FTC drops Qualcomm antitrust lawsuit after four-year battle

JC Torres - Mar 30, 2021, 12:51am CDT
FTC drops Qualcomm antitrust lawsuit after four-year battle

The past few years have seen various government agencies file complaints or lawsuits against giant tech companies but, back in 2017, that wasn’t a common thing. That’s what made the US FTC’s decision to file an antitrust lawsuit against Qualcomm back then a landmark case that would also rattle the mobile market in its wake. The FTC initially scored a victory in 2019 but lost on appeal last year. Instead of the planned request for review, however, this year’s FTC has decided not to pursue the case further, practically letting Qualcomm get away with the anticompetitive practices it was accused of.

In 2019, District Judge Lucy Koh of Apple v. Samsung fame ruled in favor of the FTC and found Qualcomm guilty of abusing its dominant position to extract excessive licensing fees from its customers, a long list that includes the likes of Apple, Samsung, and almost all smartphone makers. Although best known for making and selling mobile processors, Qualcomm’s biggest profits actually come from its IP licenses and its “no license, no chip” style of business was one of the most contested expressions of its anticompetitive behavior.

Last year, however, a three-judge Appeals Court panel overturned that ruling, arguing that while aggressive, the competition didn’t actually constitute illegal behavior. Qualcomm would have otherwise been forced to change its lucrative business model had it not won that appeal. The chipmaker argued that it was actually that licensing strategy that allowed it to drive innovation in that mobile market.

Under acting chairwoman Rebecca Kelly Slaughter, the FTC has decided it will no longer seek a Supreme Court review of the appeal. The agency makes it clear that it agreed with federal district judge Koh’s ruling but it also faced “significant headwinds” to have the appeal overturned. In other words, it had to choose its battles and it has decided to focus instead on better enforcing antitrust laws.

That decision, however, is pretty much a vindication of Qualcomm’s business practices even if it wasn’t meant to be so. Of course, Qualcomm is very happy to end the four-year legal dispute and will probably now be emboldened to strengthen its licensing strategy even more now that it has stood the test of lawsuits.


Must Read Bits & Bytes