Did Qualcomm Force Apple into a Chip Deal?

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Qualcomm now faces a lawsuit in the US; the company might have forced Apple into an exclusive chip deal

The Federal Trade Commission in the US believes QUALCOMM, Inc. (NASDAQ:QCOM) forced Apple Inc. (NASDAQ:AAPL) into a chip deal to make a WiMAX iPhone,. The chip maker faces a lawsuit in the US with claims that it used its patents unlawfully so that competitors could be forced out of the market. The tech company forced Apple into exclusive usage of its chips for a low license fee, according to the lawsuit filed on Tuesday.

The lawsuit has been filed by the FTC and consists of the said accusations. The major accusation involves the world’s biggest smartphone maker Apple. The FTC says that the chip maker made an agreement in 2007 to refund some of Apple’s patent royalty payments if it agreed to manufacture a WiMAX iPhone.

The FTC’s complaint reads: “Under a 2007 agreement, Qualcomm agreed to rebate to Apple royalties that Qualcomm received from Apple’s contract manufactures in excess of a specified per handset cap. Qualcomm’s payment obligations were conditioned upon, among other things, Apple not selling or licensing a handset implementing the WiMAX standard, a prospective fourth-generation cellular standard championed by Intel and opposed by Qulacomm.”

The chip maker was very well aware that to gain Apple’s business was a massive deal and would make the company stronger, which is why it took advantage of the situation and made Apple exclusive to itself. The company has defended itself against these accusations by saying that the FTC’s complaint is based on flawed legal theory. It even said that it has never withheld chip supply to gain an agreement.

The FTC has held investigation against Qualcomm since 2014 as it believed that it abused fair, reasonable and non-discriminatory patent commitments. This lawsuit might be hard for the chip maker to handle especially as its major client Apple is also involved. The chip maker faced a lawsuit over similar allegations in South Korea for which it was imposed a fine of $853 million.

Until the case reaches a decent conclusion, we cannot say for sure whether Qualcomm actually trapped Apple into doing business with it exclusively. The iPhone maker has not commented on the development yet.

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