Word comes out of Europe this morning that the European Union’s executive body, the European Commission, will be opening up an anti-trust investigation into Qualcomm.

The Commission has investigated Qualcomm once before on potential FRAND patent violations, ultimately opting to close the investigation with no further action taken. This time the commission is investigating Qualcomm on two separate issues.

The first issue being investigated is over whether Qualcomm offered financial incentives to customers who used Qualcomm chips exclusively or near-exclusively, which would serve to lock out the competition in an anti-competitive manner. The second issue is whether Qualcomm engaged in outright predatory pricing, selling their chips below cost in order to dive out competition.

These investigations come after an extended period of success for Qualcomm, who for most the 28nm generation has been the leading SoC supplier for Android devices thanks to a combination of early success with LTE basebands and strong overall performance. The European Commission in turn believes that there may have also been anti-competitive aspects to this success, with Qualcomm engaging in practices to shut-out the competition via unfair pricing.

Pricing-related complaints are some of the hardest to prove in anti-competitive investigations, as a regulator needs to prove that any kind of low pricing comes from natural competition and not from prohibited attempts to rig the market. So the fact that the European Commission has publicly announced an investigation on these matters could very well mean the Commission has their work cut out for them, or that they believe they have strong enough evidence to bring their investigation to the public stage.

Qualcomm for their part is denying that they have engaged in any anti-competitive practices, stating that the Commission’s concerns are “without merit.” That said, this comes just 5 months after Qualcomm was found guilty by Chinese regulators of engaging in anti-competitive patent bundling in China, a finding that cost Qualcomm $975 million in fines. Any EU fine, by comparison, could be up to 10% of Qualcomm’s global revenue, along with any structural/behavioral changes demanded by regulators.

Source: Reuters

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  • Mondozai - Thursday, July 16, 2015 - link

    The Chinese probably paved the way for this. I'm sure Qualcomm's lawyers will argue that this is all protectionism, before you look at the data. Some of the stuff they are charging for is basically predatory lending practices, especially at legacy patents that is now important to improve connectivity and the internet all over the world.

    That's why Qualcomm paid almost 1 billion to Chinese regulators after it overcharged Chinese companies by almost an order of a magnitude compared to American ones. Qualcomm controls a lot of legacy patents important for 3G and 4G tech which they often force companies to buy a whole bundle to get. So let's say you only really need the connectivity part, Qualcomm will force you to get a bunch of stuff you don't need and often that in of itself far exceeds the cost for just getting access to the 3G/4G patents.

    Just like ICANN shouldn't be the preserve of American jurisdiction - the internet is global after all - so shouldn't vital internet patents be locked up into a company which is trying to hose you with a bunch of stuff you don't need. After all, in the 80s, there was no competitor to SV in the world. 30 years from now, that picture will be radically different with the emergence of China, India and possibly even Europe if it ever stops being so fragmented that it's easier for Spotify to expand to North America than it is to Spain. The patent portfolio should reflect that reality.

    In many ways this is similar to the fights that the Big Pharma corps waged against Indian generic drugmakers.
  • eanazag - Thursday, July 16, 2015 - link

    The way I read this is that you're against patents. Without patents no one is going to invest in the things you mentioned. I am not saying that Qualcomm is not abusing their position, but without patents I wouldn't invest my money, time, and effort in information when someone else is just going to use to undercut my product. I'll find another job where people have to have something physical. Without patents stagnation in technology advancements will occur.

    Patents are not forever. I believe they're 17 years in US law.

    The argument can be raised that the EU targets successful US companies to steal from with this type of investigation. Consider how much money the EU has fined American companies in the last 20 years. A billion here and a billion there is not trivial.

    Now China - every company that has a Chinese enterprise in the country the government owns 51% of it. Think about that. Imagine the US forced any company that plans to have an office in the US to give it 51% of that enterprise. Foreigners cannot own Chinese property. The Chinese as a nation/culture predominantly do not respect intellectual property evidenced by the widespread pirating. I predict this would change once China has a dominant position in intellectual property world wide.
  • Strunf - Friday, July 17, 2015 - link

    Without Patents companies would still invest in research, do you know Coca Cola never filled a patent for it's beverage? and yet no one as managed to copy them, even better the fact they didn't fill a patent it means they never released their formula which in turn means they don't have to worry about a patent being expired and hence being public domain, I can't imagine the shock it would be for Coca Cola if they had filled a patent and today after the patent expired everyone would simply copy it. Companies would simply adapt that's all, instead of filling thousands patents hoping one would score or to be protected from others they would focus on actual products, also even without patents it would take a few years or more to have a copy and some things you can't copy without access to the original plan.
    Besides I'm pretty sure that 90% of the patents are filled not to stop others from copy it (otherwise they would just keep it secret) but to actually score gold by attacking others or to protect themselves against others. Essentially patents create a war that only costs money to everyone except to the lawyers, proving this is the fact many companies only exist cause they buy patents and live on harassing companies... they do 0 research besides the one around how much profitable a patent can be.

