In recent years, several government agencies have registered complaints or lawsuits against giant technology companies, but in 2017, this was not common. This is what made the US FTC’s decision to file an antitrust lawsuit against Qualcomm at the time, a historic case that would also shake the mobile phone market in its wake. The FTC initially won a victory in 2019, but lost on appeal last year. Instead of the planned request for review, however, this year’s FTC decided not to take the case further, practically letting Qualcomm get away with the anti-competitive practices it was accused of.
In 2019, District Judge Lucy Koh of Apple vs. Fame Samsung decided in favor of the FTC and found Qualcomm guilty of abusing its dominant position to extract excessive licensing fees from its customers, a long list that includes companies like Apple, Samsung and almost all smartphone manufacturers. Although best known for making and selling mobile processors, Qualcomm’s biggest profits really come from its IP licenses and its “no-license, no-chip” business style was one of the most contested expressions of its anti-competitive behavior.
Last year, however, a three-judge Court of Appeals panel overturned that decision, arguing that, while aggressive, the competition was not really illegal behavior. Otherwise, Qualcomm would have been forced to change its profitable business model had it not won the call. The chipmaker argued that it was this licensing strategy that allowed it to drive innovation in this mobile market.
Under Acting President Rebecca Kelly Slaughter, the FTC has decided that it will no longer seek a review of the appeal by the Supreme Court. The agency makes it clear that it agreed with the decision of the federal district judge Koh, but also faced “significant headwinds” to dismiss the appeal. In other words, he had to choose his battles and decided to focus on better enforcing antitrust laws.
This decision, however, is practically a justification for Qualcomm’s business practices, even if that was not the intention. Obviously, Qualcomm is very happy to end the four-year legal dispute and will likely now have the incentive to further strengthen its licensing strategy, now that it has passed the test of lawsuits.