It's not a fun time to be a Qualcomm lawyer as the company is in trouble in China, Europe and the U.S. In China, the company is under an 11-month antitrust investigation, while the U.S. Federal Trade Commission has a preliminary investigation into a potential breach of licensing terms and the European Commission, which loves to squeeze billions out of successful American companies are investigating rebates and other financial incentives in the sale of its chips.
Qualcomm issued a warning last week, along with its earnings, that the antitrust investigation and problems collecting royalties in China could hurt its business in that country, and admitted to the U.S. and European investigations for the first time.
The China problem has gone on for a while, but Reuters reports Qualcomm could face a fine of more than $1 billion in China from the National Development and Reform Commission (NDRC) investigation, and the company could be forced to make concessions in how it collects royalties on patents.
As for the U.S. investigation, the company said it was notified on September 17 that the FTC probe had begun a probe into violations of Section 5 of the Federal Trade Commission Act, which prohibits "unfair or deceptive acts or practices in or affecting commerce."
If a violation is found, the FTC has a broad range of remedies at its disposal, including imposing a fine or requiring modifications to Qualcomm's licensing practices.
On October 15, 2014, the EC notified Qualcomm of its investigation concerning primarily the sale and/or marketing of baseband chipsets, including alleged conditions relating to the use of rebates and/or other financial incentives. But since the investigation is in its early stages, Qualcomm has no idea where this might go.
Normally when a company starts throwing its weight around and becoming a bully to OEMs, you hear about it before the government investigations kick in. In the case of Qualcomm, there weren't any rumblings in my direction.
And despite my disdain for the EC (its former chief Neelie Kroes in particular), where there's investigative smoke there is usually fire. So we'll wait and see how this plays out.