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Qualcomm Casting Intel as Hypocrite Backfires in Antitrust Trial

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Qualcomm is battling the FTC in a closely watched antitrust trial. VCG/VCG via Getty Images

Qualcomm Inc.’s lawyers saw a chance to score some points in a government antitrust case against the chipmaker by making an example of rival Intel Corp. as a company accused of abusing its dominance of an industry. They were wrong.

After an interrogation of Intel’s chief strategy officer largely backfired this week, a Qualcomm attorney on Friday declined a judge’s invitation to bring Aicha Evans back to the witness stand as a non-jury trial brought by the Federal Trade Commission moved into its fourth day of testimony.

“Not from us, your honor,” Qualcomm lawyer Antony Ryan told U.S. District Judge Lucy Koh, provoking widespread laughter in the San Jose, California, courtroom after one of the liveliest showdowns so far in the case. It also ended something of an ordeal for him.

Evans, who formerly ran Intel’s mobile phone chip unit, repeatedly turned Ryan’s questions into opportunities to restate her company’s opinion that Qualcomm unfairly used technology licensing and its leadership in smartphone components to lock out the competition.

Qualcomm Faces FTC Trial Threatening Smartphone Dominance

Ryan frequently sought to corner Evans by citing piecemeal excerpts from her emails and pretrial testimony, a common tactic in trials to save time. Evans had none of it, asserting her right to read documents aloud in their entirety while insisting context was crucial. When Ryan tried to interrupt her, she ignored him and read on.

Evans was born in Senegal, putting her in a very unusual category in the chip industry: a black female executive. Her mission at Intel was to gain market share in mobile phones to try to match the company’s dominant hold of the personal computer processor industry.

“Mr. Ryan, Mr. Ryan, you’re going very fast. Easy,” she told the attorney at one point. Earlier she’d said: “I’m a French speaker, numbers are hard. I’d ask you to please slow down.”

Intel, the world’s second-largest chipmaker, holds about a 90 percent share in the lucrativemarket for computer server chips. In personal computer processors, it rakes in more than 80 percent of revenue. Its only remaining competitor, Advanced Micro Devices Inc., once accused Intel in a lawsuit of using its control of that market to force PC makers into remaining exclusive users of its products. The two sides settled the case with Intel paying AMD more than $1 billion in 2009.

Qualcomm Dealt Another Setback Ahead of FTC Antitrust Trial

Evans argued that Qualcomm had muscled Intel out of contracts with Apple Inc. by locking the iPhone maker into exclusive agreements.

“They came back and told us we’d have a chance in 2016, but in 2014 we’d lost because of a pre-existing agreement Apple had with Qualcomm,’’ she said. “We were set back two years. It was a near-death experience.”

Qualcomm, whose chief executive officer, Steve Mollenkopf, is set to testify Friday, has argued that the government has no evidence that its “no license, no chips” policy has hurt competition in the industry. Qualcomm asserts that Intel’s current status as the exclusive chip supplier for Apple proves that the industry is, in fact, healthy.

Evans complemented Qualcomm but took another dig at the company that the FTC’s lawyers will like.

“They are excellent technical engineers,’’ she said. “That doesn’t give them the God-given right to perform unfair business practices.”

The case is Federal Trade Commission v. Qualcomm Inc., 17-cv-00220, U.S. District Court, Northern District of California (San Jose).