EU Fines Qualcomm $1.2 Billion … But What About Apple? (Premium)

The European Union has fined Qualcomm $1.2 billion for colluding with Apple. So why wasn't Apple fined as well?

"Qualcomm illegally shut out rivals from the market for LTE baseband chipsets for over five years, thereby cementing its market dominance," EU 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."

Put a bit more simply, Qualcomm and Apple entered into an illegal deal in which they actively sought to harm competition. And yet only one party in that deal, Qualcomm, has been charged and fined. The deal brings to mind Apple's illegal deals with book publishers to harm competition in ebooks by price-fixing.

In that case, Apple initiated the illegal collusion. But the EU says that Qualcomm invented the chips scheme.

"Internal documents show that Apple gave serious consideration to switching part of its baseband chipset requirements to Intel," the European Commission notes. "Qualcomm's exclusivity condition was a material factor why Apple decided against doing so, until the agreement came to an end. Then, in September 2016, when the agreement was about to expire and the cost of switching under its terms was limited, Apple started to source part of its baseband chipset requirements from Intel. But until then, Qualcomm's practices denied consumers and other companies the benefits of effective competition, namely more choice and innovation."

That Intel's chips are vastly inferior to Qualcomm's is not mentioned in the EU documentation. But one of the ironies of this case is that Apple actually had to slow down Qualcomm-based iPhones so that they performed consistently with Intel-based iPhones. No matter: The Qualcomm/Apple partnership was illegal, and existed for several years.

Again, I ask: Why wasn't Apple also charged and fined?

According to The New York Times, Ms. Vestager says that "Apple will not face any repercussions" because its investigation has focused solely on Qualcomm. Seems like the evidence might point to a bit of collusion on Apple's part, too.

The EU has come under fire recently for pursuing a number of antitrust cases against US-based tech giants, most obviously Google, which is under investigation in at least three different cases. But I don't see xenophobia here: These companies are among the world's biggest, period, and they would naturally be under more scrutiny than the smaller, less dominant EU-based countries with which they allegedly compete. Google's abuses, for example, are obvious.

But this Qualcomm case is interesting, given that Apple is the world's most powerful consumer electronics company and is, in fact, the world's biggest company overall. That Apple could somehow be blackmailed by Qualcomm to use its superior chipsets...