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Chipmaker Qualcomm fined $1.2 billion for illegally paying off Apple

Chipmaker Qualcomm fined $1.2 billion for illegally paying off Apple
© Alexei Novikov | Dreamstime.com

Apple and Qualcomm have not exactly been the best of friends this past couple of years. They've been trading barbs and lawsuits over patent royalties, unfair business practices and even threats of iPhone importation bans.

And it looks like there's no truce in sight for these two tech giants in the foreseeable feature. In fact, this extended battle has taken another dramatic turn, putting one of them in deeper trouble!

Will these new allegations spell the unfortunate end of this mobile chip maker?

Antitrust charges

Qualcomm has been charged with a fine of 997.4 million euros (around $1.24 billion) by European Union regulators for allegedly paying off Apple to keep using its 4G chips in iPhones and iPads between 2011 and 2016.

The exclusivity deal, which offered cash and rebates, prevented other rival chipmakers, like Intel, from supplying Apple with their own mobile chips.

"Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance," stated EU Competition Commissioner Margrethe Vestager at a press conference in Brussels. "This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were."

Vestager also revealed that Apple was already seriously considering switching from Qualcomm to Intel chips earlier but the company had to wait for the deal to expire in September 2016 since it would have cost "Apple a lot of money." Note: Keep in mind that Apple started using Intel mobile chips in the iPhone 7 and iPhone 7 Plus models so the timeline of events does match up.

Vestager said that the massive fine should serve as a warning to other tech companies who are thinking of using the same strategy. Oddly enough, she also stressed that Apple is clear of any charges and there won't be any consequences for the company for accepting the Qualcomm deal.

Qualcomm's appeal

Qualcomm stated that it strongly disagrees with the decision and will immediately file an appeal with the General Court of the European Union.

“We are confident this agreement did not violate EU competition rules or adversely affect market competition or European consumers,” said Don Rosenberg, executive vice president and general counsel of Qualcomm.

Qualcomm's troubles don't end there

Aside from the Apple lawsuits and the massive EU fine it is facing, Qualcomm is also trying to fend off a $105 billion hostile takeover bid by Broadcom Ltd while dealing with declining profits.

On top of that, the company is facing further fines with another EU antitrust investigation looking into claims that it sold internet modem chips below cost from 2009 to 2011 to undercut competition from rival company Icera.

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Source: Bloomberg
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