EU fines Qualcomm for paying Apple to use its microchips
The US firm “illegally shut out rivals from the market” by paying the tech giant not to use chips made by other companies.
The European Union has slapped a near-one billion euro (£875 million) fine on US chipmaker Qualcomm for abusing its market dominance in the lucrative smartphone and tablet components sector.
EU Commissioner Margrethe Vestager said San Diego-based Qualcomm “illegally shut out rivals from the market” for more than five years by paying key customer Apple not to use chips made by Qualcomm’s competitors.
Ms Vestager said Qualcomm had paid “billions of dollars” to Apple.
She said the payments were made in part by reducing prices for Apple to buy Qualcomm components on the condition that Apple iPhones and iPads would exclusively use Qualcomm chips.
The EU said that this happened between 2011 and 2016, focusing on baseband chipsets which allow smartphones and tablets to connect to mobile networks.
Over most of that period, Qualcomm accounted for more than 90% of the market.
Apple was a dominant player with its iPad and iPhones and the two companies twice entered an agreement to cut out rivals.
.@Qualcomm to pay fine of €997 mio. They illegally shut out rivals from market of LTE baseband chipsets for over 5 years. Misuse of dominant position. Don’t.— Margrethe Vestager (@vestager) January 24, 2018
Ms Vestager said there were no regulatory repercussions for Apple despite accepting the system for the best part of six years.
She said she had internal documents showing that Apple considered switching some of its work to Intel, but could not do so financially until the end of the agreement.
Only when the deal was about to expire did Apple start to diversify. “Competition in this market is now on the up,” Ms Vestager said.
In a warning to others, she said: “Don’t go there”, adding that the massive fine 997 million euro penalty is meant to be a deterrent.