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Apple suing iPhone partner Qualcomm for $1 billion

Apple is suing one of its biggest partners, Qualcomm for $1 billion, alleging witholding of promised rebates and inflated patent prices.

The lawsuit comes just days after the Federal Trade Commission (FTC) in the US sued Qualcomm over alleged anticompetitive practices to maintain a monopoly in the semiconductor market for mobile phones.

Qualcomm denied the allegations in a statement, saying the FTC’s “central thesis”, i.e. that the firm withheld processors to gain exclusive licensing agreements, is “wrong”.

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Now, Apple, which uses numerous Qualcomm patents in its iPhone range, has filed suit in the US District Court for the Southern District of California, accusing Qualcomm of withholding $1 billion in promised rebates.

Apple claims the San Diego-based chipmaker withheld the rebates because of the Apple’s involvement in an investigation carried out by South Korea’s anti-trust regulator, the Fair Trade Commission.

The regulator fined Qualcomm 1.03 trillion won ($853 million) in December for allegedly violating competition laws.

Qualcomm has responded to Apple’s allegations in a written statement, in which it says the claims are “baseless”, and that the company has “intentionally mischaracterized our agreements and negotiations, as well as the enormity and value of the technology we have invented.”

Apple alleges Qualcomm neglected to pay the promised rebates as a response to it’s compliance with South Korea’s Fair Trade Commission’s investigation.

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As Reuters reports, the company states in its lawsuit: “Qualcomm then attempted to extort Apple into changing its responses and providing false information to the KFTC in exchange for Qualcomm’s release of those payments to Apple. Apple refused.”

But Qualcomm accused Apple of attempting to turn regulators against the company in “various jurisdictions around the world,” by “misrepresenting facts and withholding information.”

Apple’s lawsuit also alleges that Qualcomm overcharged the company for use of its chips and patents.

As the firm states in its lawsuit: “Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined,”

Qualcomm is the owner of several essential patents in the CDMA (code division multiple access) and LTE (long-term evolution) mobile standards, many of which were used in the iPhone 7 and iPhone 7 Plus.

The firm charges mobile companies royalties for use of the patents, providing Apple with GSM and CDMA-enabled iPhone 7 modem chips, which were used in the US handsets.

In its response to Apple’s lawsuit, Qualcomm says it “welcome[s] the opportunity to have these meritless claims heard in court.”

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