European Commissioner for Competition Margrethe Vestager said Wednesday, that the chip making giant paid billions to Apple to not buy chips from rival companies. The wrongdoing will cost Qualcomm $1.23 billion (€ 997 million)
Vestager said the payments made to Apple were not price reductions as the companies had said. They were part of an exclusivity deal between the two companies, as Apple vowed to use only chips manufactured by Qualcomm in its future iPads and iPhones.
EU regulators also found that the deal enabled Qualcomm to achieve a market dominance when it comes to LTE baseband chips, which is a violation of the union’s antitrust rules.
The paid exclusive deal was inked in 2011 and was extended late into Dec. 2016 two years later. EU regulators found that other chipmakers were “denied the possibility to compete effectively for Apple’s significant business, no matter how good their products were.”
Qualcomm Facing More Problems
EU cited internal documents provided by the iPhone maker, which revealed that the company actively sought to use only Qualcomm products after the controversial agreement.
In late 2016, Apple used Intel modems in its iPhone 7 models, and rumors have it that the tech giant may distance itself from Qualcomm modems altogether.
So, Qualcomm’s problems are far more serious than the EU fine. The company was slapped with a $1 billion lawsuit by Apple in January 2017 and the FTC has also sued the chipmaker for more antitrust law violations.
Taiwan’s Fair Trade Commission fined Qualcomm $773 million for similar antitrust issues. In the wake of the scandals, the San Diego, CA-based chipmaker’s net income plunged to $168 million from $1.6 billion in just one year.
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