Why it matters: Broadcom is one of those companies that is not a household name, but most are seemingly unaware of how much of its tech powers our gadgets, and even some specialized datacenter hardware. Both the U.S. and E.U are investigating the company for abusing its dominance in the semiconductor market, which could have serious implications for everyone.
The European Commission has recently opened an antitrust investigation into Broadcom, one of the largest players in the semiconductor industry, amid concerns that it has been using exclusivity deals in order to corner the competition.
The investigation is focused on the company’s chipsets found in many modems and TV set-top boxes, and there is a proposal for an interim ban on the alleged contractual restrictions in order "to avoid any risk of serious and irreparable harm to competition."
Broadcom is also under fire by the US Federal Trade Commission, whose investigation is similar in scope, citing abusive practices in the sale of chipsets found in Wi-Fi and Ethernet chips. All of this came into focus as the company tried their luck at a hostile takeover of Qualcomm for over $100 billion, which was recently shot down by Trump’s executive order. But that didn’t stop it from shelling out $18.9 billion for CA Technologies, a software and services company that helps it expand its reach to corporate customers.
The company naturally disagrees with the allegations, but the antitrust battle could bubble up in the E.U., and while Broadcom told regulators it doesn’t expect any material impact from the interim ban, the Commission can hit it with fines of up to 10% of its global revenues – or something around $2 billion, which are already suffering from the Huawei ban.
It’s easy to look at this and dismiss it as yet another battle between regulators and big tech that will take years to get to a conclusion. Most people don’t know that Broadcom’s chips are inside almost every gadget you might have, powering internet connectivity in everything from phones to laptops, routers, and IoT devices such as the Raspberry Pi 4.
The effects of the investigations could affect both manufacturers and consumers.