6 ms·

Should Apple also be fined for accepting the bribe? (Curious about legal standing as well as what people here feel)

hvidgaard 9y ago
In a perfect world, most certainly
Aaargh20318 9y ago
According to some other reports, Apple accepting the bribe does not violate any antitrust rules. (Can't find an english-language source for that unfortunately)
- nothrabannosir 9y ago
  For the record: which reports? Regardless of language…
  - Aaargh20318 9y ago
    This one for example: https://tweakers.net/nieuws/134381/eu-legt-qualcomm-boete-op-van-bijna-een-miljard-euro-voor-misbruik-machtspositie.html https://tweakers.net/nieuws/134381/eu-legt-qualcomm-boete-op... Quote: “Volgens Vestager treft Apple in dit dossier geen blaam; er zou geen bewijs zijn dat Apple de Europese mededingingsregels heeft overtreden.“ Translation: “According to Vestager Apple is not blamed in this case; there seems to be no evidence Apple violated the European antitrust rules”
- briandear 9y ago
  Bribe is such an incorrect word for this. A discount isn’t a bribe, nor is a rebate. If Tim Cook got extra money in his bank account, then that would be a bribe. This situation isn’t.
mtgx 9y ago
I think it's better to only have one party fined over bribes, because then the other party can report the first one (kind of like it's happening with Apple and Qualcomm now).
- uhhhhhhh 9y ago
  And that should be the company accepting the bribes.
  - mtgx 9y ago
    Debatable. I'm more inclined to believe it should be the party paying the fines, because then the punishment would try to deter the first part of the process, rather than the latter (receiving the money). So you'd try to nip the bribing process in the bud. Plus, if you're say a politician, and everyone throws money at you to bribe you, because they have no risk in doing that (only you do), you may eventually take that risk and cave in (especially since you'd be in a position of power, and you'd think nothing bad could happen to you, even if you do get discovered). But if you were to punish companies for giving bribes to politicians, I think that would be a more effective way of stopping the whole thing. Or think if you wanted to bribe a government clerk to do some papers for you faster. You'd know there is a risk for being punished over it, so you may not even try. Even if the clerk would tell you to pay them money to quicken the process, you may think it could be a trap, since he'd be working for the government. But if the punishment wouldn't affect you, then "it wouldn't hurt to ask" if the clerk accepts bribes to quicken processing your papers. The clerk would be taking the risk, and you wouldn't care if she gets caught. And you'd be willing to pay to get those papers faster.
    - uhhhhhhh 9y ago
      Based on existing laws, accepting bribes is unethical and usually illegal. There will always be someone willing to bribe you no matter what the penalties are, and going after those who paid bribes will not actually stop that IMO. Companies act illegally all the time, and when its in their interests to do so they will continue. Making the penalties for accepting bribes be more significant (more than the benefit gained by accepting the bribe) would significantly deter people from taking bribes regardless of how many people or how often. I think we both have good points, so maybe the solution would be offering and accepting bribes should be illegal and penalized, and both parties should be penalized more than the benefits gained by offering/accepting the bribes. In this case, Qualcomm should be fined a much more significant amount of 4.9%, and apple too should be fined more than the price reductions + payouts they received from Qualcomm
denzil_correa 9y ago
It seems not. > In fact, internal documents show that Apple gave serious consideration to switching part of its baseband chipset requirements to Intel. Qualcomm's exclusivity condition was a material factor why Apple decided against doing so, until the agreement came to an end. Then, in September 2016, when the agreement was about to expire and the cost of switching under its terms was limited, Apple started to source part of its baseband chipset requirements from Intel. But until then, Qualcomm's practices denied consumers and other companies the benefits of effective competition, namely more choice and innovation. http://europa.eu/rapid/press-release_IP-18-421_en.htm http://europa.eu/rapid/press-release_IP-18-421_en.htm
- dkcbdodbwi 9y ago
  Would this sort of agreement be legally binding? Even though it it was against EU law, could Apple be sued for breach of contract if they used Intel chips?
  - torstenvl 9y ago
    I think I t would depend on the forum and choice-of-law provisions of the contract itself. If it were entirely under, say, the UK's jurisdiction, common law countries generally permit the nullification of a contract provision that is against public policy (I am an American lawyer, not a U.K. lawyer, and my practice area is not contracts, so take my only-slightly-educated guess with a grain of salt.) Chances are good it says that any disputes are to be governed by the laws of, say, the State of California. Since California doesn't adopt EU law as its own public policy, it would be likely to enforce the contract (unless it violated California law in some way).
    - gsnedders 9y ago
      Note there's no such thing as UK jurisdiction, as there are three separate legal systems in the UK (English, Scottish, and Irish). But yes, all three would likely nullify the contract provision.
