Report describes meeting between Apple and Qualcomm CEOs

The legal battle between Qualcomm and Apple has become increasingly tense since the beginning of 2017. A new report from The Wall Street Journal Explores how and why the legal battle has intensified, focusing on hostile relations between Qualcomm's general manager, Steve Mollenkopf, and Apple's chief executive, Tim Cook.

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The report describes a meeting between Mollenkopf and Cook last year at Apple's headquarters. The two men were meeting to discuss the increasingly hostile legal battle between their companies, but Mollenkopf would have left his attorney general for most of the discussions.

According to today's report, Mollenkopf suspected Apple of supporting Broadcom's hostile acquisition of Qualcomm:

Mollenkopf, who suspected Apple of supporting a hostile takeover of his company, initially did not speak, leaving his general counsel to start talking, according to people close to the meeting.

This awkwardness punctuated the distant relations between the main leaders who turned the conflict of their societies into one of the most horrific battles between companies in history.

According to the report, part of the problem in Cook's relationship with Mollenkopf is that they have "so few personal connections". That's why Apple executives do not "think it's possible" that Qualcomm has a chance Apple being able to reach an agreement. "It's personal, I do not see anyone who can bridge that gap," an unnamed WSJ official said.

The legal battle between Qualcomm and Apple will be the subject of a lawsuit this week, with both CEOs expected to testify. Pleadings will begin Tuesday in federal court in San Diego. Cook was so frustrated by Qualcomm's practices that he wanted to testify in the case:

The group decision approach allowed an application team to defend Mr. Cook's view that Qualcomm's licensing practices – taking up 5% of the bulk of the selling price of 'an iPhone – were completely wrong, thus allowing the chip maker to make profits Apple's innovations in display and camera technologies.

Mr. Cook's conviction on this point and his frustration with the handling of the dispute by Mr. Mollenkopf compelled him to testify against Qualcomm, according to people close to his mind, a rarity in his time as CEO.

The report also provides information on the first partnership between Qualcomm and Apple for the first iPhone in 2007, negotiated by Steve Jobs. At that time, Jobs had a friendly relationship with Paul Jacobs, then CEO of Qualcomm. The two negotiated that Apple would pay $ 7.50 per iPhone to Qualcomm.

However, when Cook became CEO in 2011, he would have found this agreement "flagrant" and pushed to reorganize it.

Both companies made sales. By the end of 2012, five years after its launch, Apple had sold more than 250 million iPhones and generated a turnover exceeding $ 150 billion. Qualcomm had collected more than $ 23 billion in royalties from all partners and nearly $ 42 billion worth of chips and other products over the same period.

Mr. Cook, who succeeded Mr. Jobs as CEO in 2011, found it outrageous that Apple had paid Qualcomm more than all other iPhone licensees combined, said people familiar with the negotiations.

The complete Wall Street Journal report is worth reading and can be found here.

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