back to article Europe slaps €997m antitrust fine on Qualcomm

The European Commission today slapped a €997m (£872m) fine on Qualcomm for abusing its dominant market position - finding it paid billions to Apple to exclusively use its chips. The Snapdragon chip designer blocked rivals by making significant payments to a key customer on condition it would not buy cellular modem chipsets …

  1. lglethal Silver badge
    Go

    and Apple's fine is ?

    And where is Apple's antitrust fine? By accepting the payments, surely it is breaking antitrust laws as it is no longer providing a straight basis for competition of other suppliers.

    It takes two to Tango...

    1. Dave 126 Silver badge

      Re: and Apple's fine is ?

      The onus of responsibility lies with Qualcomm, not Apple. If, for example, Apple had signed a similar exclusivity contract with a small supplier of modems that didn't enjoy a dominant market position there would have been no breach of the Anti Trust law.

      1. hellwig Silver badge

        Re: and Apple's fine is ? (Qualcomm Dominance)

        Never understood this. Sure, Qualcomm should not be saying "we'll pay you to not use a competitor", but at the same time, REGARDLESS of market-share, isn't the point of anti-trust to make sure everyone is fairly competing, providing a free-market for the consumer (in this case, Apple)?

        If Joe's Semiconductor said "We'll sell you modems below cost", isn't that anti-competitive? In the state of Wisconsin, US, it is! Can't imagine some US state is more restrictive than the EU.

    2. Anonymous Coward
      Anonymous Coward

      Re: and Apple's fine is ?

      "It takes two to Tango..."

      But it takes one to dominate a market. Had Qualcomm not been the dominant force in the baseband market (or indeed any other market), then providing a substantial discount or direct payments for exclusivity would have been perfectly legal.

    3. Len Silver badge

      Re: and Apple's fine is ?

      There might still be one coming. Apple has not been free from EC scrutiny after all.

      It might also be that Apple actually worked with the EC on this one. Apple and Qualcomm are hardly good friends so they may have been fairly forthcoming with evidence against Qualcomm.

      There is also this nifty scheme the EU anti-trust department uses (although I doubt it will have been used in this case) where the first party to report a cartel, or any approaches to form one, gets out without charges. It is probably one of the most effective measures to prevent cartels in the first place. If you are planning to create an industry cartel you will never know if the next party you reach out to is the one that is going to bring you down by reporting it to the EC.

      1. Charles 9 Silver badge

        Re: and Apple's fine is ?

        "Apple and Qualcomm are hardly good friends so they may have been fairly forthcoming with evidence against Qualcomm."

        Maybe that's one reason Apple took out its own ARM license and started rolling their own CPUS rather than be held hostage to Snapdragons.

    4. DougS Silver badge

      Re: and Apple's fine is ?

      The Reg left it out of their article of course, but when the EU announced the Qualcomm fine they stated Apple was not at fault.

      If Apple had refused this deal they would have paid a LOT more. Qualcomm licenses its non-FRAND CDMA patents to third parties at the same price as they charge for their chips, so there's no way for a third party to undercut them unless they are willing to sell at a loss. That's why there have never been any third party chips that use US spec CDMA.

      But what about Samsung, you may ask, since they have recently started making Exynos SoCs that include CDMA. They made a different deal with Samsung after they started getting investigating for unfair trade practices in Korea - Samsung was allowed to use Qualcomm CDMA patents (no idea as to pricing) but they had to purchase one Qualcomm SoC for every Exynos SoC they shipped, and were banned from shipping Exynos SoCs into the US.

      So even though it sounds like the latest Exynos has improved its CPU performance quite a bit, well ahead of Qualcomm's Snapdragon 845, Those in the US will have to buy the slow version of the upcoming S9.

    5. gnasher729 Silver badge

      Re: and Apple's fine is ?

      "And where is Apple's antitrust fine?"

      Apple doesn't have a dominant position supplying cellular modem chipsets. They actually don't have any position in that market at all.

  2. Anonymous Coward
    Anonymous Coward

    Wait, what?

    A supplier pays it's customer to use it's products? Why not just offer a discount?

    I find this very strange but I suppose the extra dollar will help the EU after brexit, by my back of a fag packet maths that's nearly four days of funding according to the bus.

    1. Lysenko

      A supplier pays it's customer to use it's products? Why not just offer a discount?

      Probably because it's easier to contain evidence of a (commercial) brown envelope than a discount.

      Lowering prices comes to the attention of numerous lowly functionaries in the customer purchasing department who might leak such information to other customers who may in turn demand equal treatment, whereas brown envelopes can be squirrelled away in the ledgers such that only appropriately corrupt reliable personnel are generally aware of them.

