Apple, Alleging Extortion, Sues Qualcomm for $1B | News & Opinion

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Qualcomm on Friday faced the second lawsuit in less than a week alleging it engaged in unfair business practices, this time from Apple, which filed a complaint seeking $1 billion in damages, the Wall Street Journal reported.


Apple’s suit, filed in federal district court in the Southern District of California, alleges that Qualcomm withheld contractually-obligated payments in retaliation for Apple’s cooperation with a Korean investigation into its business practices. That investigation ended with the Korean antitrust agency levying a record $854 million fine against Qualcomm last month.


Qualcomm makes the processors found in some models of the iPhone and many other smartphones and mobile devices, from flagship handsets like the Samsung Galaxy S7 to lower-end Android models.


The agreement with Apple, which used Qualcomm chips exclusively in its iPhones from 2011 to 2016, required Apple to pay a percentage of iPhone sales revenue to Qualcomm, according to the Journal. Qualcomm was supposed to return a portion of those payments as rebates, but it stopped doing so after Apple cooperated with investigators from the Korea Fair Trade Commission (KFTC).


The suit says that Qualcomm “attempted to extort Apple into changing its responses and providing false information to the KFTC in exchange for Qualcomm’s release of those payments,” according to the Journal. In all, Apple claims that $1 billion worth of rebates were withheld.


“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,” Apple said in a statement to the Journal.




Qualcomm Executive Vice President and General Counsel Don Rosenberg said that Apple was encouraging “regulatory attacks” on Qualcomm’s business practice.


“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,” Rosenberg said in a statement.


Apple’s complaint comes two days after the US Federal Trade Commission sued Qualcomm for using anticompetitive tactics to impose unfair conditions on its customers and weaken its competitors. Qualcomm has objected to both the Korean and US lawsuits, and said it plans to appeal them.

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