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Asian regulator delays Microsoft acquisition of Nokia devices unit

New delays are causing some concern about Nokia’s planned sale of its devices unit to Microsoft

Nokia’s planned sale of its devices unit to Microsoft for $7.4 billion has met a new round of delays, this time in Asia.

The deal is delayed until April, awaiting approval from regulators in China. It already was approved by antitrust regulators in the United States and Europe, and was supposed to get final approvals elsewhere in March.

There was some speculation from Reuters that the company may have to make “technology patent concessions to get the deal done.” 

According to a report from Trefis, regulators may want to review if the deal could lead to higher licensing fees for smartphone manufacturers. The company may try to get higher royalties, “potentially making it costlier for local Asian players to manufacture handsets and sell in price-sensitive emerging markets such as China and India,” the report adds. 

In December, the U.S. Federal Trade Commission gave the deal “early termination.” 

“We look forward to the date when our partners at Nokia will become members of the Microsoft family, and are pleased that the Department of Justice has cleared the deal unconditionally,” a Microsoft spokesman told The Verge back in December.

In an interview in the November 2013 edition of InsideCounsel, Microsoft General Counsel Brad Smith said that the Microsoft-Nokia deal, “gives us the chance to add a business that is complementary to our own … transitioning us from a pure software company to a devices and services company.”

In addition, the deal will “improve economics in the market” and let Microsoft “grow market share and be a more profitable player in the mobile space,” Smith said.

Microsoft previously partnered with Nokia on Nokia Lumia phones, which use Microsoft’s Windows operating system.

As a result of the deal, Microsoft will become a more serious competitor in the smartphone market, which is now dominated by a few other companies. 

“Microsoft is a small participant in a marketplace dominated by Google and Apple. This acquisition will add competition to the market, and regulators like to see acquisitions that add competition to the market, so there is a lot for people to like about this,” Smith said. 

In addition, the deal will lead to quicker innovations. “We see this acquisition enabling us to innovate faster, bringing hardware and software together to ensure a better experience for customers,” Smith added. 

The deal also includes a $2 billion agreement to license Nokia's patent portfolio. 

Meanwhile, the newest delays are a concern to some sector observers. 

“They have been discussing with authorities for quite a while already, and they still need more time," Sami Sarkamies, a Nordea Markets analyst, told Reuters. "The biggest risk is in the upside of their patents. It looks like Nokia will have to make bigger concessions to push the deal through.”

 

Further reading:

Windows to the future: Talking with Microsoft's GC

U.S. government approves Microsoft acquisition of Nokia

Identity crisis: The rise in IP litigation

 
 

Contributing Author

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Ed Silverstein

Ed Silverstein is a veteran writer and editor for magazines, websites and newspapers. A graduate of Harvard's Kennedy School of Government, he has won several...

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