Apple buys modem chips from companies like Qualcomm to enable the iPhone to connect to cellular networks.
Qualcomm and Apple have settled a bitter legal battle over billions of dollars in royalties and licensing fees just as it went to trial this week in San Diego. As part of the settlement, all legal action worldwide between the two companies will be dropped, and Apple will buy Qualcomm chips again.
Licensing patents is a critical revenue stream for Qualcomm. The fees from patent licensing were only 23% of Qualcomm's revenue in its 2018 fiscal year, but made up a majority of Qualcomm's operating income. But technology companies and governments often have different ideas about what constitutes fair and reasonable.
As Cook put it:"They have an obligation to offer their patent portfolio on a fair, reasonable, and non-discriminatory basis and they don't do that. They charge exorbitant prices."In 2009, South Korea's antitrust agency, protecting local companies like Samsung and LG, fined Qualcomm $200 million for abusing its market position in radio frequency chips, saying in a statement more recently that a"monopolist enterprise's abuse of its market position cannot be tolerated.
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