FTC vs. Qualcomm: Did Apple Illegally Influence The FTC?

The FTC vs. Qualcomm litigation, from the start, looked like it was a combination of false claims and abuse of power by Apple and undue influence over the FTC, all focused on getting Apple a lower cost for Qualcomm licenses. This series of events looked to me like the FTC was acting as Apple’s agent. They did an incredible amount of damage to Qualcomm, almost forcing a hostile merger that would have gutted and likely shuttered the company—giving Apple Qualcomm’s patents at pennies on the dollar.

Apple’s troubling history would suggest there is more to the FTC’s actions than just a mistake. Let’s explore whether Apple used its massive power, financial or otherwise, to illicitly control one of the US’s most powerful agencies.

Background

I attended the hearing in superior court on the FTC vs. Qualcomm case, watched the FTC evidence and primary witness fail rather spectacularly, and was shocked that the Judge ruled in favor of the FTC. Before even seeing the case, the appeals court made comments indicating the judge overstepped, and then, when they heard the case, they reversed the ruling handing Qualcomm the win. I’d never before seen an appeals court, before hearing a case, effectively rule on it because the prior judgment was so far out of line, and I had no doubt what the final ruling would be.

Now part of the background on this is that during the FTC case in another action discovery seemed to find that Apple had fabricated evidence forcing a series of unfortunate events for most everyone on Apple’s side of the case. These events were Apple paying Qualcomm what they were owed, Intel being forced out of the smartphone business, and the immediate settlement and termination of that other case in San Diego.

At that time, I thought that the FTC would pull back, realize they were being played, and focus on Apple as the true bad actor. In their final tortured comments, the FTC seemed to indicate they still believed they should have won. Qualcomm was guilty of completely ignoring Apple’s behavior, the appeals court comments, and positions by both the Department of Justice (DOJ) and Department of Defense (DOD) in favor of Qualcomm.

I think this indicates a clear abuse of power by the FTC, and I find that very troubling.

Abuse of Power

Apple has a history of abusing suppliers and failed partnerships. Back when I lived in Silicon Valley, there was a saying that nobody did business with Apple twice, carried mainly by those that the company had burned. They’ve had an impressive series of scandals, mostly having to do with abusing customers. Antennagate, Batterygate, throttling their phones to force premature replacement, and around eight others. Some of them were potentially deadly, like the Apple Maps problem that could navigate you into danger that Cook allegedly demanded be shipped on time anyway.

Steve Jobs’ wife broadly owns the Atlantic, which even called the company out for hypocrisy on their privacy claims. Of course, the most famous was the broad abuse of workers that build Apple products in China. The most recent allegedly surrounds not curating applications like they promised, resulting in one user losing their life savings.

Apple is also under an anti-trust cloud with the App Store under review by the US and European Commission. Epic Games is also accusing the company of abuse of power and even put out an ad reminiscent of that most famous Big Brother ad that appeared at the Super Bowl in the 1980s. Epic just filed another complaint this week. Granted, Apple is hardly alone in tech companies being accused of misbehaving, but they seem to have a long history of it (some argue that supervillains arguably run the company).

Wrapping Up: There Should Never Have Been an FTC Case

Without Apple, there was no FTC case against Qualcomm. Apple’s deep history of allegedly abusing power and misrepresentation should have given the FTC pause. When you have a company with massive financial reserves, you also have a company with the capability to influence politicians and bureaucrats illegally. Apple’s security chief was indicted for bribery.

So, the question I’d like to leave you with is, why isn’t there an investigation into undue influence by Apple of the FTC? Apple’s past behavior coupled with the apparent fact that this case was created with false evidence supplied mainly by Apple would suggest wrongdoing. I wonder if the last shoe still needs to drop. I don’t think Cook’s friends in high places will be much help this time, though that suggests undue influence.

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Rob Enderle

President and Principal Analyst at Enderle Group

As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

Background

Abuse of Power

Wrapping Up: There Should Never Have Been an FTC Case

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