[i[The appeals panel has upheld Qualcomm’s notion and point-of-view of the practice, stating that there is no antitrust law which prohibits the company from applying licensing arrangements in this way.[/i] ___________________________________________
Also the conflict with China is heating up. Can't shoot your companies in the foot right now. What's shi*ting on everything you ever claimed is one of your values when it gives you the upper hand against "brutish countries".
Like classic by-the-book communism that requires simultaneous global implementation, so too does 'pure' unregulated free-market capitalism require global implementation. Otherwise, there exist foreign markets that are 'unfairly' (by the standard of free-market capitalism, anyway) advantaged that must be regulated against, and this the now-regulated local market is no longer a pure free-market.
Without a single global governance organisation, the best any single country can do is pick and choose the best bits of all the many available 'pure' economic and legislative systems available that work the best locally, rather than whining over the different decisions other nations make.
The point on which I failed miserably is that ***there is no antitrust law which prohibits the company from applying licensing arrangements in this way.***
In effect, current US antitrust law is antiquated in a 'globalized' business environment, the 'not-so free market' picks winners and losers, and the 'monopolized' end result is less than competitive.
Why the hard boundary on "government" intervention? With no government market distortions would still be applied by the largest actors and/or trade confederations. Simpler just to accept that the concept of a truly free market is a theoretical nicety that has no bearing on reality.
No, zero government intervention doesn't make a free market. It's a common misconception. A free market is defined as one where there are minimal barriers to entry, and that buys (consumers or other businesses) have access to all of the information to make choices, and that they are free to choose.
You actually need a lot of (very specific and very smart) government rules to create and maintain a free market.
As a stupid example, with no government intervention, I can kill off my competitors (aka mob rule). Or larger companies buying up any new smaller ones. Or pricing things so that no competitors are viable (Intel saying that if an OEM sells only computers with Intel processors they cost $X but if they also sell other processors then it costs $X + $Y).
And things like truth in advertising laws, and market accessibility laws, etc. Intellectual property laws, etc etc etc.
TL,DR; It takes a lot of laws backed by an active government to create and maintain a free market.
The initial anti-competition ruling was based on a tortured narrative concocted by lawyers of much bigger _customers_ (not competitors) of Qualcomm characterizing royalties as an unfair surcharge in an effort to reduce their input costs for valuable IP which adds hundreds of dollars to the value of a device (just compare iPad and iPad LTE).
The court correctly observed that Qualcomm's general behavior among its actual competitors was hyper-competitive rather than anti-competitive. In no way did they block the entry to rival chip makers with their licensing and their royalties were in fact explicitly designed to be chip neutral.
The FTC, led by the nose by Apple had been barking up the wrong tree this whole time as the style of licensing that Qualcomm (the owners of most of the seminal patents for the LTE air interface) actually allowed for vibrant competition in implementations of cellular solutions. Compare this to Intel which jealously guarded its IP from open licensing and collected fat margins while suppressing competition for years for chips that were arguably much less sophisticated than the SoCs pervasive in smart phones today. Qualcomm by comparison collects much lower total margins, licensing included in selling much more sophisticated SoCs, and its capped percentage royalty schedule is generally a fair discount for many lower end phones which make less intensive use of very robust standards that just work than some unfair take of the value of the most premium tier, highest priced handsets.
"In no way did they block the entry to rival chip makers with their licensing and their royalties were in fact explicitly designed to be chip neutral"
Except the present ruling did not center on this and it's implied this is still true. Just that the breach lies in contract and patent law rather than antitrust law. The law is made in such a way to allow multiple interpretations specifically to give some freedom to judge either way should the need arise.
Unfortunately these days US courts have about the same spine as an ice cream in the sun. They are not allowed to touch big-tech in any way, shape, or form as this would weaken the US's position relative to China. It's the same principle that made the US take protectionist measures with TikTok after shouting for decades that protectionism is baaaad.
So these days more than ever, a US court decision in such a case is about as trustworthy as a Chinese court decision. You can almost see the band playing behind the judges, and the judges dancing to the tune as expected.
"Except the present ruling did not center on this and it's implied this is still true."
The ruling if you read the entirety of it by and large does not imply this is true, finding some merit in only one small claim by Koh who grossly over-stepped in her decision. The conclusion summarizes it nicely:
"Anticompetitive behavior is illegal under federal antitrust law. Hypercompetitive behavior is not. Qualcomm has exercised market dominance in the 3G and 4G cellular modem chip markets for many years, and its business practices have played a powerful and disruptive role in those markets, as well as in the broader cellular services and technology markets. The company has asserted its economic muscle 'with vigor, imagination, devotion, and ingenuity.' Topco Assocs., 405 U.S. at 610. It has also 'acted with sharp elbows—as businesses often do.'