    The EU has a GDP of TRILLIONS a billion is little. And they don't target US companies, EU companies are also targeted you just don't hear about it cause it's irrelevant to you.
  • icrf - Friday, July 17, 2015 - link

    The formula for coke isn't relevant. Trade secrets are used everywhere, especially where it can be used publicly without revealing it.

    There is no way to do this in the communications industry where interoperability is absolutely key. Groups do research and agree on standards that have to be documented. Just because everyone uses them doesn't mean there wasn't a large expense invested in creating them. The R&D is done to the best of their ability to convince standards groups that their way is the best and should be adopted for everyone to use. The reason for this is the patent royalty payouts. You can't just say remove patents and they'll still invest and we'll all still have all the technology we have now.

    I'm not saying ivestment will stop without patents. It will definitely slow, likely severely, and be a completely different landscape. Some markets thrive without strong protections. Fashion works this way. Designers come up with something today that shortly are copied and sold for cheap. They then have to come up with something else, which again gets copied in short order. The reason it works is the short life cycle on fashion. What is considered "in" changes certainly every year, sometimes even faster. Could you imagine if communication standards changed that rapidly? No one would ever invest in infrastructure that would be two or three cycles out of date by the time the multi billion dollar project was completed.
  • Anato - Thursday, July 23, 2015 - link

    "The way I read this is that you're against patents. Without patents no one is going to invest in the things you mentioned. I am not saying that Qualcomm is not abusing their position, but without patents I wouldn't invest my money, time, and effort in information when someone else is just going to use to undercut my product. I'll find another job where people have to have something physical. Without patents stagnation in technology advancements will occur."

    No one is protecting your innovations even now! Patents are for publication of innovation. Society pays around 20 year exclusion for publication of invention. Big problem today there is less and less innovations we should pay 20 years exclusion as technology progresses faster. But opposite is true and we give exclusions to ridiculous things and this is actually hampering progress and makes monopolies.

    Think about Soviet Union, there was no patents like there was no patents before 1800s still development happened.
  • Krysto - Thursday, July 16, 2015 - link

    Qualcomm is likely guilty at least for the first one, and probably the second, too.

    However, how can they focus so much on Qualcomm, and not even give Intel a second look. Intel is selling Snapdragon 810 equivalent chips for the price of the mid-range Snapdragon 615, even though its high-end Atom equivalents should normally cost 50-100% more than Snapdragon 810. Yet nobody bats an eye.

    I wonder if this is why Intel has recently said it will "stop" subsidizing its mobile chips, even though it conveniently merged the Mobile and PC groups recently to make it impossible to know if they are using PC profits to sell mobile chips below cost, and we're supposed to just "trust them" that they aren't subsidizing the mobile chips anymore.
  • jimbo2779 - Thursday, July 16, 2015 - link

    I would imagine it is because in this instance, unlike similar situations in the past, Intel are nowhere near to being the dominant force in mobile chips that Qualcomm is.
  • Kevin G - Thursday, July 16, 2015 - link

    One difference is that Intel own their own fabs. The raw cost per chip isn't that high but the expense comes at the billions in tools in the fab to actually manufacture the chip. For Intel, this gains them market share in mobile and makes use of some excess fab capacity.
  • squngy - Thursday, July 16, 2015 - link

    Intel does not have a monopoly in the mobile space, so anti trust laws do not apply to them.

    Also, Intel tends to get chips for a lot cheaper than most anyway, because they not only own their own fabs, but have the most advanced fabs in the world.
  • kspirit - Thursday, July 16, 2015 - link

    China and European Union seems to be up everyone's ass about antitrust matters, no other country is this vehement about these issues. Qualcomm is likely not innocent, but neither is Intel. The difference being Qualcomm actually succeeded. Everyone is using their chips, even though the S810 is a disaster.

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