The European Union has levied a fine of $1.23 billion against Qualcomm, alleging the chipmaking used its influence to score lucrative chip deals with Apple between 2011 and 2016.
The EU says Qualcomm gave Apple massive discounts on baseband chips, the components that allow smartphones and tablets to speak to cell towers, so that Apple would not use components from competing firms. The five-year stretch during which Apple used only Qualcomm radios led to the latter’s rise as the dominant supplier in the industry, when it achieved 90% market share.
EU Commissioner Margrethe Vestager claims Qualcomm:
“illegally shut out rivals from the market. In particular it has made a difference because we are talking about the one of the biggest and most important customers in this market,”
Vestager noted that smaller firms looked up to Apple and its business choices.
Evidence suggests Apple considered opting for chips from firms other than Qualcomm and yet it didn’t because it would have been financially detrimental to do so.
Once the deal expired in 2016 and Apple began using baseband chips from other suppliers (in the case of the iPhone, Intel), competition in the space began to turn around.
The EU sees the $1.23 billion fine as a deterrent to convince other firms to avoid similar behavior.
Qualcomm denied the charges and filed an appeal.
