Apple just did the unthinkable: The tech giant is suing Qualcomm, which makes the iPhone's baseband processor — the smartphone's modem for connecting to mobile networks — to the tune of $1 billion.... more
Apple just did the unthinkable: The tech giant is suing Qualcomm, which makes the iPhone's baseband processor — the smartphone's modem for connecting to mobile networks — to the tune of $1 billion.
First reported by CNBC, the lawsuit is related to another legal action from earlier this week, when the FTC filed an antitrust lawsuit against the chipmaker, alleging Qualcomm was using its patents to strong-arm competitors into paying exorbitant royalties, even for devices that didn't use Qualcomm-made modems.
Apple was prominently named in the FTC lawsuit, which also alleges Qualcomm pressured Apple in specific ways to guarantee it would use its modem tech exclusively for a five-year period, from 2011 to 2016. The agreement essentially shut out every other manufacturer of baseband processors from the world's most popular smartphone, which the lawsuit says unfairly hampered their development. (With the iPhone 7 and 7 Plus, Apple began producing some iPhones with Intel modems.)
In Apple's statement about its action, the company says Qualcomm has been charging royalties "for technologies they have nothing to do with." Apple casts Qualcomm as a lazy company that no longer innovates because its business is built around "older, legacy technologies" and that it collects many royalties "for no reason" — essentially accusing the chipmaker of being a patent troll.
Apple specifically accuses Qualcomm of withholding "nearly $1 billion" in payments to Apple because Apple had cooperated with "law enforcement agencies" tasked with investigating the chipmaker. Those investigations are what likely led to the FTC lawsuit.
Apple also gave a little detail on just how large Qualcomm's royalties are. According to the company's statement, the royalties Qualcomm collects on the iPhone are five times those of the device's other "cellular patent licensors" combined.
Apple’s lawsuit offers a rare glimpse into the behind-the-scenes dealmaking that goes into building the world’s most popular tech products. While lawsuits over designs and patents happen occasionally, the world’s most valuable company going after one of its own partners, especially one as important to the iPhone as Qualcomm, was something few could have predicted.
The lawsuit will certainly have reverberations in the wireless industry for years to come, and could lead to big changes in the cellular modem market as 5G technology — the successor to 4G LTE — takes hold. In 2016, Qualcomm held a whopping 65% of the market for mobile baseband modems (and 50% of the revenue), figures that will likely tumble as these lawsuits proceed and competitors pounce.
In addition, considering Apple has already begun to use competing modems in the iPhone 7, the incendiary tone of Apple’s statement implies Apple will show Qualcomm the door for the iPhone 8, expected to be unveiled in the fall.
Representatives for Qualcomm didn't immediately respond to a request for comment.
Apple's full statement, sent to Mashable, is below, followed by the full legal filing:less