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Xiaomi Might Benefit From The Antitrust Battle Between Qualcomm And The Chinese Authorities

December 6, 2014 - Written By Kristijan Lucic

We reported recently that China’s National Development and Reform Commission i investigating Qualcomm’s monopoly on patents in China. Qualcomm will basically be forced to lower license fees and end ‘reverse patent license’ in China. What’s the issue here? Well, because of Qualcomm’s monopoly on patents when it comes to smartphones, smaller chip manufacturers have a hard time penetrating the market and can’t compete with Qualcomm. This investigation has come to an end, as we already reported, and it focuses on unfair licensing and extremely high licensing charges. Qualcomm has a way of bundling standard patents in the industry and then charges way to much to smaller firms in order to use those patents, they also charge for expired and non-useful patents as well that way because such patents are also a part of the bundle and companies can’t exactly choose not to purchase them.

The investigation has already been concluded, but what that means for other firms? Well, this will actually be a great thing for smaller companies like Xiaomi because they won’t be forced to pay for such patent bundles anymore, Qualcomm will be forced to reverse patent license in China, as I mentioned earlier. It is still unclear how will Qualcomm be punished though, we still don’t know all the details but we should find out in the coming weeks, hopefully. This is actually quite an interesting situation. Bundling patents doesn’t actually hurt companies like Huawei or ZTE because they simply don’t have to purchase them, those two companies are loaded with patents, ZTE has over 52,000 registered patents while Huawei crossed the 30,000 mark. Xiaomi is a far smaller company though, they were founded in 2010, so you can’t exactly expect them to compete with the likes of ZTE and Huawei as far as patent licensing goes.

Such development might really benefit smaller companies in China and might work to Xiaomi’s advantage. The company has been doing unbelievably well this and this might only help them do even better. Xiaomi is probably the fastest growing smartphone manufacturer in the world and it will be interesting to see how much will this help them out in the end.