WSJ Crisis of the Week: Qualcomm Chips Away at South Korea Probe

Schwartz Media Strategies’ CEO, Tadd Schwartz, shares with the Wall Street Journal his crisis communications plan for Qualcomm Inc. after a South Korean regulator said it would fine the company for about $853 million for alleged antitrust violations.




By Ben Dipietro

Chip maker Qualcomm Inc. takes crisis center stage this week after a regulator in South Korea said it would fine the company $853 million for alleged antitrust violations related to its patent-licensing business.

Qualcomm denounced the decision by the Korea Fair Trade Commission, calling it “inconsistent with the facts and the law” and vowing to appeal. “For decades, Qualcomm has worked hand in hand with Korean companies to foster the growth of the wireless Internet,” the company said in a statement. “Qualcomm’s technology and its business model have helped those companies grow into global leaders in the wireless industry. This decision ignores that win-win relationship.”

The experts evaluate how well the company is handling this crisis.

Tadd HeadshotTadd Schwartz, president and chief executive, Schwartz Media Strategies: “Qualcomm’s reaction to allegations of antitrust violations in South Korea targeted three critical audiences. By painstakingly mapping out the minutiae of its position and vowing to defend itself, Qualcomm telegraphed its legal case and put regulators on the defensive. In underscoring the small market share that South Korea represents globally, the company moved to calm the nerves of investors. And by crafting its response with esoteric language and tapping its general counsel—and not its chief executive–as lead spokesperson, Qualcomm made what appears to be a calculated decision that most consumers would tune out altogether.

“This is one of those rare instances where not connecting with consumers can be a winning strategy, regardless of whether it was intentional. As a company that occupies a sizable position in the middle of the supply chain, the Qualcomm brand has little consumer appeal. Containing the public fallout and bolstering its legal stance was the right approach, and Qualcomm should stay the course by instilling trust and confidence in its primary audiences while doing its best to keep the allegations outside of the consumer realm.”

Read more on the Wall Street Journal.