      1. Anonymous Coward
        Anonymous Coward

        "Probably because it's easier to contain evidence of a (commercial) brown envelope than a discount."

        It's likely to be far more prosaic. Discounting hits your product margin and your top line billings. This makes Wall Street analysts (who depend heavily on these two numbers) very, very unhappy. Dressing up the equivalent discount as a one-off payment can be accounted for any number of ways that don't impact your share price.

        Also let's say you form an agreement for 3 years of exclusivity and after 2 your customer decides to end the agreement. It's hard-to-impossible to take back a per-unit discount, while it's very straightforward to claw back a one off payment, or even not pay it at all.

        Accountants make the world go round.

        1. Lysenko

          It's likely to be far more prosaic. Discounting hits your product margin and your top line billings.

          Quite possibly so. I was extrapolating from some of the rebate shenanigans I've seen at work in certain areas of "Enterprise Sales".

      2. Anonymous Coward
        Anonymous Coward

        "Lowering prices comes to the attention of numerous lowly functionaries in the customer purchasing department who might leak such information to other customers who may in turn demand equal treatment"

        Are companies not allow to negotiate lower prices for bulk purchases?

  3. alain williams Silver badge

    Microsoft/Munich next ?

    Their move away from Linux is widely regarded as not for technical reasons but you all know the story ...

    I wonder if the EU will have the balls to impose a fine here.

    1. Korev Silver badge

      Re: Microsoft/Munich next ?

      The person quoted in that article is from the company who provided the Linux service to Munich; he's probably not an unbiased source :)

  4. Anonymous Coward
    Anonymous Coward

    Look Who Wants to Wet Their Beaks

    They might as well. It is not as though regulatory agencies produce anything of value on their own.

    1. pleb

      Re: Look Who Wants to Wet Their Beaks

      A properly functioning market is if no value?

    2. Tomato42 Silver badge

      Re: Look Who Wants to Wet Their Beaks

      @AC: you may come as a surprise to you, but in EU the government is of the people, for the people. And people don't benefit from monopolies or cartels.

  5. Anonymous Coward
    Anonymous Coward

    Poor little intel

    Intel, always the victim of bully boy monopolies. Maybe one day they'll become a large successful company

    1. Anonymous Coward
      Anonymous Coward

      Re: Poor little intel

      Intel?

      1. hellwig Silver badge

        Re: Poor little intel

        Intel is competing (unsuccessfully) with Qualcomm in the modem market. Their product is shit (people don't like using it). Qualcomm produces almost a full range of mobile chips, while no one is using Intel CPUs, thus Intel is having a harder time breaking into the mobile market. So Qualcomm can squeeze a bigger profit from an entire phone, even by reducing the costs of the individual chips (or in this case, just bribing Apple). Intel (and other competitors) can't offer the same discounts, so that's not fair (cue EU pity police).

        Of course, Intel did EXACTLY what Qualcomm is doing, with Dell and AMD (paying Dell not to use AMD). They paid a few billion to AMD and signed an agreement for information exchange to drop the lawsuit. Which I assume is the sarcasm in the original post.

  6. disgustedoftunbridgewells Silver badge

    I wonder if there should be a law against accepting these kinds of deals too - corporate bribery or some such.

  7. pɹɐʍoɔ snoɯʎuouɐ

    WTF?

    I hate apple as much as the next man, I can see the principle of what the EU are doing but surely offering a company a discount for being the exclusive supplier and in the numbers of chips involved should not be against the law?

    If another company comes along and demands equal treatment, then give it to them, so long as they are buying chips in a similar quantity? I am sure if another company approached them demanding discounts, offering to buy 500,000,000 chips a year a nice big discount would be in order...

    This is about the EU fat cats taking a slice of everyone's pie, How does it benefit anyone other than the EU governing body issuing these fines? They bleat on its about fair competition, but its not. is their an EU chip supplier that can supply the chips in the numbers needed and to the same quality?

    The EU is the most corrupt organisation I know of, for example they make it so that the taxation on importing tomatoes from outside of the EU too expensive just to protect the Italian tomato growing industry. There are plenty of products that can be imported from outside the EU that are a superior quality to what's available from within, but they make the rules to keep the competition out of Europe... But they will fine an American company, supplying chips to another American company for a product being made in another continent.... so WTF is it to do with the EU? Is there a EU company that can supply the required chips but are being excluded because of these payments?

    1. DougS Silver badge

      Re: WTF?

