The European Commission has slapped Qualcomm with a hefty $1.23 billion fine over its anticompetitive deals with Apple, the EU announced in a press release.
By far, Qualcomm is the world's largest LTE baseband chipset supplier. Other chipmakers in this market have been trying to challenge Qualcomm's dominance, particularly Intel, which is the world's largest supplier of chipsets used in computers but without much success.
Qualcomm has long been the dominant provider of LTE chipsets for smartphones, particularly Apple's iPhones and the European Commission says that it violated antitrust laws to get where it did. After an investigation, the European Commission has ruled that Qualcomm abused its market position for years when it comes to its deals with Apple.
EU Fines Qualcomm Over Apple Deals
According to the European Commission, Qualcomm has been engaging in anticompetitive practices, abusing its dominant position between 2011 and 2016, hurting competition and innovation through its relationship with Apple.
The chipmaker allegedly paid Apple to be the exclusive vendor of iPhone LTE chipsets within the said period. This, in turn, hurts all other chipset vendors by excluding them and denying them the chance of a deal with Apple.
When Apple started using Intel-made modems for iPhones, it sparked rumors that it might ditch Qualcomm as a modem supplier altogether. Qualcomm even sued Apple over it, alleging that it gave Intel "unprecedented access" to proprietary chip technology.
Now, the European Commission is fining Qualcomm a hefty €997 million, which would translate to roughly $1.23 billion. The amount makes up 4.9 percent of the revenues Qualcomm had in 2017, and it was determined based on the number of years during which it pulled this scheme. Under EU antitrust regulations, fines can amount to a maximum of 10 percent of annual turnover.
Qualcomm Illegally Eliminated Rivals
"Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance. Qualcomm paid billions of US Dollars to a key customer, Apple, so that it would not buy from rivals," says Commissioner Margrethe Vestager, the head of competition policy. "These payments were not just reductions in price - they were made on the condition that Apple would exclusively use Qualcomm's baseband chipsets in all its iPhones and iPads."
The commissioner further explains that by doing so, Qualcomm virtually ensured that no competitor could effectively challenge its dominance in the market, regardless of whether they have quality products or not. In addition to harming rivals, Qualcomm's actions also harmed consumers by denying them choice and innovation.