The decision itself cites multiple instances of aggressive and unique business practices which while on the face of it seemingly anticompetitive ended up procompetitive, forcing other players to innovate while benefitting the consumer. Qualcomm's model falls short of many of those examples in even seeming anticompetitive given its open licensing and carve out for other chip makers in particular when compared to the prevailing practices of industry behemoths like Intel.
This ruling has taken the bludgeon out of the hands of the government and left it w/ a scalpel. The initial decision by Koh sacrifices the legitimate benefits of IP rights on the altar of a narrative based theory of fairness (spun by the likes of Apple for god sakes) which simply wasn't supported by the actual developments of the past decade. If anything, competition was vibrant, consumers enjoyed better products as well as prices, and judge Koh was the one who danced to the tune of her handlers, necessitating a slapdown by a higher court.
There are plenty of other businesses who don't like Qualcomm, but it is because they had to compete against Qualcomm, not because Qualcomm extinguished the possibility of competition in anyway. They've had to continually reinvest royalties and innovate to retain their position in cellular standards bodies and implementations, but their patents are the seminal standards and their chips are in a unique spot in terms of PPA.
Raqia, if you don't mind me asking, why do you take articles about Qualcomm so personally? One rolls around every couple months, and you're always so angry about it.
I know some people who work there who were laid off in this saga and also respect the company's immense technical achievements. It had been a real shame for them that Apple could get so far with a few incorrect and deconstructive analogies, thereby threatening a very important R&D work underpinning a lot of important infrastructure. Apple's only goal in doing this was to reduce legitimate input costs to pad their already massive margins built on top of Qualcomm's work. By far, Qualcomm does more difficult and important technical work even though shiny Geekbench scores for the latest AX on run of the mill review sites dominates people's impressions of Apple.
Bytedance as a company would be one of the more spineless ones under Xi's tyranny, they take a shoe-licking attitude towards the Party similar to Tencent. I said a few months ago that if some sort of ban expands beyond Huawei, Tencent should be on the chopping block instead of the likes of Sina and Alibaba, who maintain careful distance with the Party. Bytedance was entirely off my radar at the time though, but in hindsight they're politically similar to Tencent. The motive may be partially protectionist but Tiktok's tittytainment algorithms are currently the world's most effective way of non-discriminate brainwash, Bytedance built their entire fortune pushing tasteless clips between users who for some reason have forgone thinking for themselves, bad enough, you don't want to risk that being manipulated by the influence of Xi.
Selection bias: things are more likely to get appealed when there's a question of law that's not settled. Plenty (ie the vast majority) don't go anywhere because they know the lower court judgement will stand on appeal (esp since appeals generally only cover questions of law, not factual findings).
Here you have Qualcomm doing something that patent holders haven't tried before, and the FTC trying a new legal argument to stop it. It's not surprising that lawyers and judges would disagree on how the law applies in a totally novel situation. Again, selection bias: if it was really clear what the law was then they would have settled before going to court.
Possibly yes, possibly no. It is hard to tell, but if you read the ruling on the original case by Lucy koh, it was pretty clear this will be appealed given how many holes and questions were left in it.
In my limited legal experience, the reason there is often a win on appeal (at least for individuals) is a simple change in legal strategy. Initial court hearings are a beta-test for legal arguments and attorneys get to field their approach differently in appeals court, changing tactics from something that didn't work the first time, to something that does.
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Smell This - Tuesday, August 11, 2020 - link
[i[The appeals panel has upheld Qualcomm’s notion and point-of-view of the practice, stating that there is no antitrust law which prohibits the company from applying licensing arrangements in this way.[/i]___________________________________________
Not-so Free Market ??
khanikun - Tuesday, August 11, 2020 - link
Free market would be zero government intervention. US has never had a free market.close - Wednesday, August 12, 2020 - link
Also the conflict with China is heating up. Can't shoot your companies in the foot right now. What's shi*ting on everything you ever claimed is one of your values when it gives you the upper hand against "brutish countries".edzieba - Wednesday, August 12, 2020 - link
Like classic by-the-book communism that requires simultaneous global implementation, so too does 'pure' unregulated free-market capitalism require global implementation. Otherwise, there exist foreign markets that are 'unfairly' (by the standard of free-market capitalism, anyway) advantaged that must be regulated against, and this the now-regulated local market is no longer a pure free-market.Without a single global governance organisation, the best any single country can do is pick and choose the best bits of all the many available 'pure' economic and legislative systems available that work the best locally, rather than whining over the different decisions other nations make.
