While Washington Talks Antitrust, Europe Takes Action
It’s been a strange, conflicted week for antitrust in Washington, DC. In one set of congressional hearings, tech leaders, facing possible far-reaching regulation, fended off accusations that they are strangling competition. In another, Facebook’s David Marcus explained why the social media giant should be given a green light to expand ambitiously into global finance with its Libra cryptocurrency. You’d be forgiven, watching the dueling livestreams, for thinking you’d stumbled across portals into a pair of parallel universes.
Gregory Barber covers cryptocurrency, blockchain, and artificial intelligence for WIRED.
For now, it's Europe leading the antitrust charge. European Union regulators have recently revealed a flurry of actions against US tech companies, starting last month with an investigation into chipmaker Broadcom over whether it used exclusivity agreements to fend off competitors. Then, this week, Margrethe Vestager, the top EU antitrust official, said Amazon was next on deck, over concerns that its sales strategy for branded products penalized independent merchants who sell through its site. Now Vestager has followed up with a major fine against a familiar target of European regulators: Qualcomm.
On Thursday, the European Commission said it would fine the US chipmaker €242 million ($273 million) for violating EU antitrust laws. It has to do with a relatively old battle. The EU says that, between 2009 and 2011, Qualcomm sold its 3G chipsets below cost in an attempt to force a British competitor, Icera, out of the market. According to the ruling, it proceeded strategically, luring the Chinese smartphone makers Huawei and ZTE with too-good-to-be-true prices as they sought to grow their business in Europe.
Qualcomm’s market dominance has made it a prime target for regulators. The commission, which opened its investigation in 2015, noted that during the period in question the company held 60 percent of the global market for mobile baseband chipsets. That was more than three times the share of its nearest competitor. While having a big slice of the pie isn’t in itself illegal under EU rules, abusing that position to engage in “predatory pricing” is, Vestager said.
Qualcomm said Thursday that it intends to appeal the finding in the EU’s General Court, arguing that the alleged pricing scheme did not merit antitrust action. Customers “favored Qualcomm chips not because of price but because rival chipsets were technologically inferior,” the company’s general counsel, Don Rosenberg, said in a statement.
The fine is just the latest swipe at US tech firms for Vestager, who has become well-known for her efforts to rein in the power of big tech. In her five-year tenure as European Competition Commissioner, she has led judgments against big US tech firms—notably Google, which has been fined a total of €8 billion in three cases. Last year, it fined Qualcomm nearly €1 billion over an antitrust dispute with rival chipmaker Intel. After announcing the Broadcom investigation last month, Vestager was attacked by President Trump, who told Fox that she “hates the United States perhaps worse than any person I’ve ever met.”
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Vestager has argued that now is an important time to carefully regulate tech firms. “We form our societies not to help tech companies, but to form societies,” Vestager told WIRED’s Nick Thompson last September. “And this is, I think, for us, this is a very important point. That technology is serving us as citizens, as consumers, and this is why we regulate. Not because we want to hold anyone down, but because we want our societies to work.”
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According to Reuters, Vestager said at a press conference Thursday that she expected to remain in her post for another term, though some have speculated that she could take on a different role in November as a top deputy to the incoming president of the European Commission, Ursula von der Leyen.
For Qualcomm, the ruling follows antitrust fines from China, the EU, South Korea, and the US. In May, US District Judge Lucy Koh agreed with the Federal Trade Commission that the company had used its dominant market position to squeeze out competitors. Qualcomm had angered its customers, including Apple and Samsung, who say the company hiked licensing fees for its chip patents, driving up smartphone prices. Qualcomm has said it intends to appeal that ruling as well. Last month, Qualcomm’s customers lost an alternative supplier for future handsets when Intel abandoned its plans to make 5G chips.