Qualcomm has been accused by the Federal Trade Commission of anticompetitive patent tactics, with the FTC filing a federal court complaint alleging the chip maker used nefarious tactics to maintain a monopoly on mobile processors.
The FTC, which works with the Justice Department to enforce antitrust law, said that Qualcomm used its dominance in supplying baseband processors used in smartphones and tablets to extract elevated royalties for patents in what the complaint dubbed a "no license-no chips" policy.
The complaint, filed in federal district court in California, accuses Qualcomm of forcing cellphone manufacturers to pay increased rates for using certain processors from competitors, what the FTC refers to as an "anticompetitive tax".
As we've seen play out before when cellular-essential patents are contested, those who hold such rights are expected to license them on so-called FRAND terms.
Ultimately, Qualcomm has few competitors for high-end baseband modems. To prevent that from happening, the FTC claims Qualcomm offered Apple substantial rebates on licensing fees in exchange for being its exclusive supplier of modem chips from 2011 to 2016. According to the FTC, Apple was forced to exclusively use Qualcomm's baseband processors between 2011 and 2016.
Qualcomm is the dominant supplier of modem chips that enable phones to hook up to cellular networks, but the company also extracts a licensing fees for almost every modern phone in the world.
A Bruce Springsteen cover band quits Trump inauguration because of Springsteen
Their presence is distinctly representative of New Jersey, and they signed the contract for this year's event way back in 2013. Even with all the support and publicity, I would trade that all in just to go back to where we were four months ago.
Another tactic Qualcomm used, the FTC said, is that it would threaten to limit phone manufactures' access to its cellular chips and then hike up royalties payments.
In filing the complaint, the FTC is seeking a court order to "undo and prevent" Qualcomm's "unfair" methods of competition. "Qualcomm has never withheld or threatened to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms", it said in a statement.
One of the FTC Commissioners, Maureen Ohlhausen, dissented with the agency's suit against Qualcomm. Conditions allegedly included not using a competitive wireless technology backed by Intel, agreeing not to sue Qualcomm over royalties, and using Qualcomm chips in forthcoming iPhones and iPads.
"We have grave concerns about the two Commissioners' decision to bring this case despite a lack of evidence supporting the allegations and theories in the complaint", he said.
The US Federal Trade Commission has charged Qualcomm with violating the FTC Act.