iPhone 7 throttling: Qualcomm says Apple gag stopped it revealing speed squeeze

Qualcomm has countersued Apple, arguing huge profits from the iPhone would have been impossible without its technology.

Qualcomm has accused Apple of attempting to bully it into not revealing that Qualcomm LTE chips were deliberately hobbled to match slower Intel chips in some iPhone 7 models.

The claim is part of Qualcomm's countersuit, filed on Monday, in response to Apple suing it in January and seeking $1bn in damages over alleged unpaid royalties and anticompetitive licensing.

Apple accused Qualcomm of withholding licensing payments in retaliation for its cooperation with the Korea Fair Trade Commission, which hit the chipmaker with an $853m antitrust fine in December.

Among Qualcomm's complaints in the countersuit is that Apple failed to engage in good faith negotiations over its 3G and 4G standard essential patents (SEP) on fair, reasonable, and non-discriminatory (FRAND) terms.

Apple also breached and mischaracterized agreements with Qualcomm, encouraged international regulatory attacks on the company, and caused iPhone contract manufacturers to withhold royalties, according to Qualcomm.

The chipmaker claims that Apple also threatened the chipmaker to prevent it revealing it throttled Qualcomm-powered iPhones. A minor controversy erupted last year after tests found the iPhone 7 from Verizon could download data faster than the iPhone 7 from AT&T, but didn't.

The Verizon iPhones used Qualcomm's X12 modem, which has a maximum 600Mbps download speed, while the AT&T iPhones had Intel's 450Mbps modem.

"Apple chose not to utilize certain high-performance features of the Qualcomm chipsets for the iPhone 7," Qualcomm said. Then, when the story broke that Apple falsely claimed there was "no discernible difference", Apple "acted to prevent Qualcomm from revealing to consumers the extent to which iPhones with Qualcomm's chipsets outperformed iPhones with Intel's chipsets", the complaint reads.

Qualcomm notes that Apple takes about 90 percent of the smartphone industry's profits and was able to "achieve its success without contributing much, if anything, to the innovations at the heart of cellular communications".

Apple traditionally hasn't had a direct license for Qualcomm's technologies, but rather relies on licensing agreements between iPhone contract manufacturers and Qualcomm.

So far, the pair have failed to reach an agreement over the value of Qualcomm's SEPs. Qualcomm says the agreements with iPhone contract manufacturers were signed before Apple used its chipsets.

Apple last July rejected Qualcomm's FRAND licensing offer for 3G and 4G SEPs, but then asked for these as well as potential 5G SEPs for a "small fraction" per phone compared with what others smartphone vendors would pay, according to Qualcomm.

"Over the past 10 years, Apple has played a significant role in bringing the benefits of mobile technology to consumers with its popular products and services. But Apple could not have built the incredible iPhone franchise that has made it the most profitable company in the world, capturing over 90 percent of smartphone profits, without relying upon Qualcomm's fundamental cellular technologies," said Don Rosenberg, executive vice president and general counsel of Qualcomm.

"Now, after a decade of historic growth, Apple refuses to acknowledge the well-established and continuing value of those technologies. It has launched a global attack on Qualcomm and is attempting to use its enormous market power to coerce unfair and unreasonable license terms from Qualcomm."

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