WSJ report details Apple and Qualcomm relationship, hostile meeting between CEOs

The legal battle between Qualcomm and Apple has grown increasingly tense since it began in early 2017. A new report from The Wall Street Journal explores how and why the legal battle escalated, with a particular focus on the hostile relationship between Qualcomm CEO Steve Mollenkopf and Apple CEO Tim Cook.

The report describes a meeting between Mollenkopf and Cook last year at Apple’s headquarters. The two were meeting to discuss the increasingly hostile legal battle between their companies, but Mollenkopf reportedly left his general counsel to do most of the talking.

According to today’s report, Mollenkopf suspected that Apple had supported Broadcom’s hostile takeover attempt of Qualcomm:

Mr. Mollenkopf, who suspected Apple of supporting a hostile takeover of his company, initially didn’t speak, leaving his general counsel to start talking, according to people familiar with the meeting.

The awkwardness punctuated a distant relationship between the chief executives that has turned their companies’ conflict into one of the ugliest corporate battles in history.

Part of the issue in the relationship between Cook and Mollenkopf, the report says, is that they have “so little personal connection.” Because of this, Apple’s top executives reportedly “don’t think it’s possible” that there’s any chance of Qualcomm and Apple being able to reach a deal. “It’s personal. I don’t see anybody who can bridge this gap,” an anonymous executive told The WSJ.

The legal battle between Qualcomm and Apple will go to trial this coming week, with both CEOs expected to testify. Opening arguments will begin on Tuesday in a San Diego federal court. Cook is said to be so frustrated by Qualcomm’s licensing practices that he desired to testify in the case:

The group-decision approach has resulted in a team of enforcers who defend Mr. Cook’s view that Qualcomm’s licensing practices—taking a 5% share of most of the sales price of an iPhone—was just plain wrong, allowing the chip maker to profit off Apple innovations in display and camera technology.

Mr. Cook’s conviction on that point and his frustration over Mr. Mollenkopf’s handling of the dispute have compelled him to testify against Qualcomm, according to people familiar with his thinking—a rarity in his time as CEO.

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

When Cook became CEO in 2011, however, he is said to have found that agreement “egregious” and pushed to revamp it.

Both companies raked in sales. By the end of 2012—five years after its launch—Apple had sold more than 250 million iPhones and generated more than $150 billion in sales. Qualcomm had collected more than $23 billion in royalties from all its partners and almost $42 billion in chip and other product sales over the same period.

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

The full report from The Wall Street Journal is worth a read and can be found here.