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Apple’s Strong-Arm Tactics Hurt Consumers And Threaten Technology

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What is far more concerning are the strong-arm tactics Apple is using against the American company that created the very technology that has allowed them to thrive, Qualcomm, based in San Diego. Qualcomm holds the patents on much of the technology that makes iPhones work and connect to a wireless network. Late last month Apple instructed its Asian manufacturers to stop paying Qualcomm the royalties due for the use of its technology, escalating a long-standing feud between the two companies over licensing payments.

Apple claims that they’re being unfairly gouged, paying way more for the use of the technology than reasonable. Qualcomm, as one might guess, disagrees. In the end, the people who gobble up Apple’s products will care little or not at all about this heavyweight bout, but in starker terms, we all should.

First, it should be remembered that the patents that Apple exploits, and the licensing deals that govern them, were in effect before Apple even entered the cell phone market. The technology they peddle was built on investment, and as Bloomberg notes, Qualcomm ploughs significant resources into research to maintain its technological advantage in the marketplace, the very technology that moves consumers to unburden themselves of a week’s pay for the latest gadget. When Apple takes a dominant position in the mobile industry, then decides to withhold its patent royalties, that significantly impacts an American company’s ability to propel technological innovation.

Apple’s tactic of withholding owed royalties to Qualcomm will cost the tech innovator hundreds of millions of dollars in lost revenue. Apple is gambling they can saw off the branch on which they sit and be just fine. That might be the case, but if Qualcomm stumbles in the tech race, just how do we benefit when America has to look to China or Taiwan for the most advanced technology?

Secondly, coming off the era of “too big to fail” we’re getting dangerously close to entering the realm of “too big to care.” If the world’s largest company can succeed in ignoring legally binding licenses and interfering with contractual obligations then all bets are off. It’s only natural to expect other tech manufacturers to follow Apple’s lead and employ a Don Corleone posture toward innovators.

Today more and more products are embedded with the latest chip and wifi technology, from cars, to home security systems to coffee makers. Technology is still rapidly expanding, and advances don’t come cheap. Without assurances that companies will play by the rules and honor the rights of tech innovators, the very lifeblood of technological advancement could end up on life support.

While Qualcomm is no start-up cowering under the foot of a competitive goliath, it doesn’t change the fact that Apple remains staunchly committed to unilaterally dictating the terms of already existing licensing deals. Apple is building an empire on technology created on the ingenuity of others, and is expecting to prevail based on their sheer size and loyal customer base. While their customers may be all smiles as they plunk down their cash for the iPhone 8, if Apple’s strong-arm tactics against Qualcomm prove successful, there will be far less to smile about in the future.

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