EU Fines Qualcomm A Billion Euro Over Exclusive Deals With Customers

[Lucian Armasu]

The European Commission fined Qualcomm a billion euro as it concluded its antitrust investigation against the company. According to the EC, Qualcomm abused its market position to do exclusive deals with its customers that had anti-competitive effects.

EU Fines Qualcomm A Billion Euro Over Exclusive Deals With Customers : Read more

 

[-Fran-]

I wonder how much of the outrageous current smartphone prices are due to Qualcomm's shenanigans.

Cheers!

 

[gangrel]

Not that much.

http://www.businessinsider.com/iphone-x-teardown-parts-cost-ihs-markit-2017-11

Estimates the parts cost breakdown. The modem is less than 3% of the cost. And also figure, in a completely free and competitive market, the price wouldn't be *that* much less. Even if we say half...that's only dropping $10 off the total parts bill.

The *big* cost factor is the screen. Next up, the case. Together, they're almost half.

 

[derekullo]

1.23 billion from the European Union
854 million from South Korea
1 billion from China
1 billion from Apple (Maybe/Probably)

4.08 billion total

http://investor.qualcomm.com/results.cfm

Revenue in 2011 was 14.96 billion
Revenue in 2012 was 19.12 billion
Revenue in 2013 was 24.87 billion
Revenue in 2014 was 26.49 billion
Revenue in 2015 was 25.3 billion
Revenue in 2016 was 23.6 billion
Revenue in 2017 was 22.3 billion

or 156.64 billion in 7 year revenue.

Judging from their total revenue, a $4.08 billion fine pales in comparison to the money made in a 7 year monopoly.

In fact, when you do the calculations they appear to be only getting fined on average 2.6% a year

4.08 billion / 156.64 billion = 0.026


Does the math look correct, the fine seems abnormally low?

 

[mrmez]

$3 billion in fines, and it doesn't effect them
#Ballin!!!

I don't think the parts price includes licensing fees???
A big gripe from Apple was that QC charged fees based on the sale price of the device.
So, for example, regardless of every iPhone X having the same QC modem, they pay more for a modem in a 256Gb phone than one in a 64Gb phone.

Kinda like paying more for a movie rental because you have a bigger TV and can enjoy it more. It's BS.

 

[jasonkaler]

I want to own a company where a 1 billion dollar fine "has no impact on the company’s ongoing operations"

 

[MASOUTH]

"Does the math look correct, the fine seems abnormally low?"

At a glance, the math looks correct. No, the amount doesn't seem abnormally low by the normal standards applied in these cases. Yes, it does seem low by "common" sense.

 

[bigpinkdragon286]

$3 billion in fines, and it doesn't effect them
#Ballin!!!

I don't think the parts price includes licensing fees???
A big gripe from Apple was that QC charged fees based on the sale price of the device.
So, for example, regardless of every iPhone X having the same QC modem, they pay more for a modem in a 256Gb phone than one in a 64Gb phone.

Kinda like paying more for a movie rental because you have a bigger TV and can enjoy it more. It's BS.

I'm not disagreeing with your post, just pointing out the irony of Apple's complaint here. If Apple doesn't think you should be able to charge more for the same product, based on some final sales price, in this case a modem, or based on the usage, why does Apple charge such an added premium for the very same flash memory chips, just because they used a few more of them?

Payment for a good based on a percentage of a final sale is not unheard of in business. An easy example is how movie studios get a percentage of ticket sales. The higher the ticket prices, or the higher the percentages in the contracts, the more money goes to the studios.

If Apple didn't like the terms of the contract, they shouldn't have entered into it. This sounds more like childish bickering because they changed their minds about something and now want a free pass for terms they obligated themselves to as a company. This isn't to say Qualcomm's behavior is good, but it would seem Apple is trying to say they're innocent and should get a pass, because Qualcomm victimized them, and I'm not buying it.

 

[varase]

Not that much.

http://www.businessinsider.com/iphone-x-teardown-parts-...

Estimates the parts cost breakdown. The modem is less than 3% of the cost. And also figure, in a completely free and competitive market, the price wouldn't be *that* much less. Even if we say half...that's only dropping $10 off the total parts bill.

The *big* cost factor is the screen. Next up, the case. Together, they're almost half.

Actually, the cost of a Qualcomm modem is about $18 - but the real cost is that Qualcomm then demands 5% of the total cost of the handset to license its IP (regardless of whose chip you buy).

This means that for the base iPhone X, the total cost is $67.95, but if you get the 256GB model your cost goes up to $75.45 (despite the fact that Qualcomm had nothing to do with that NVMe memory).

This is Qualcomm's idea of FRAND (Fair, Reasonable, and Non-Discriminatory) licensing for being part of the cellular communications standards.

Really, if I were on a standards body I would consider Qualcomm's participation as a poison pill to be avoided at all costs.

 

[varase]

I'm not disagreeing with your post, just pointing out the irony of Apple's complaint here. If Apple doesn't think you should be able to charge more for the same product, based on some final sales price, in this case a modem, or based on the usage, why does Apple charge such an added premium for the very same flash memory chips, just because they used a few more of them?

Payment for a good based on a percentage of a final sale is not unheard of in business. An easy example is how movie studios get a percentage of ticket sales. The higher the ticket prices, or the higher the percentages in the contracts, the more money goes to the studios.

If Apple didn't like the terms of the contract, they shouldn't have entered into it. This sounds more like childish bickering because they changed their minds about something and now want a free pass for terms they obligated themselves to as a company. This isn't to say Qualcomm's behavior is good, but it would seem Apple is trying to say they're innocent and should get a pass, because Qualcomm victimized them, and I'm not buying it.

You don't get it, do you?

The majority of that cost is just for using cellular telephone standards ... and every handset maker is on the hook to Qualcomm for using their IP.

Qualcomm agreed to license their technology on FRAND terms to be part of the standard, but they're extorting every handset maker. Any "discounts" they're offering for using their chips is sort of like the Godfather offering you lower protection fees for putting in his cigarette machines.

As for movie studios getting a percentage of the gate - the product produced by the studio is of the essence of the business. For something like an iPhone, cellular communications probably accounts for less than 10% of it's usage - modern smartphones are more like computers with the ability to use several communications facilities - wifi, bluetooth, and cellular - than they are actual wireless telephones.

Imagine where networking would be if you had to pay $75 for an ethernet NIC (or before it a modem). The Internet would've died on the vine.