    - jaclaz 9y ago
mdasen 9y ago
It's not a bribe. A bribe would be if Qualcomm offered a personal reward to Apple execs for using their chips. This was a price reduction meant to keep a key buyer of chips from choosing competitors. It's a key difference. For example, Amazon Web Services can offer discounts to keep companies from switching to Azure and Google Cloud. That's legal. If Amazon Web Services offered the CEO of Snap a billion dollars (to them personally, not to the company) to use AWS instead of Google Cloud, that's illegal (both for AWS to offer it and for the CEO to accept it). The only reason why it's illegal for Qualcomm to have taken this action is because it falls afoul of competition regulations. For example, AWS may be the largest cloud provider and it may be a key market, but they aren't so large that they can really shut off the market to competitors. Similarly, none of their customers are so large that they're a significant portion of the market for buying servers. Finally, because AWS doesn't control buying servers or data centers (and companies often do invest in that when they hit a certain scale), it's hard to argue that they're shutting out competition. By contrast, Qualcomm specifically created a plan to make sure it wouldn't be profitable for competitors to develop high-end modems. While more Android phones are sold than iPhones, the iPhone is a very significant portion of the high-end phone (and modem) market. If Apple committed to Intel or another manufacturer, that company would have the sales necessary to create high-end modems that would challenge Qualcomm. Absent Apple committing to that, it's unlikely that any company would be willing to spend the money developing competition to Qualcomm. Plus, Qualcomm's discounts mean that a company like Intel would look at the situation and note that if they did develop a competitor, Qualcomm would simply discount their chips for a year or two and drive them out of the business. If you're Intel and you develop a competitor and no one buys your chips for a couple years, you'll exit the business. You're allowed to offer discounts to get companies to choose your products or stay with your products. However, you're not allowed to use discounts to choke off competition. From what I understand of the situation Qualcomm is accused of: 1) Qualcomm has patents on LTE and other wireless technology that they committed to licensing under FRAND (fair, reasonable, and non-discriminatory) terms. 2) If you want Qualcomm chips, you need to agree to a license for those patents on Qualcomm's terms and not challenge the terms as violating FRAND. 3) Because Qualcomm got you to agree to very high licensing rates for their patents, they could then discount their chips a lot to keep competitors from getting a foothold. Let's say you're Apple. You need Qualcomm's modems because they're the only high-end modem supplier in the world. So you agree to their non-fair license rates. Intel looks like they might enter the market and create a second seller of high-end modems. Qualcomm offers a steep discount on chips so that you won't buy Intel's and so Intel doesn't have enough sales to continue in the market. You have to pay Qualcomm's very high non-fair license rates even if you use Intel chips because you still need Qualcomm chips for some of your phones. Qualcomm's discount on their modems came with the caveat that you only use Qualcomm modems. So, Apple could buy some modems from a competitor, but they'd still have to pay Qualcomm's very high license rates and more for the Qualcomm chips they needed -or- they could take the discount on Qualcomm chips. Over the past two generations of iPhone, Apple has been trying very hard to break Qualcomm's monopoly. They're propping up Intel's modem business with the hopes that they can switch 100% off Qualcomm in the future and get rid of what they see as Qualcomm violating their FRAND licensing requirements. But they couldn't do that without a competitor for modems. Because Qualcomm operated "no license, no chips" and Apple couldn't shut down iPhone production for years until a competing high-end modem came around, they had to play ball. At this point, they only really need Qualcomm for Sprint and maybe some other small carriers. In a pinch, Verizon does have non-CDMA, VoLTE-only (voice over LTE) phones. It is illegal to accept bribes, but this isn't a bribe. A bribe would have been to offer a reward to some Apple execs to tip the scale in Qualcomm's favor against Apple's interests. "If your town chooses us for your broadband, you might find a new Porsche in you driveway," is a bribe. "If your town chooses us for your broadband, we'll charge residents 20% less than Comcast," isn't a bribe. "...we'll also upgrade the town's electrical system...we'll sponsor after-school coding classes for students in town...we'll throw a dance party for everyone in town," aren't bribes because the benefit isn't a personal one for the person making the decision. Qualcomm isn't accused of offering a bribe to key execs at Apple. If Qualcomm's actions hadn't been anti-competition, there's nothing wrong with discount payments. Almost all companies offer discounts off list prices if they're dealing with enterprises. The issue is that it's anti-competition and that's why Qualcomm is the only one in hot water. Apple wants the competition and has been doing more to stimulate it than anyone else seems to have been.

