumors, up until 2016 Qualcomm was Apple's sole supplier for the LTE modems used in Apple's line of iPhones. The last generation iPhone 7 and the iPhone 7 Plus models use modems from both Intel Qualcomm and Intel.