Smell This - Wednesday, August 12, 2020 - link
A lot of this /\ /\ /\
The point on which I failed miserably is that ***there is no antitrust law which prohibits the company from applying licensing arrangements in this way.***
In effect, current US antitrust law is antiquated in a 'globalized' business environment, the 'not-so free market' picks winners and losers, and the 'monopolized' end result is less than competitive.
Spunjji - Wednesday, August 12, 2020 - link
100%Spunjji - Wednesday, August 12, 2020 - link
Why the hard boundary on "government" intervention? With no government market distortions would still be applied by the largest actors and/or trade confederations. Simpler just to accept that the concept of a truly free market is a theoretical nicety that has no bearing on reality.SigmundEXactos - Thursday, August 13, 2020 - link
No, zero government intervention doesn't make a free market. It's a common misconception.A free market is defined as one where there are minimal barriers to entry, and that buys (consumers or other businesses) have access to all of the information to make choices, and that they are free to choose.
You actually need a lot of (very specific and very smart) government rules to create and maintain a free market.
As a stupid example, with no government intervention, I can kill off my competitors (aka mob rule). Or larger companies buying up any new smaller ones. Or pricing things so that no competitors are viable (Intel saying that if an OEM sells only computers with Intel processors they cost $X but if they also sell other processors then it costs $X + $Y).
And things like truth in advertising laws, and market accessibility laws, etc. Intellectual property laws, etc etc etc.
TL,DR; It takes a lot of laws backed by an active government to create and maintain a free market.
SigmundEXactos - Thursday, August 13, 2020 - link
buys => buyersI thought we could edit our comments? :/
rpg1966 - Tuesday, August 11, 2020 - link
Why do so many rulings get over-turned on appeal? Are the lower court judges just not up to the job?Raqia - Tuesday, August 11, 2020 - link
The initial anti-competition ruling was based on a tortured narrative concocted by lawyers of much bigger _customers_ (not competitors) of Qualcomm characterizing royalties as an unfair surcharge in an effort to reduce their input costs for valuable IP which adds hundreds of dollars to the value of a device (just compare iPad and iPad LTE).The court correctly observed that Qualcomm's general behavior among its actual competitors was hyper-competitive rather than anti-competitive. In no way did they block the entry to rival chip makers with their licensing and their royalties were in fact explicitly designed to be chip neutral.
The FTC, led by the nose by Apple had been barking up the wrong tree this whole time as the style of licensing that Qualcomm (the owners of most of the seminal patents for the LTE air interface) actually allowed for vibrant competition in implementations of cellular solutions. Compare this to Intel which jealously guarded its IP from open licensing and collected fat margins while suppressing competition for years for chips that were arguably much less sophisticated than the SoCs pervasive in smart phones today. Qualcomm by comparison collects much lower total margins, licensing included in selling much more sophisticated SoCs, and its capped percentage royalty schedule is generally a fair discount for many lower end phones which make less intensive use of very robust standards that just work than some unfair take of the value of the most premium tier, highest priced handsets.
close - Wednesday, August 12, 2020 - link
"In no way did they block the entry to rival chip makers with their licensing and their royalties were in fact explicitly designed to be chip neutral"Except the present ruling did not center on this and it's implied this is still true. Just that the breach lies in contract and patent law rather than antitrust law. The law is made in such a way to allow multiple interpretations specifically to give some freedom to judge either way should the need arise.
Unfortunately these days US courts have about the same spine as an ice cream in the sun. They are not allowed to touch big-tech in any way, shape, or form as this would weaken the US's position relative to China. It's the same principle that made the US take protectionist measures with TikTok after shouting for decades that protectionism is baaaad.
So these days more than ever, a US court decision in such a case is about as trustworthy as a Chinese court decision. You can almost see the band playing behind the judges, and the judges dancing to the tune as expected.
Raqia - Wednesday, August 12, 2020 - link
"Except the present ruling did not center on this and it's implied this is still true."The ruling if you read the entirety of it by and large does not imply this is true, finding some merit in only one small claim by Koh who grossly over-stepped in her decision. The conclusion summarizes it nicely:
"Anticompetitive behavior is illegal under federal
antitrust law. Hypercompetitive behavior is not. Qualcomm
has exercised market dominance in the 3G and 4G cellular
modem chip markets for many years, and its business
practices have played a powerful and disruptive role in those
markets, as well as in the broader cellular services and
technology markets. The company has asserted its economic
muscle 'with vigor, imagination, devotion, and ingenuity.'
