Q&A: Apple vs. Qualcomm Issue
In the recent times, Apple and Qualcomm the two telecom giants have been engaged in a prolonged legal battle. The matter has arisen owing to the claim made by Apple that Qualcomm has been charging exorbitant royalties on the technology that it supplies to Apple. There is also a claim of charging a huge percentage of revenue on the patents of Qualcomm.
How did the Matter Arise?
The matter arose with respect to a small chip that is produced by Qualcomm. This chip is regarded by many as the main device that transforms ipod into iphone. Qualcomm, an American company, produces a lot many technologies that allows devices to connect to cellular networks for the purpose of calls and data. This cellular modem distinguishes iPhone from other smartphones in the sense that unlike these phones, it does not have to wait for a Wi-Fi network for net connection.
It all began with Qualcomm charging a royalty of 5% on a device. This could result in an amount of $30 as against a normal and cheap Android phone manufactured in China. Although Apple had succeeded in bringing this price down to $10 per phone, it also agreed to a condition that it would not challenge Qualcomm’s patents. But in around August 2016, Qualcomm stopped the usual rebates granted to Apple which automatically raised the royalty rates.
In between the Korean Fair Trade Commission (KFTC) charged $850 million for ‘abuse of market dominance’. After an inquiry began on Qualcomm’s anti-competitive tactics Apple also came up with its suit claiming $1 billion damages from the company and also reduce the royalties. Apple also cut off its royalty payments amounting to $ 2 billion per year. All this resulted in shattering of Qualcomm’s market.
Witnessing this setback, Qualcomm also barged at Apple with its own countersuit. This suit accused Apple of infringing six patents concerning battery life and graphics processing. It also filed an application before the US International Trade Commission to impose a ban on iPhone imports whose verdict would be issued by 2018.
What are the Implications of the Legal Battle on Qualcomm?
While the legal battle appears to be a very serious one, to be continued for years, the parties have left no stone unturned for defaming each other in an economic battle. Qualcomm has filed a separate application in China to impose a ban on the sale and manufacturing of the Apple phone to China. It is a step taken in response to an accusation that Apple has used its technologies both for power management and Force touch. It is regarded by many as an ugly step taken by such a technology giant. It had also filed a complaint requesting Cease and Desist Order for banning new iPhones to come to the country.
The company with reduced royalties, is also expecting cuts on profits.
What are the Implications of the Legal Battle on Apple?
Apple has been constantly accusing Qualcomm for operating an illegal business model. It has also accused for invalid patents. Conversely, the battle is likely to affect Apple to the extent of slowing down the speed of its data. This is because the Qualcomm technology formed the basis for most of iPhone’s data LTE speeds. But the company has been looking for alternatives to the chipmaker’s products and is looking for new partners.
