Apple leveled some pretty serious allegations against Qualcomm earlier this year, citing anticompetitive licensing practices (among other things). The Cupertino, California-based company likened Qualcomm’s practices to extortion and asked for $1 billion in payments that were allegedly withheld.
“Qualcomm built its business on older, legacy, standards but reinforces its dominance through exclusionary tactics and excessive royalties,” said Apple back in late January. “We are extremely disappointed in the way Qualcomm is conducting its business with us and unfortunately after years of disagreement over what constitutes a fair and reasonable royalty we have no choice left but to turn to the courts.”
At the time, Qualcomm General Counsel Don Rosenberg fought back with a rather toothless statement, writing, "Apple has intentionally mischaracterized our agreements and negotiations, as well as the enormity and value of the technology we have invented, contributed and shared with all mobile device makers through our licensing program.”
Now that Qualcomm has had more than two months to stew over actions by Apple and the Federal Trade Commission (FTC), it is firing back with all its might in a countersuit. Qualcomm accuses Apple of a number of undermining its business operations across the globe and most emphatically takes issue with Apple’s handling of comparisons between Qualcomm modems and competing Intel modems used in the iPhone 7 and iPhone 7 Plus.
The issue stems from the fact that Apple intentionally crippled Qualcomm’s Snapdragon X12 LTE modem in certain versions of the iPhone 7 family so that they would perform similarly to the Intel XMM 7360 used in AT&T models. "They don’t want one version to get the reputation that it is better," said Jan Dawson of advisory firm Jackdaw Research LLC. "If Apple had a guiding principle it’s that they want to make sure customers were having a consistent performance.”
For its part, Apple at time stated, “In all of our rigorous lab tests based on wireless industry standards, in thousands of hours of real-world field testing, and in extensive carrier partner testing, the data shows there is no discernible difference in the wireless performance of any of the models.”
This confirms that Apple is artificially limiting the superior-performing Qualcomm chips to provide performance that is in line with that of the Intel chips. This infuriated Qualcomm, which felt that its chips were being underutilized and weren’t being shown in the best [performance] light.
Qualcomm also alleges in its countersuit that Apple made threats “in an attempt to prevent it from making any public comparisons about the superior performance of the Qualcomm-powered iPhones.” Although it is not exactly clear how Apple would have been able to retaliate in this instance.
Qualcomm also accuses Apple of other nefarious deeds, including:
- Breached agreements and mischaracterized agreements and negotiations with Qualcomm
- Interfered with Qualcomm’s long-standing agreements with Qualcomm licensees that manufacture iPhones and iPads for Apple
- Encouraged regulatory attacks on Qualcomm’s business in various jurisdictions around the world by misrepresenting facts and making false statements
Rosenberg went to on to deliver a lengthy statement against Apple, and its own business practices that are of course setup to protect the profits of the iPhone:
The value of our inventions has been proven through hundreds of license agreements, negotiated and renegotiated over almost three decades, with virtually every significant handset maker in history, including the companies in Asia that have manufactured Apple iPhones and iPads. Over the last ten years, Apple has played a significant role in bringing the benefits of mobile technology to consumers with its popular products and services. But Apple could not have built the incredible iPhone franchise that has made it the most profitable company in the world, capturing over 90 percent of smartphone profits, without relying upon Qualcomm's fundamental cellular technologies. Now, after a decade of historic growth, Apple refuses to acknowledge the well-established and continuing value of those technologies. It has launched a global attack on Qualcomm and is attempting to use its enormous market power to coerce unfair and unreasonable license terms from Qualcomm. We intend to vigorously defend our business model, and pursue our right to protect and receive fair value for our technological contributions to the industry.
This is truly a fight between two dominate players in the smartphone industry — one which gobbles up the majority of the profits for handsets (Apple) and one that has an overwhelmingly massive lead as an SoC and baseband provider for all smartphone manufacturers (Qualcomm) — not to mention licensed LTE intellectual property. It will be interesting to see how this all plays out in the courts.
In the meantime, you can read Qualcomm’s entire 139-page lawsuit here.