Why the Qualcomm/Broadcom deal wouldn’t be great for you, the smartphone user

FOSTER CITY, Calif. — The $117 billion proposed takeover of Qualcomm by Broadcom would be the largest tech deal ever, combining two powerhouses that make the tiny, complex chips that run our always-connected lives.

And it's one you, as a smartphone user, shouldn't cheer on.

The deal, which has been hung up by U.S. regulators over national security concerns and fought by San Diego-based Qualcomm, threatens to stall the pace of change smartphone users have grown accustomed to.

To understand why, you need history. Qualcomm has been a key innovator in the modem and telecommunications world for more than 30 years. Along the way, the company developed a large number of patents surrounding early mobile phones, smartphones and their ability to connect to wireless networks. In fact, a large portion of the company’s profitability is thanks to the licensing fees it receives from other companies to use those patents.

As great as those patents may be, the company has become vulnerable, dragged down by lawsuits and regulatory fines. In January, the European Union fined it $1.2 billion, accusing it of bribing Apple to use its chips in iPhones and iPads. Qualcomm promised to appeal.

Some companies believe it has used its hard-earned but privileged position with its patents unfairly. Apple has sued Qualcomm, claiming it charged unfair prices for licensing in modem chips. Qualcomm is fighting that suit, and others.

Source: usatoday