Qualcomm share price down 11% after losing antitrust case
The chipmaker's stock plummets after a judge rules against the company in an antitrust lawsuit.
Qualcomm share price is down by double digits after a judge ruled against the chipmaker in an antitrust lawsuit brought by the US Federal Trade Commission (FTC). This comes just weeks after Qualcomm settled a patent dispute with Apple.
Why did the FTC sue Qualcomm?
The FTC sued Qualcomm for having anticompetitive practices against other companies making smartphone chips. The agency also alleged that the corporation threatened other tech companies like Apple with excessive licencing fees because of its dominance in the chip market.
US District Judge, Lucy Koh, concluded that Qualcomm violated antitrust policy. Koh wrote in her decision that she agreed with the FTC's claim that Qualcomm knew its practices were anticompetitive and used to punish rivals.
‘This evidence of Qualcomm's intent confirms the court's conclusion that Qualcomm's practices cause anticompetitive harm because no monopolist monopolizes unconscious of what he is doing,’ wrote Koh.
What will Qualcomm have to do after losing the antitrust lawsuit?
As a result of the ruling, Qualcomm has to implement new licencing agreements with phone companies at more reasonable prices. Qualcomm also has to be monitored for compliance for seven years.
How could the antitrust ruling impact Qualcomm?
Analysts at wealth management firm Raymond James noted that if the ruling against Qualcomm isn’t overturned, the decision could hurt Qualcomm’s future profits.
‘If the ruling were to stand, it would have the potential to upend Qualcomm’s licencing model, forcing them to renegotiate agreements with existing licencees, ostensibly at lower rates, and potentially licence technology as a percentage of the much lower chipset price rather than the handset price,’ wrote the analysts.
What is Qualcomm’s reaction to the ruling?
Qualcomm’s general counsel, Don Rosenberg, noted in a statement that the company disagreed with Koh’s decision and would appeal the ruling.
‘We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,’ said Rosenberg.
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