Qualcomm Wrapped Up Its Defense Against FTC's Accusations

On Friday, Qualcomm completed its defense against the FTC’s accusation of its monopolistic practices in the mobile chip market.

The chipmaker called Aviv Nevo, economics and marketing professor at the University of Pennsylvania to defend against FTC experts’ claim. Qualcomm’s current head of licensing business, Alex Rogers, was also called to explain again how this business works.

Qualcomm wraps up its defense

Nevo said that the accusation from FTC’s Shapiro of Qualcomm’s excessive royalty rates “is just not born out of actual market data.” He stressed that this theory has no data to base on. According to Nevo, the cell phone industry is strong, and the company’s licensing policies are reasonable.

As stated by Nevo, he tested Shapiro’s theory using the real world data. He compared Qualcomm’s licensing fees during the time of alleged market power and other periods. While FTC claimed the fees were higher during strong times, Nevo did not find that through his test and data.

Nevo added that regarding the top segment, the industry is thriving. While phones are cheaper, their quantities are growing dramatically.

In his testimony, Rogers said that Qualcomm doesn’t recall processors from its customer. Plus, for the past few years, the company has been charging lower royalty rates. In fact, Nevo said that Qualcomm charged all companies the same royalty rates. Licensing terms are determined before processor rates and last for a decade or more, but prices of processors and contracts are set annually. So, Nevo testified, the royalty rate has no influences on the choice of processor.

The battle between Qualcomm and the Federal Trade Commission has been going on in the courtroom, San Jose, California, since January 4. On January 15, the FTC completed its case against the chipmaker. Since then the chip maker has been defending against FTC’s accusations, which was wrapped up on Friday.

Recalling the lawsuit, the Federal Trade Commission accused Qualcomm of monopolistic practices in the wireless chip market, forcing its customers like Apple to exclusively use Qualcomm processors and charging unusually high royalty rates. In defense, Qualcomm said the FTC filed a lawsuit with no legal theory support. The chipmaker also claimed that companies chose to buy its products because they make the best chips. Plus, Qualcomm denied that it stopped selling chips to customers, it said it still provided chips to companies even when the battle was going on.