May 22, 2019 - Technology

FTC wins antitrust case against Qualcomm, which plans to appeal

Qualcomm's booth at Mobile World Congress

Photo: Xin Yue/ via Getty Images

A federal judge has ruled that Qualcomm engaged in anticompetitive behavior and ordered the chipmaker to renegotiate its licensing deals with device makers. Qualcomm vowed to appeal the ruling.

The big picture: Qualcomm defends its "no license, no chips" business model — under which it only sells processors to companies that also take a license to its patents. But critics say the policy is unfair and that the company doesn't offer its standards-essential technology on a fair and reasonable basis.

Qualcomm's practices have "strangled competition," Judge Lucy Koh wrote in a 233-page ruling that was posted late Tuesday.

Why it matters: Qualcomm gets a large chunk of its revenue — and an even greater share of its profits — from licensing its broad patent portfolio of wireless technology. Forcing it to renegotiate deals could put a significant dent in that business.

Shares of Qualcomm fell more than 10% in the wake of the decision.

The timing of the ruling is interesting, coming after Apple settled a similar suit with Qualcomm and agreed to a new license and chip supply deal. That deal took place after the FTC case was heard.

What's next: Qualcomm said it will seek a stay of the order from Judge Lucy Koh as well as an expedited appeal to the U.S. Court of Appeals for the 9th Circuit.

“We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,” general counsel Don Rosenberg said in a statement.

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