Qualcomm’s chip dominance in the smartphone arena is about to take a $1.23 billion hit courtesy of the EU. The fine specially relates to Qualcomm’s involvement with Apple and the use of its LTE chipsets in the iPhone. The European Commision claims that Qualcomm abused its position in the market and as a result broke anticompetitive regulations.
The European Commission yesterday announced that it had issued Qualcomm with a €997 million ($1.23 billion) fine for abusing its market position between 2011 and 2016, related to its relationship with Apple. The figure works out to 4.9 per cent of Qualcomm’s revenues in 2017.
“Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance,” said Competition Commissioner Margrethe Vestager, in a statement. “Qualcomm paid billions of US Dollars to a key customer, Apple, so that it would not buy from rivals. 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.
“This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. Qualcomm’s behaviour denied consumers and other companies more choice and innovation – and this in a sector with a huge demand and potential for innovative technologies. This is illegal under EU antitrust rules and why we have taken today’s decision.”
Qualcomm is now set to appeal the fine but it is unclear which route it will take. As the iPhone now uses both Intel and Qualcomm chips, Qualcomm is unlikely to get into further trouble. However, tests indicate that the Intel chips performance is slower giving Qualcomm grounds for appeal.