Qualcomm-FTC lawsuit: Everything you need to know

Posted by CNET

Qualcomm-FTC lawsuit: Everything you need to know

Friday marks the start of a case that could affect the future of our smartphones.

The US Federal Trade Commission has accused Qualcomm of operating a monopoly in wireless chips, forcing customers like Apple to work with it exclusively and charging excessive licensing fees for its technology.

Starting this week, a judge will hear arguments to decide if that’s the case.

Qualcomm is the world’s biggest provider of mobile chips, and it created technology that’s essential for connecting phones to cellular networks. The company derives a significant portion of its revenue from licensing those inventions to hundreds of device makers, with the fee based on the value of the phone, not the components.

Because Qualcomm owns patents related to the 3G, 4G and 5G networking technology — as well as other features like software — all handset makers building a device that connects to cellular networks have to pay it a licensing fee, even if they don’t use Qualcomm’s chips.

But the FTC lawsuit could break that model. It’s the latest in a series of legal battles for Qualcomm that include a fight against its former major customer, Apple, and against regulators in South Korea, China and the European Union. In the US, the FTC in January 2017 accused Qualcomm of maintaining a monopoly that extracted high royalty fees and weakened competition. It says Qualcomm forced Apple and other handset makers to use its chips exclusively in exchange for lower licensing fees, a practice that excludes competitors and harms competition.

Qualcomm has denied the allegations and says the FTC doesn’t have evidence of any anticompetitive behavior against rival chipmakers.

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