Topco Assocs., 405 U.S. at 610. It has also 'acted with sharp
elbows—as businesses often do.'
The decision itself cites multiple instances of aggressive and unique business practices which while on the face of it seemingly anticompetitive ended up procompetitive, forcing other players to innovate while benefitting the consumer. Qualcomm's model falls short of many of those examples in even seeming anticompetitive given its open licensing and carve out for other chip makers in particular when compared to the prevailing practices of industry behemoths like Intel.
This ruling has taken the bludgeon out of the hands of the government and left it w/ a scalpel. The initial decision by Koh sacrifices the legitimate benefits of IP rights on the altar of a narrative based theory of fairness (spun by the likes of Apple for god sakes) which simply wasn't supported by the actual developments of the past decade. If anything, competition was vibrant, consumers enjoyed better products as well as prices, and judge Koh was the one who danced to the tune of her handlers, necessitating a slapdown by a higher court.
There are plenty of other businesses who don't like Qualcomm, but it is because they had to compete against Qualcomm, not because Qualcomm extinguished the possibility of competition in anyway. They've had to continually reinvest royalties and innovate to retain their position in cellular standards bodies and implementations, but their patents are the seminal standards and their chips are in a unique spot in terms of PPA.
Mr Perfect - Thursday, August 13, 2020 - link
Raqia, if you don't mind me asking, why do you take articles about Qualcomm so personally? One rolls around every couple months, and you're always so angry about it.Raqia - Thursday, August 13, 2020 - link
I know some people who work there who were laid off in this saga and also respect the company's immense technical achievements. It had been a real shame for them that Apple could get so far with a few incorrect and deconstructive analogies, thereby threatening a very important R&D work underpinning a lot of important infrastructure. Apple's only goal in doing this was to reduce legitimate input costs to pad their already massive margins built on top of Qualcomm's work. By far, Qualcomm does more difficult and important technical work even though shiny Geekbench scores for the latest AX on run of the mill review sites dominates people's impressions of Apple.s.yu - Thursday, August 13, 2020 - link
Bytedance as a company would be one of the more spineless ones under Xi's tyranny, they take a shoe-licking attitude towards the Party similar to Tencent. I said a few months ago that if some sort of ban expands beyond Huawei, Tencent should be on the chopping block instead of the likes of Sina and Alibaba, who maintain careful distance with the Party. Bytedance was entirely off my radar at the time though, but in hindsight they're politically similar to Tencent. The motive may be partially protectionist but Tiktok's tittytainment algorithms are currently the world's most effective way of non-discriminate brainwash, Bytedance built their entire fortune pushing tasteless clips between users who for some reason have forgone thinking for themselves, bad enough, you don't want to risk that being manipulated by the influence of Xi.Spunjji - Wednesday, August 12, 2020 - link
Your comments here have been really helpful for me in understanding this - particularly WRT to the Intel comparison. Thanks for the solid posts 👍voiceofunreason - Tuesday, August 11, 2020 - link
Selection bias: things are more likely to get appealed when there's a question of law that's not settled. Plenty (ie the vast majority) don't go anywhere because they know the lower court judgement will stand on appeal (esp since appeals generally only cover questions of law, not factual findings).Here you have Qualcomm doing something that patent holders haven't tried before, and the FTC trying a new legal argument to stop it. It's not surprising that lawyers and judges would disagree on how the law applies in a totally novel situation. Again, selection bias: if it was really clear what the law was then they would have settled before going to court.
Spunjji - Wednesday, August 12, 2020 - link
Another useful bit of input. Cheers 👍ksec - Wednesday, August 12, 2020 - link
Possibly yes, possibly no. It is hard to tell, but if you read the ruling on the original case by Lucy koh, it was pretty clear this will be appealed given how many holes and questions were left in it.Samus - Wednesday, August 12, 2020 - link
In my limited legal experience, the reason there is often a win on appeal (at least for individuals) is a simple change in legal strategy. Initial court hearings are a beta-test for legal arguments and attorneys get to field their approach differently in appeals court, changing tactics from something that didn't work the first time, to something that does.vladx - Wednesday, August 12, 2020 - link
No problem, EU and China will just fine them some more.