Qualcomm has been fined more than $1 billion by the EU after paying Apple to put its chips in the iPhone

  • The European competition commission has fined Qualcomm more than $US1 billion for paying Apple to use its chips exclusively in the iPhone and iPad.
  • The deal, which was struck in 2011 until the end of 2016, meant Apple would need to repay Qualcomm if it decided to use a rival’s chipsets.
  • The commission found the deal blocked Qualcomm’s competitors from doing business with Apple and stifled innovation.
  • Qualcomm will appeal the decision.

The European Union has slapped a 997 million euro (£873 million, $US1.2 billion) fine on Qualcomm for paying Apple to use its chips exclusively in the iPhone and the iPad.

The EU’s competition watchdog ruled that the chipmaker had taken advantage of and then cemented its dominant position when it agreed to pay Apple to use its chips exclusively from 2011 to 2016.

“Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance,” European Competition Commissioner Margrethe Vestager said.

“Qualcomm paid billions of US dollars to a key customer, Apple, so that it would not buy from rivals. These payments were not just reductions in price – they were made on the condition that Apple would exclusively use Qualcomm’s baseband chipsets in all its iPhones and iPads.”

The agreement meant no challenger could take on Qualcomm, hurting innovation in the chip sector, Vestager said. It also meant Apple would have to repay all of Qualcomm’s money if it decided to give its business to a rival.

The investigation found that Apple had considered switching to Intel, a major competitor, but decided not to in part because of its exclusivity agreement.

Qulacomm says it will appeal the ruling.

“We are confident this agreement did not violate EU competition rules or adversely affect market competition or European consumers,” said Don Rosenberg, the executive vice president and general counsel of Qualcomm. “We have a strong case for judicial review and we will immediately commence that process.”

The fine represents 4% of Qualcomm’s turnover in 2017.

The EU is separately investigating whether Qualcomm undercut rivals in the broadband chipset market by selling its chips below cost. That investigation is ongoing.

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