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Home / Business / The FTC says you pay too much for smartphones. Here is the reason

The FTC says you pay too much for smartphones. Here is the reason



The Federal Trade Commission thinks you pay too much for smartphones. But there are no manufacturers of mobile phones like Apple and Samsung or mobile operators. Instead, the agency accuses Qualcomm, which owns key wireless technology patents and manufactures chips found in most high-end Android phones and many iPhones.

Qualcomm charges companies such as Apple a fixed percentage of the total price of one phone in exchange for the right to use its technology under the antitrust lawsuit filed by the FTC. Percentages vary, but Qualcomm typically charges 5 percent of the value of a device, up to a maximum of $ 20 per device. This is clear from a legal notice submitted by Qualcomm. Phone manufacturers like Apple and Huawei argue that Qualcomm demands a bigger share of every telemarketing deal than is fair, but pays for it, because Qualcomm threatens to deliver key wireless chips if it does not. The FTC describes this as a "tax" on mobile phones that push up prices and affect competition.

On Friday in court, Apple boss Tony Blevins accused the chip maker of the tactics of strong arms. Blevins said Qualcomm President Cristiano Amon said to him during the 201

3 negotiations, "I'm your only choice and I know Apple can afford to pay for it," CNET reports.

Blevins also said that Apple has considered the use of Intel chips In the iPad Mini 2, however, the idea was dashed when Qualcomm 2013 offered a discount on the exclusive use of its chips. The FTC claims that Apple has not adopted the WiMax 3G standard, which Intel supported. Steven Mollenkopf, CEO of Qualcomm, confirmed on Friday that it was Apple According to CNET reporter Stephen Shankland pursued the company's exclusivity contract. Apple has been using wireless Intel chips since 2016. Last year no Qualcomm chips were used anymore.

Mollenkopf also confirmed that Qualcomm is committed to companies that buy the chips are also licenses for its patents, which is unusual for a chip maker, but argued for legitimate business reasons, according to living FOSS patent blogger Florian Müller the process. Qualcomm argued in its review that it does not include the price of its intellectual property in its chips, so it charges a separate patent fee. The company claims that its policy of requiring patent licensing agreements existed decades before the company had market power and increased its patent fees, as its market share has grown as expected from a monopoly [19659003] The FTC has sued Qualcomm in 2017 for antitrust violations, but the case did not reach trial until this week. It is unclear whether prices for smartphones will fall if the FTC wins or if phone manufacturers simply put savings in their pockets. However, if it loses, Qualcomm may need to rethink its business model, which depends heavily on patent licensing.

The case is just one of many legal conflicts affecting Qualcomm since 2015. Regulatory authorities in China, the European Union and South Korea have punished Qualcomm for antitrust violations. Apple also sued the company because Qualcomm had withheld the discounts owed by Apple in return for its cooperation with the South Korean regulators. Qualcomm countered and Apple extended his suit. The case is due to be brought to trial in April. Qualcomm has recently been affected by a class action lawsuit on behalf of all consumers who bought a phone with Qualcomm chips.

Qualcomm says that there is more competition on the chip market than ever before, a 34 percent lower average smartphone price between 2010 and 2017 as proof that it has not affected the competition. According to Qualcomm, market share declined over the past year as new competitors such as Intel, MediaTek and Samsung gained ground in the wireless chip business.

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That may be The best defense of the company, says David Reichenberg, a cartel lawyer with Cozen O'Konnor, who says Qualcomm should refute the FTC's argument, the telephone prices were too high and the innovation had been damaged.

But US District Judge Lucy Koh, hearing the case, has already ruled that Qualcomm can not provide any more recent evidence than March 2018 when the reconnaissance process ended for the case; This means that some of the data showing a decline in Qualcomm's assets may not get into the trial.

Richard Brunell, general counsel of the American Antitrust Institute, who advocates robust antitrust prosecution, says that although Qualcomm can prove its market for smartphones, it is healthy, it does not prove that the market would be even stronger if more competition had taken place ,

In November, Judge Koh decided that Qualcomm must license its patents to competitors and solve part of the case. The FTC claim alleged that Qualcomm did not license its technology to competitors. Some of Qualcomm's patents are wireless networking standards. Under its agreements with standardization bodies, Qualcomm is obligated to license these patents to licensees under "fair, reasonable and non-discriminatory" conditions.


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