Policy

The EU’s Qualcomm reversal shows antitrust is easier said than done

Qualcomm has had major antitrust rulings against it reversed twice.

The EU’s Qualcomm reversal shows antitrust is easier said than done

Wednesday’s ruling lands as both U.S. and EU regulators are trying to push more-aggressive antitrust enforcement against technology companies.

Photo: Emmanuel Dunand/AFP via Getty Images

A European court’s reversal of a landmark $1 billion antitrust penalty against Qualcomm — the second time the company has successfully appealed a ruling about the same anti-competitive behavior — has cast doubt on enforcers’ ability to make antitrust action stick, even while regulators worldwide are trying to tackle Big Tech with every tool available.

The European Commission ruled in 2018 that Qualcomm had violated EU antitrust law by paying Apple to use Qualcomm components, instead of competing products, in iPhones produced between 2011 and 2016. As part of that ruling, the commission imposed a €997 million fine on Qualcomm.

“Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance,” Margrethe Vestager, head of competition regulation for the European Commission, said at the time. “This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were. Qualcomm's behavior denied consumers and other companies more choice and innovation.”

The EU General Court on Wednesday entirely annulled the commission’s ruling. The commission “committed a number of irregularities when it was putting together the case-file” on Qualcomm, the court said. Regulators also “failed to take account of all the relevant factual circumstances” of the case as it was filed, including that there was no competing product at the time that Apple could have sourced instead.

The FTC similarly filed an antitrust suit against Qualcomm in 2017, alleging the company violated competition law to strong-arm mobile device makers, and Apple in particular, into using its chips. “When Apple sought relief from Qualcomm’s excessive royalty burden, Qualcomm conditioned partial relief on Apple’s exclusive use of Qualcomm baseband processors from 2011 to 2016,” the agency wrote in its initial complaint (PDF). “Qualcomm’s exclusive supply arrangement with Apple denied other baseband processor suppliers the benefits of working with a particularly important cell phone manufacturer and hampered their development into effective competitors.”

A federal judge in 2019 ruled in favor of the FTC, finding that Qualcomm had used its patent to shake down mobile phone makers and block out competitors.

“Qualcomm’s licensing practices have strangled competition in the CDMA and premium LTE modem chip markets for years, and harmed rivals, OEMs, and end consumers in the process,” District Judge Lucy Koh wrote in her largely scathing opinion (PDF).

Over a year later, however, a federal appeals court tossed out that ruling. Although Qualcomm “possessed monopoly power in the CDMA modem chip market,” holding more than a 90% share, the company did not abuse its power, a Ninth Circuit panel said. Although Qualcomm’s behavior may have been disadvantageous to device-makers such as Apple, the appeals court ruled that the FTC failed to demonstrate that the company harmed its competitors in the chips market specifically. While the EU has been able to enact increasingly tight regulations on edge providers — internet services such as Facebook, Netflix, Google and Twitter that people use to get content from the internet — regulators have had a more difficult time with hardware companies.

Uphill battle

Wednesday’s ruling, widely seen as a blow to Vestager’s competition agenda, lands as both U.S. and EU regulators are trying to push more-aggressive antitrust enforcement against technology companies. It also highlights the disparities between cases mounted against edge providers and those trying to take on makers of hardware and devices.

The General Court last year upheld an EU ruling — and its associated €2.4 billion fine — finding that Google had broken competition law by privileging its own content in searches for shopping services. That ruling was one of several the European Commission has issued against Google since 2017 relating to the company’s search, shopping and Android services, and the company has been ordered to pay more than €8 billion in aggregate fines in those cases.

European regulators have also been busy developing ambitious new rules for platforms that will fundamentally reshape the way some software and services have to work. The Digital Markets Act, which EU regulators revealed in March, focuses on “gatekeeper platforms” valued at more than €75 billion. Under the DMA, those companies will have to promote interoperability, allow competition with third-party app stores and payments systems, avoid self-preferencing and introduce more limits on how consumers’ data is used, among other provisions.

European regulators have said they hope the EU action also inspires similar change in the U.S., and it just might. There’s currently a significant amount of momentum behind bipartisan antitrust enforcement bills in Congress, although the time left on Capitol Hill to get anything accomplished is rapidly running out. The FTC, however, is also trying to flex its authority to crack down on harmful mergers and anti-competitive behaviors that reduce competition, suppress wages or harm consumers, especially with regards to privacy.

But as with Qualcomm, the world of enforcement against firms dealing in hardware is another story entirely, moving both more slowly and less surely. In January, the EU General Court once again tossed out a 2009 ruling that had fined Intel about €1 billion for abusing its market position in computer CPUs.

The FTC settled a similar claim with Intel in 2010, but no fines were mandated as part of that agreement. More recently, in November, chipmaker Broadcom also reached a settlement with the FTC over allegations it had unfairly leveraged its dominant market position. That settlement did not carry a fine either.

Entertainment

Niantic’s future hinges on mapping the metaverse

The maker of Pokémon Go is hoping the metaverse will deliver its next big break.

