Will this add to the issue of computer chip shortage?
As the technology world faces a shortage of computer chips, one of their biggest suppliers Broadcom also faces a massive problem– with the FTC. On Friday, July 2, the Federal Trade Commission releases charges against the company for allegedly monopolizing the market.
Broadcom vs. FTC
On the said charges, Broadcom was accused by the Commission of deliberately forcing companies to sign them with exclusivity and loyalty contracts. As the name suggests, these contracts allow Broadcom to be the only one producing semiconductors for popular names in the industry such as Apple. Thus, prohibiting the healthy competitiveness between other computer chip suppliers in the world.
“By entering exclusivity and loyalty agreements with key customers at two levels of the supply chain, Broadcom created insurmountable barriers for companies trying to compete with Broadcom,” the FTC said in the release.
As the investigation arises, the Commission also voted to accept a proposed consent order signed by Broadcom for public comment. This consent order tasks the company to no longer commit to any exclusivity deals. Aside from that, it would also prohibit Broadcom from retaliating against customers that deal with its competitors.
In simple terms, Broadcom may be forced to deal with FTC before being able to deal with their partner companies– which may result to delays of services from the computer chip supplier.
What FTC has to say
In a report from CNBC, the Broadcom company has already released their statement about the issue. Although, they were ‘pleased’ to see FTC taking time with the investigation, they reiterated in the statement that they did not do anything illegal with their contracts on each company they partnered with.
“We are pleased to move toward resolving this Broadband matter with the FTC on terms that are substantially similar to our previous settlement with the EC involving the same products. While we disagree that our actions violated the law and disagree with the FTC’s characterizations of our business, we look forward to putting this matter behind us and continuing to focus on supporting our customers through an environment of accelerated digital transformation. We are equally pleased that the FTC investigation into our other businesses has been closed without action.”
Government’s serious tackle on tech monopolists
It should be noted that FTC has been one of the most controversial agencies in the past due to their various filed charges against major tech companies in the world. For its Director Holly Vedova, this is a good sign.
“Today’s complaint reflects the Commission’s commitment to enforcing the antitrust laws against monopolists, including in high-technology industries,” FTC Bureau of Competition Acting Director Holly Vedova said in a statement. “America has a monopoly problem. Today’s action is a step toward addressing that problem by pushing back against strong-arm tactics by a monopolist in important markets for key broadband components. There is much more work to be done and we need the tools and resources to do it. But I have full confidence in FTC staff’s commitment to this effort.”