      It is illegal when you are abusing a dominant market position. In a competitive market it is fine and the EU wouldn't have come calling.

      1. stanimir

        Re: WTF?

        In the EU (anti-trust laws) it's illegal to attempt and exclude competitor regardless of your own market share... it's just that being big is likely to provide extra scrutiny.

  8. Chronos Silver badge
    Flame

    Great.

    Guess who pays that. Don't you just love backdoor taxation? It's a double-win for them, too, because spreading the OpEx of punitive fines knows no borders...

    1. DougS Silver badge

      Re: Great.

      The goal of such fines is actually to SAVE money for consumers. Had Qualcomm acted above board, licensed their patents fairly etc. there would have been more competition for cellular chips and Apple as well as Android OEMs would have been paying less on average per phone for them. Instead Qualcomm has been extracting monopoly profits due to the need to include CDMA functionality in any phones intended for the US.

      Now I suppose the EU could decide "hey it looks bad if we keep the money, people will think we're doing it for a shakedown" and donate it to a worthy cause, but winning cases like these isn't cheap. It isn't just the cost of trial, but all the research they do that leads up to deciding they have grounds to bring a case. And all the research they do against other companies that leads up to deciding they DON'T have grounds to bring a case.

      If the EU makes money at all on the commission that enforces these laws, I doubt it is anything near as profitable as people think it.

      1. Anonymous Coward
        Anonymous Coward

        Re: Great.

        The only alternative in the last five years when this deal was in place was Intel. It’s hard to say that Intel could not invest and catch up on their product because of this deal. They had plenty of cash coming from their processors to invest and ensure their modem product is competitive. As for CDMA, the Intel modem XMM7560 finally has CDMA/EVDO so it does look like an issue of investment, not licensing as claimed.

        Unlike the Intel antitrust case where they said they wouldn’t supply Intel chips if Dell sold AMD, this is about an elective “cash-back” if Qualcomm was the exclusive supplier, which was at the discretion of Apple. Apple were free to choose another supplier, they just wouldn’t get the cash back.

        If Qualcomm are selling below cost yes there is an issue. But the EU has not established this as far as I can see. if Qualcomm are achieving economies of scale due to their size, and thus able to offer a discount, this shouldn’t be confused with abusing a monopoly position.

        >> The goal .. is to SAVE money for consumers

        Given this is Apple, I have no confidence whatsoever that this agreement stopped Apple products from getting cheaper and saving money consumers. This is APPLE ffs.. you’ve got to be joking..

        And Apple are also certainly making their own modem, and need to enter the market with a sub-par design which Qualcomm is an obstacle to. Apple have done this to every other supplier before internalising- Imagination is the most recent victim. They fuck them up to make Apple in-house versions to look good/competitive.

        While Qualcomm is pushing gigabit LTE, Apple is trying to play it down, with the iPhone X not supporting it. The most expensive phone in the market does not offer the best in class technology of the market.

        There is plenty of evidence Qualcomm lowered the barrier of entry for Android and therefore enabled the cheaper smartphone with their Snapdrahon platform and Android ports. This is IMO another reason why Apple is pissed off with Qualcomm because the Apple features are on Android phones at vastly lower cost and hurts Apple ability to charge a premium and keep milking old features on exclusivity. The iPhone X is a struggle to call innovative.

        This is about greed and between Apple and Qualcomm, Apple is definitely f*#king greedier.

        1. DougS Silver badge

          Re: Great.

          While Qualcomm is pushing gigabit LTE, Apple is trying to play it down, with the iPhone X not supporting it.

          Please tell me just ONE use case for having a gigabit at the disposal of a mobile phone.

          1. Anonymous Coward
            Anonymous Coward

            Re: Great.

            >> Please tell me just ONE use case for having a gigabit at the disposal of a mobile phone.

            I don't care about the peak rate which I think is what you allude to. The average data rate is higher in the same environment vis-a-vis a lower/previous technology. Because the network capacity increases for the same amount of licensed spectrum.

            This I damn well want.

            1. DougS Silver badge

              Re: Great.

              Because the network capacity increases for the same amount of licensed spectrum.

              Sorry, but you're wrong. The Intel & Qualcomm modems in the latest iPhone (as well as Qualcomm's newer X20) all use QAM256 on the downlink and therefore get the exact same data rate from a given amount of spectrum off a single antenna on the tower. The uplink speed is the same with all of these modems at 150 Mbps using QAM64, using the same CA & MIMO with each.

