Qualcomm Takes on the FTC
Qualcomm fails to block FTC’s lawsuit
Qualcomm (QCOM) believes that it could prevail in the case where the FTC (Federal Trade Commission) has sued it on allegations of antitrust violations. Qualcomm had asked the court to throw out the FTC’s claims against it, but Judge Lucy Koh of the Northern District of California rejected the request in a June ruling and instead cleared the way for the case to proceed.
Qualcomm argues that the FTC would have difficulty providing its antitrust violation claims. Since the onset of the lawsuit, Qualcomm has maintained that the claims made against it by the regulator, the FTC, lack merit. Qualcomm has also argued that even if the regulator’s claims were to be proven true, they would still not amount to an offense.
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FTC’s win could rattle Qualcomm
While Qualcomm maintains that it has a strong defense against the FTC’s antitrust allegations against it, the lawsuit is not without risk for the company. Qualcomm could be slapped with heavy fines if the court upholds the regulator’s claims.
Intel threat looming
Qualcomm has also been probed or fined in China (MCHI) and South Korea over antitrust issues. The company is fighting a wave of legal challenges to its licensing business at a moment when rival Intel (INTC) is busy gunning for its share of the market for the mobile chip (QQQ).
As shown in the above chart, the business of selling chips (or QCT) gives Qualcomm the most revenues, but licensing technology (or QTL) earns it the most profits.