The European Union has hit Qualcomm with a whopping €997 million (US$1.23 billion) antitrust fine, for payments it made to Apple for chip exclusivity.
The component manufacturer reportedly paid Apple “billions” of dollars between 2011 and 2016, for the exclusive use of Qualcomm chips within iPads and iPhones.
The EU states that Qualcomm abused its market dominance, as the deal prevented Apple from purchasing from rivals, thereby hindering competition in the markets for ‘baseband chips’.
EU antitrust officials affirm that Qualcomm’s actions squeezed out other competitors in the industry.
Margrethe Vestager, Europe’s Antitrust Chief asserts states in a news release:
“Qualcomm illegally shut out rivals from the market, thereby cementing its market dominance”
“Qualcomm paid billions of U.S. dollars to a key customer, Apple, so that it would not buy from rivals”
“These payments were not just reductions in price — they were made on the condition that Apple would exclusively use Qualcomm’s baseband chipsets in all its iPhones and iPads”
“It excluded rivals from the market and deprived European consumers of genuine choice and innovation”.
Vestager states she does not know exactly how much Qualcomm has paid Apple, it was in the “billions”.
She states documents received during the inquiry reveal that Apple seriously considered using chips from rivals, such as Intel, however, waited for its deal with Qualcomm to conclude.
The news increases speculation that Apple’s forthcoming iPhones will, therefore, not incorporate Qualcomm components.
Apple’s penalty for existing the agreement early would reportedly include paying back some of the money already received.
Vestager states the inquiry was focused on Qualcomm, and Apple will not face any repercussions.
Don Rosenberg, Qualcomm’s General Counsel has advised the company “strongly disagrees” with the ruling, and intends to appeal:
“We are confident this agreement did not violate E.U. competition rules or adversely affect market competition or European consumers”
“We have a strong case for judicial review, and we will immediately commence that process”.
The news continues the EU antitrust division’s crackdown on technology companies, with many American tech giants claiming they are being unfairly targeted. EU officials have reportedly strongly denied the allegations.