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China Approves Microsoft Acquisition of Nokia Devices
China Approves Microsoft Acquisition of Nokia Devices

By Seth Fitzgerald
April 8, 2014 10:46AM

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Samsung, Google and others had brought up concerns with Chinese regulators and requested they verify that Nokia and Microsoft's patent licensing deals would not change with the acquisition. The delay in the approval process caused many to assume the Chinese regulators had felt similarly, but Tuesday's events suggested otherwise.

Following a longer than usual wait, China has approved Microsoft's acquisition of Nokia's devices and services business. The deal, which is taking place for $7.4 billion, passed through regulators in the United States and Europe with ease and only hit delays in Asia, where some companies have voiced concerns. Given the size of the deal, regulators and companies in Asia have worried that the acquisition could negatively affect Nokia's patent licensing practices.

Now that China has approved the deal, Nokia says it expects the deal to close this month. The news pushed the company's shares up 3 percent and was also beneficial for Microsoft, which first announced its agreement with Nokia in September.

Patent Concerns

Samsung, Google and others had brought up concerns with the Chinese regulators and requested they verify that Nokia and Microsoft's patent licensing deals would not change once the acquisition was closed. The delay in the approval process caused many people to assume that the Chinese regulators had felt similarly in regards to those concerns, but Tuesday's events seemed to suggest otherwise.

Both Nokia and Microsoft had said there were no plans to change patent licensing deals or fees, and Microsoft went so far as to pledge that its licensing practices would go unchanged for eight years.

"It has never been our intent to change our practices after we acquire the Nokia business," said David Howard, Microsoft vice president for litigation, writing on the company's blog. Even though Microsoft did not agree with the "premise that [its] incentives might change in the future," it has tried to remain open to discuss the topic and quell any concerns, Howard said.

We caught up with Jeff Kagan, an independent technology analyst, for his opinion on the concerns and China's approval. He told us he expected the deal to go through but that lawsuits could always occur in the future given how often companies go to court to settle disputes.

"I think the Nokia-Microsoft deal will be approved. Any delays are just that, but the deal will be done," Kagan said. "Will any suits be brought by or against Nokia-Microsoft? I have no idea, but knowing the way this industry operates I would say that I wouldn't be surprised. But still it's not a big deal."

The Acquisition

Microsoft's acquisition of Nokia has been under way for months, and the delays that it has experienced are not surprising given the size of both companies. Even though Microsoft is taking over the vast majority of Nokia's products, it will only be licensing the patents, meaning that Nokia will remain in control of the patents for now.

Then-Microsoft CEO Steve Ballmer wrote in September that the deal "will accelerate Microsoft's share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services." As Microsoft continues to focus on the Windows Phone platform, the deal will provide the company with new ways to compete against Android and iOS.

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