In a perfect world, most certainly

Aaargh20318 9y ago

According to some other reports, Apple accepting the bribe does not violate any antitrust rules. (Can't find an english-language source for that unfortunately)

nothrabannosir 9y ago
For the record: which reports? Regardless of language…
- Aaargh20318 9y ago
  This one for example: https://tweakers.net/nieuws/134381/eu-legt-qualcomm-boete-op-van-bijna-een-miljard-euro-voor-misbruik-machtspositie.html https://tweakers.net/nieuws/134381/eu-legt-qualcomm-boete-op... Quote: “Volgens Vestager treft Apple in dit dossier geen blaam; er zou geen bewijs zijn dat Apple de Europese mededingingsregels heeft overtreden.“ Translation: “According to Vestager Apple is not blamed in this case; there seems to be no evidence Apple violated the European antitrust rules”
briandear 9y ago
Bribe is such an incorrect word for this. A discount isn’t a bribe, nor is a rebate. If Tim Cook got extra money in his bank account, then that would be a bribe. This situation isn’t.

mtgx 9y ago

I think it's better to only have one party fined over bribes, because then the other party can report the first one (kind of like it's happening with Apple and Qualcomm now).

uhhhhhhh 9y ago
And that should be the company accepting the bribes.
- mtgx 9y ago
  Debatable. I'm more inclined to believe it should be the party paying the fines, because then the punishment would try to deter the first part of the process, rather than the latter (receiving the money). So you'd try to nip the bribing process in the bud. Plus, if you're say a politician, and everyone throws money at you to bribe you, because they have no risk in doing that (only you do), you may eventually take that risk and cave in (especially since you'd be in a position of power, and you'd think nothing bad could happen to you, even if you do get discovered). But if you were to punish companies for giving bribes to politicians, I think that would be a more effective way of stopping the whole thing. Or think if you wanted to bribe a government clerk to do some papers for you faster. You'd know there is a risk for being punished over it, so you may not even try. Even if the clerk would tell you to pay them money to quicken the process, you may think it could be a trap, since he'd be working for the government. But if the punishment wouldn't affect you, then "it wouldn't hurt to ask" if the clerk accepts bribes to quicken processing your papers. The clerk would be taking the risk, and you wouldn't care if she gets caught. And you'd be willing to pay to get those papers faster.
  - uhhhhhhh 9y ago
    Based on existing laws, accepting bribes is unethical and usually illegal. There will always be someone willing to bribe you no matter what the penalties are, and going after those who paid bribes will not actually stop that IMO. Companies act illegally all the time, and when its in their interests to do so they will continue. Making the penalties for accepting bribes be more significant (more than the benefit gained by accepting the bribe) would significantly deter people from taking bribes regardless of how many people or how often. I think we both have good points, so maybe the solution would be offering and accepting bribes should be illegal and penalized, and both parties should be penalized more than the benefits gained by offering/accepting the bribes. In this case, Qualcomm should be fined a much more significant amount of 4.9%, and apple too should be fined more than the price reductions + payouts they received from Qualcomm

denzil_correa 9y ago

It seems not. > In fact, internal documents show that Apple gave serious consideration to switching part of its baseband chipset requirements to Intel. Qualcomm's exclusivity condition was a material factor why Apple decided against doing so, until the agreement came to an end. Then, in September 2016, when the agreement was about to expire and the cost of switching under its terms was limited, Apple started to source part of its baseband chipset requirements from Intel. But until then, Qualcomm's practices denied consumers and other companies the benefits of effective competition, namely more choice and innovation. http://europa.eu/rapid/press-release_IP-18-421_en.htm http://europa.eu/rapid/press-release_IP-18-421_en.htm

dkcbdodbwi 9y ago
Would this sort of agreement be legally binding? Even though it it was against EU law, could Apple be sued for breach of contract if they used Intel chips?
- torstenvl 9y ago
  I think I t would depend on the forum and choice-of-law provisions of the contract itself. If it were entirely under, say, the UK's jurisdiction, common law countries generally permit the nullification of a contract provision that is against public policy (I am an American lawyer, not a U.K. lawyer, and my practice area is not contracts, so take my only-slightly-educated guess with a grain of salt.) Chances are good it says that any disputes are to be governed by the laws of, say, the State of California. Since California doesn't adopt EU law as its own public policy, it would be likely to enforce the contract (unless it violated California law in some way).
  - gsnedders 9y ago
    Note there's no such thing as UK jurisdiction, as there are three separate legal systems in the UK (English, Scottish, and Irish). But yes, all three would likely nullify the contract provision.
  - jaclaz 9y ago