Niantic's new standalone messaging and social app, Campfire, is a way to get players organizing and meeting up in the real world. It launches today for select Pokémon Go players.

Image: Niantic

Pokémon Go sent Niantic to the moon. But now the San Francisco-based augmented reality developer has returned to earth, and it’s been trying to chart its way back to the stars ever since. The company yesterday announced layoffs of about 8% of its workforce (about 85 to 90 people) and canceled four projects, Bloomberg reported, signaling another disappointment for the studio that still generates about $1 billion in revenue per year from Pokémon Go.

Finding its next big hit has been Niantic’s priority for years, and the company has been coming up short. For much of the past year or so, Niantic has turned its attention to the metaverse, with hopes that its location-based mobile games, AR tech and company philosophy around fostering physical connection and outdoor exploration can help it build what it now calls the “real world metaverse.”

Keep Reading Show less
Nick Statt

Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.

Every day, millions of us press the “order” button on our favorite coffee store's mobile application: Our chosen brew will be on the counter when we arrive. It’s a personalized, seamless experience that we have all come to expect. What we don’t know is what’s happening behind the scenes. The mobile application is sourcing data from a database that stores information about each customer and what their favorite coffee drinks are. It is also leveraging event-streaming data in real time to ensure the ingredients for your personal coffee are in supply at your local store.

Applications like this power our daily lives, and if they can’t access massive amounts of data stored in a database as well as stream data “in motion” instantaneously, you — and millions of customers — won’t have these in-the-moment experiences.

Keep Reading Show less
Jennifer Goforth Gregory
Jennifer Goforth Gregory has worked in the B2B technology industry for over 20 years. As a freelance writer she writes for top technology brands, including IBM, HPE, Adobe, AT&T, Verizon, Epson, Oracle, Intel and Square. She specializes in a wide range of technology, such as AI, IoT, cloud, cybersecurity, and CX. Jennifer also wrote a bestselling book The Freelance Content Marketing Writer to help other writers launch a high earning freelance business.
Climate

Supreme Court takes a sledgehammer to greenhouse gas regulations

The court ruled 6-3 that the EPA cannot use the Clean Air Act to regulate power plant greenhouse gas emissions. That leaves a patchwork of policies from states, utilities and, increasingly, tech companies to pick up the slack.

The Supreme Court struck a major blow to the federal government's ability to regulate greenhouse gases.

Eric Lee/Bloomberg via Getty Images

Striking down the right to abortion may be the Supreme Court's highest-profile decision this term. But on Thursday, the court handed down an equally massive verdict on the federal government's ability to regulate greenhouse gas emissions. In the case of West Virginia v. EPA, the court decided that the agency has no ability to regulate greenhouse gas pollution under the Clean Air Act. Weakening the federal government's powers leaves a patchwork of states, utilities and, increasingly, tech companies to pick up the slack in reducing carbon pollution.

Keep Reading Show less
Brian Kahn

Brian ( @blkahn) is Protocol's climate editor. Previously, he was the managing editor and founding senior writer at Earther, Gizmodo's climate site, where he covered everything from the weather to Big Oil's influence on politics. He also reported for Climate Central and the Wall Street Journal. In the even more distant past, he led sleigh rides to visit a herd of 7,000 elk and boat tours on the deepest lake in the U.S.

Fintech

Can crypto regulate itself? The Lummis-Gillibrand bill hopes so.

Creating the equivalent of the stock markets’ FINRA for crypto is the ideal, but experts doubt that it will be easy.

The idea of creating a government-sanctioned private regulatory association has been drawing more attention in the debate over how to rein in a fast-growing industry whose technological quirks have baffled policymakers.

Illustration: Christopher T. Fong/Protocol

Regulating crypto is complicated. That’s why Sens. Cynthia Lummis and Kirsten Gillibrand want to explore the creation of a private sector group to help federal regulators do their job.

The bipartisan bill introduced by Lummis and Gillibrand would require the CFTC and the SEC to work with the crypto industry to look into setting up a self-regulatory organization to “facilitate innovative, efficient and orderly markets for digital assets.”

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

Enterprise

Alperovitch: Cybersecurity defenders can’t be on high alert every day

With the continued threat of Russian cyber escalation, cybersecurity and geopolitics expert Dmitri Alperovitch says it’s not ideal for the U.S. to oscillate between moments of high alert and lesser states of cyber readiness.

Dmitri Alperovitch (the co-founder and former CTO of CrowdStrike) speaks at RSA Conference 2022.

Photo: RSA Conference

When it comes to cybersecurity vigilance, Dmitri Alperovitch wants to see more focus on resiliency of IT systems — and less on doing "surges" around particular dates or events.

For instance, whatever Russia is doing at the moment.

Keep Reading Show less
Kyle Alspach

Kyle Alspach ( @KyleAlspach) is a senior reporter at Protocol, focused on cybersecurity. He has covered the tech industry since 2010 for outlets including VentureBeat, CRN and the Boston Globe. He lives in Portland, Oregon, and can be reached at kalspach@protocol.com.

Latest Stories
Bulletins