Thursday, March 30, 2017

Qualcomm allegedly kept Samsung out of the wireless chipset market: unconvincing denial

When routinely checking for Twitter news about Qualcomm's antitrust issues, I found a job ad for an antitrust counsel at Qualcomm. Seriously, if you're an antitrust lawyer looking for a job, this might be one of the most interesting places to be in the months and years ahead. While some secondary issues such as a case brought over oversight duties go away from time to time, various regulators on multiple continents are currently doing everything to provide job security for San Diego-based antitrust attorneys:

Three months after a Korean antitrust ruling against Qualcomm, which was appreciated by industry groups on both sides of the Atlantic, another antitrust front in Qualcomm's multi-front, cross-jurisdictional fight against regulators and device makers has become known: the Korea Fair Trade Commission's (KFTC) concerns are apparently not limited to Qualcomm's licensing terms in general but also Qualcomm's practice (since 1993) of allegedly preventing Samsung from selling its Exynos wireless baseband chips, with CDMA (code division multiple access) technology, to other companies. I read about it on AndroidAuthority, which quotes Qualcomm's denial:

"Qualcomm has never stood in the way of Samsung selling chips to third parties, and nothing in our agreements has ever prevented Samsung from doing so. Any statement to the contrary is false."

At first sight, that denial appears to be complete and clear, but at a closer look it doesn't convince me. Apart from the fact that Qualcomm obviously could never admit to totally anticompetitive behavior (restriction of competition), in this case going back to an agreement signed in 1993 and failed negotiations a few years ago, the denial merely says that Samsung could somehow have sold chips to third parties, but not that Samsung could have sold, for example, CDMA-capable chips to third parties.

As AndroidAuthority notes, Qualcomm sued a Chinese Samsung customer (Meizu), which built some devices incorporating Samsung's Exynos chipset, and I agree with AndroidAuthority that "we have to wonder why the Korean giant only sells its mobile SoCs to one small company in China" (in light of Samsung's large customer base for other types of chipsets).

One of the things I learned from Apple's complaint against Qualcomm was that Qualcomm withheld "rebates" claiming, among other things, that Apple had persuaded Samsung to complain about Qualcomm's conduct to South Korea's antitrustauthority. Now that a competition enforcer has concluded that Qualcomm anticompetitively kept Samsung (for the most part) out of the baseband chipset market, it takes more than an incredible stretch of the imagination to believe that Samsung needed to be persuaded by Apple. By the way, Apple and Samsung can soon celebrate the 6th anniversary of the first Apple v. Samsung patent infringement action (the first California case, which among other types of intellectual property rights also involves design patents and still hasn't been settled or definitively decided). I'm mentioning this because it additionally--though the fact that Samsung was apparently harmed by Qualcomm in two respects (as a device maker and as a supplier of components) is the strongest point in this context--makes it hard to believe that Apple basically talked Samsung into taking action against Qualcomm. Apple and Samsung are rivals in the marketplace, they're adversaries in the courtroom, and while I like both companies' products and admire both companies in different ways, I've also criticized both of them at different times (since Samsung withdrew its standard-essential patent assertions but had--and still has--to fight against patentee overcompensation, I've largely agreed with Samsung in recent years, but before that happened, I was mostly on Apple's side and throughout all those years I usually agreed with Apple to the extent that it was a defendant).

Just this week it became known that Samsung will ship its next flagship Android phone, the S8, in two variants, one incorporating Samsung's own Exynos chipsets and another one with Qualcomm's Snapdragon chip. I read on Twitter that the Exynos version of the S8 is going to be sold in certain markets but not in the U.S., where Qualcomm probably has a lot more leverage based on its CDMA patent portfolio. That is a pity if certain benchmarks, which appear to show a major advantage for the Exynos variant, are true.

The plot is thickening with respect to Qualcomm's two mutually-reinforcing monopolies, and while Apple's antitrust cases against Qualcomm in three jurisdictions are at this stage the best source of information with respect to Qualcomm's practices, Samsung has even been affected in two roles (as a device maker and as a chipset maker), so the longer this takes, the more we'll likely learn about how Qualcomm acquired and held onto its monopoly power (see another AndroidAuthority article: "A lack of alternatives to Qualcomm is hurting the ecosystem").

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