              The more recent LTE categories that the more recent Qualcomm modems support use more spectrum (i.e. carrier aggregation) or more antennas (i.e. more MIMO) to achieve their higher speeds. In a congested cell a single phone isn't going to be able to grab more than one band or more than one antenna, so all these chips will run at exactly the same speed! Sure, in a less congested cell you can go faster, but again what's the use case for going 1 or 1.2 Gbps instead of 600 Mbps?

              1. Anonymous Coward
                Anonymous Coward

                Re: Great.

                Wrong - the modulation alone does not dictate it. Spectrum AND time occupied matters. You refer to MIMO which exploits spatial diversity and does increase effective channel capacity. Otherwise by your logic the Intel modem could just do 1 GBps. 1 additional CA does not equate to 600 Mbps i.e 2x the previous release.

                In addition, it has things like LAA that is cheaper for operators to use to extend capacity.

                >> isn't going to be able to grab more than one band or more than one antenna, so all these chips will run at exactly the same speed!

                This is a spread spectrum technology, so your understanding of grabbing the antenna is true only for pure Time domain multiplexing. Even with TD-CDMA, the data transfer would complete faster for a given payload. That frees it faster for other users.

                https://www.macrumors.com/2017/12/01/qualcomm-iphone-x-still-faster-than-intel/

                These are measured results, not some spec sheet compare. Again not about peak speed.

                Apple is simply not putting the best component in the market for user experience and that is simply a fact.

                "Qualcomm's Snapdragon X16 is a gigabit-class modem that supports 4x4 MIMO, for example, but the functionality is disabled in the iPhone X. The result is that both the Qualcomm and Intel versions of the iPhone X have a peak theoretical download speed of 600 Mbps in most countries."

                They go so far as to do this.

          2. Berny Stapleton

            Re: Great.

            > Please tell me just ONE use case for having a gigabit at the disposal of a mobile phone.

            Downloading updates when tethered?

            Syncing your spotify playlist at the gate before you board because you realised it's not sync'ed and you want to listen in offline mode after you take off?

            File syncronisation as a generalisation with Google Drive, One Drive, Dropbox etc etc

            OS updates now are delivered over the air, and Gigabit LTE chips aren't just going into mobile phones, they're going into M2M devices, laptops etc etc.

      2. Craig 2

        Re: Great.

        "Apple as well as Android OEMs would have been paying less on average per phone for them."

        What the hell has component cost got to do with the price Apple sell their phones for?

  9. Nimby
    WTF?

    Qualcomm is full of something that sounds like "chip".

    This is a weird one to mull over the implications of. Intel has (had?) been trying for years to break into mobile phones and portable computing with their Atom CPUs and theoretically interesting radio chips. But because their baseband part was somewhat less than perfect, Intel had a really hard time of it. No one wants to make an Atom phone when the CPU is great but the radio is crap. And because Intel was keeping lines clearly drawn in their departments, their overwhelming laptop/desktop/server CPU market was of absolutely no help to their phone chip division.

    Yet we now have it that Apple was actually looking into doing this very thing of using Intel for phones? The money from that kind of win would have put Intel's radio chips on the path to great success. Which would have made Atom a lot more interesting to other phone companies.

    This one shady backroom deal from Qualcomm could have been the very pivot point between Atom becoming common on cellphones or not. Which in turn could have very well been the line between "phone" operating systems used on phones and real OSes on phones. We could have had cheap x86 Windows 10 Home phones and tablets on Atom, if only. Kind of makes you wonder what would have happened to Android if Apple, Microsoft, and Linux (probably Ubuntu) all had successful x86 Full OS phones.

    Kind of makes me want to portal into an alternate universe to see what would have happened had Qualcomm not played dirty. Potentially, it could have completely changed the course of the entire cellphone industry. Or, nothing may have changed at all. There's a huge range of What If hanging in this balance that boggles the mind.

    1. Anonymous Coward
      Anonymous Coward

      Re: Qualcomm is full of something that sounds like "chip".

      The Atom is hopelessly bad for energy per instruction. Have you used an Atom device? I have and it didn't and doesn't have a chance in the mobile space - cellular comes after the basic CPU and there is no way Apple would pick an Atom.. even if the modem was free.

      The only redeeming case for Atom is that it runs Windows. For any other OS, ARM is the CPU of choice for battery operated use (Android, Linux, iOS).

      Atom is a turd of a mobile chip. It is bigger, slower and hungrier. It has to compromise too much on performance to meet battery life expectations, and by then a run of the mill ARM from a chinese manufacturer like rockchip wins over. Intel needs to give up on the x86/x64 architecture if it wants to address the battery operated space.

      They need to offer something better in price and performance than what the market already has.

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