mdasen 9y ago

It's not a bribe. A bribe would be if Qualcomm offered a personal reward to Apple execs for using their chips. This was a price reduction meant to keep a key buyer of chips from choosing competitors. It's a key difference. For example, Amazon Web Services can offer discounts to keep companies from switching to Azure and Google Cloud. That's legal. If Amazon Web Services offered the CEO of Snap a billion dollars (to them personally, not to the company) to use AWS instead of Google Cloud, that's illegal (both for AWS to offer it and for the CEO to accept it). The only reason why it's illegal for Qualcomm to have taken this action is because it falls afoul of competition regulations. For example, AWS may be the largest cloud provider and it may be a key market, but they aren't so large that they can really shut off the market to competitors. Similarly, none of their customers are so large that they're a significant portion of the market for buying servers. Finally, because AWS doesn't control buying servers or data centers (and companies often do invest in that when they hit a certain scale), it's hard to argue that they're shutting out competition. By contrast, Qualcomm specifically created a plan to make sure it wouldn't be profitable for competitors to develop high-end modems. While more Android phones are sold than iPhones, the iPhone is a very significant portion of the high-end phone (and modem) market. If Apple committed to Intel or another manufacturer, that company would have the sales necessary to create high-end modems that would challenge Qualcomm. Absent Apple committing to that, it's unlikely that any company would be willing to spend the money developing competition to Qualcomm. Plus, Qualcomm's discounts mean that a company like Intel would look at the situation and note that if they did develop a competitor, Qualcomm would simply discount their chips for a year or two and drive them out of the business. If you're Intel and you develop a competitor and no one buys your chips for a couple years, you'll exit the business. You're allowed to offer discounts to get companies to choose your products or stay with your products. However, you're not allowed to use discounts to choke off competition. From what I understand of the situation Qualcomm is accused of: 1) Qualcomm has patents on LTE and other wireless technology that they committed to licensing under FRAND (fair, reasonable, and non-discriminatory) terms. 2) If you want Qualcomm chips, you need to agree to a license for those patents on Qualcomm's terms and not challenge the terms as violating FRAND. 3) Because Qualcomm got you to agree to very high licensing rates for their patents, they could then discount their chips a lot to keep competitors from getting a foothold. Let's say you're Apple. You need Qualcomm's modems because they're the only high-end modem supplier in the world. So you agree to their non-fair license rates. Intel looks like they might enter the market and create a second seller of high-end modems. Qualcomm offers a steep discount on chips so that you won't buy Intel's and so Intel doesn't have enough sales to continue in the market. You have to pay Qualcomm's very high non-fair license rates even if you use Intel chips because you still need Qualcomm chips for some of your phones. Qualcomm's discount on their modems came with the caveat that you only use Qualcomm modems. So, Apple could buy some modems from a competitor, but they'd still have to pay Qualcomm's very high license rates and more for the Qualcomm chips they needed -or- they could take the discount on Qualcomm chips. Over the past two generations of iPhone, Apple has been trying very hard to break Qualcomm's monopoly. They're propping up Intel's modem business with the hopes that they can switch 100% off Qualcomm in the future and get rid of what they see as Qualcomm violating their FRAND licensing requirements. But they couldn't do that without a competitor for modems. Because Qualcomm operated "no license, no chips" and Apple couldn't shut down iPhone production for years until a competing high-end modem came around, they had to play ball. At this point, they only really need Qualcomm for Sprint and maybe some other small carriers. In a pinch, Verizon does have non-CDMA, VoLTE-only (voice over LTE) phones. It is illegal to accept bribes, but this isn't a bribe. A bribe would have been to offer a reward to some Apple execs to tip the scale in Qualcomm's favor against Apple's interests. "If your town chooses us for your broadband, you might find a new Porsche in you driveway," is a bribe. "If your town chooses us for your broadband, we'll charge residents 20% less than Comcast," isn't a bribe. "...we'll also upgrade the town's electrical system...we'll sponsor after-school coding classes for students in town...we'll throw a dance party for everyone in town," aren't bribes because the benefit isn't a personal one for the person making the decision. Qualcomm isn't accused of offering a bribe to key execs at Apple. If Qualcomm's actions hadn't been anti-competition, there's nothing wrong with discount payments. Almost all companies offer discounts off list prices if they're dealing with enterprises. The issue is that it's anti-competition and that's why Qualcomm is the only one in hot water. Apple wants the competition and has been doing more to stimulate it than anyone else seems to have been.