Decided not to pursuit
The four year legal battle is over. The Federal Trade Commission (FTC) has decided not to appeal the 9th Circuit’s decision, against the claim that Qualcomm’s business model and practice were anti-competitive. To refresh your memory, the verdict that included a vote from three judges was unanimous in Qualcomm’s favor.
The Federal Trade Commission (FTC) had a deadline until March 26 to appeal, and it didn’t. The deadline passed, and it was a clear indication that this four year battle is behind Qualcomm. The last win for Qualcomm on the 9th Circuit’s court, with a unanimous vote from all judges, left the FTC little chance to win the Supreme court’s battle.
FTC Acting Chairwoman Rebecca Kelly Slaughter, who wasn’t part of the Commission when the lawsuit was filed, issued the following statement:
“Given the significant headwinds facing the Commission in this matter, the FTC will not petition the Supreme Court to review the decision of the Court of Appeals for the Ninth Circuit in FTC v. Qualcomm. “
The rest of the quote can be found here.
In the meantime, since 2017, when the battle started, some of the FTC lawsuit effort’s key supporters, including Intel and Apple, also settled their differences with Qualcomm. Intel sold its modem business to Apple, and Apple found its peace with Qualcomm, became a licensee, and continues to use Qualcomm for its 5G and a few generations old 4G devices.
In 2017 The Federal Trade Commission started the process claiming that Qualcomm used unlawful maintenance of a monopoly in baseband processors attacking Qualcomm’s business practice and its licensing business model. Intel, Apple, and a few others were against Qualcomm’s practice of “no license no chip”. The FTC’s whole argument was based on the hypothesis that Qualcomm might abuse its power, with no proof that this happened.
Simultaneously, Qualcomm always argued that its licensing fees were well invested in the immense pool of 140.000 patents as taking a long-term risk, inventing technology, and filing patents is costly. The company invests, innovates, and helps the whole industry and a large number of partners develop innovative and competitive devices. Qualcomm makes the SoC and companion technologies that include Bluetooth, WiFi, Antenna arrays, RF, Camera subsystems, and AI hardware and software and sells and license it to its customers.
Qualcomm enables competition under phone manufacturers. It’s a simple fact that 1000s of different phones and other products are made by many partners who essentially compete for their piece of the market.
Qualcomm is, for example, responsible for the acceleration of 5G deployments almost a whole year ahead of schedule, an action that would not be possible without colossal engineering and patent portfolio investment.
For those less knowledgeable about patents and how that whole world works, a company does not have to give rights to use (license) its patents to anyone and can keep its technology for itself. For the most part, companies like Samsung, Apple, Huawei, and many others do just that.
They invent stuff that helps their agenda and business, while Qualcomm makes most of its technology IP available for the rest of the ecosystem. Qualcomm decided to innovate and offer most of its 140.000 patents to licensees and help customers with R&D and support patent use and application.
In May 2019, Judge Lucy H. Koh of the US District Court for the Northern District of California ruled in favor of the FTC, concluding that Qualcomm violated US antitrust law.
Qualcomm immediately appealed the ruling. On August 11, 2020, that decision was reversed by a three-judge panel of the US Court of Appeals for the Ninth Circuit (the second-highest tier of courts in the United States).
FTC’s only possible legal recourse was to appeal to the highest authority, the Supreme Court of the United States, and it didn’t. That is the end of the antitrust case against Qualcomm.
The whole case was rather absurd as it started under the last breath of the previous Obama administration. Reading between the lines and hypothesizing, some powerful companies, led by Apple and Intel, Samsung and Huawei, used their influence to whisper to (various) government ears that Qualcomm used practices that they didn’t like. That was the essence and the beginning of all FTC legal actions against Qualcomm.
In the meantime, since the 2017 filing, Intel failed to make 5G modems for Apple. Apple settled with Qualcomm to license its IP and purchase 5G modems, resulting in a multi-year partnership, and subsequently acquired the modem business from Intel.
The USA was going after one of its own leading companies, against Qualcomm, a homegrown company and a market leader in wireless technology.
Trump and Biden’s administrations agree on the one front. By identifying Huawei as a significant security threat, both Trump and now Biden’s administrations pursued legal actions that severely limit Huawei’s options for high-end phones and infrastructure business in the US and many European and world countries. From this angle, Huawei is the real enemy here.
The US wants to keep its technology dominance, and companies like Qualcomm know that they need to work hard for the next fight for dominance in 6G. Don’t hold your breath just yet. 6G will become relevant in the latter part of the 2020 decade. Early work on 6G has already started, but for the next five+ years, all you need to care about are advances in 5G. We are at the beginning of a trillion dollar+ economy impact journey that will be affected by 5G.
Don’t forget that China has a 2035 strategy. That translates to at least three US presidential elections from now.
China-based competition led by Huawei is competing in the long run, but so far, the US still has a large advantage over China regarding semiconductors and SoCs. The US technology advantage is unlikely to change in the coming years.
Qualcomm the enabler
Qualcomm essentially sells and exports a lot of technology to its partners and helps the US and worldwide economies. It is clear that Qualcomm’s customers are helped by enabling technologies that none of the smaller partners could come up with on their own.
That makes Qualcomm the enabler, and even big companies such as Facebook or Google rely on Qualcomm to develop technology for their XR devices or phones. Xiaomi, Oppo, Vivo, and almost all other mobile phone manufacturers you ever heard of would not be able to come up with great phones and great cameras, connectivity, and performance without Qualcomm. The competition, including MediaTek, is not coming with competitive SoCs attractive for manufacturers, especially at the high end of the market, but it does enable 5G devices.
Apple and Samsung also make their own SoCs, but they only use them internally and invest in increasing their device sales and impact. On the other hand, Qualcomm invests in making its products attractive for its wide variety of partners and works against a chip-fits-all strategy.
Qualcomm spent decades on wireless communications and became a world leader in 3G, 4G, and 5G communications. Qualcomm has many engineers who work day and night on next-generation technologies and offers most of its patents to its licensees.
In summary, we are glad that the FTC fight is over, as Qualcomm can focus on things that matter, making great technologies and enabling current and future devices.