Threat of Microsoft
Korean electronics manufacturers and the authorities concerned respond to Microsoft, which has recently acquired Nokia, in order to provide against its dominant position in the global market as a patent owner and price setter.
The Korea Electronics Association (KEA) submitted a petition to the Fair Trade Commission (FTC) on March 7 with the Korea Software Industry Association, the Korea Semiconductor Industry Association, and the Korea Battery Industry Association, claiming that Microsoft is likely to keep Korean manufacturers in check by means of Nokia’s patents.
Microsoft decided to take over the mobile phone business unit of Nokia at a cost of approximately US$7.2 billion back in September last year. Since then, the two companies have gone through business combination reviews in countries around the world and won approvals in the US and Europe in December 2013. The FTC is carrying out the examination in Korea.
Korean companies are particularly concerned over the possibility of Nokia turning itself into a patent troll through the acquisition. Microsoft let Nokia own and use its mobile patents for 10 years from the acquisition.
This means that Nokia can exercise its patent rights at will, even without manufacturing handsets, for that period of time. “As a mobile phone maker, Nokia rarely exercised its patent rights because of its cross-licensing with Samsung Electronics, Apple and the like, but now it can launch patent lawsuits or demand an increase in royalties without any limitation,” said KEA lawyer Hwang Eun-jeong, adding, “At the same time, Microsoft can expand its mobile phone business while keeping Samsung and Apple at bay by utilizing Nokia as a sort of cannon fodder.”
The business consolidation review is taking more and more time in China as well due to the very same concerns. “The FTC needs to look deeply into the possible impact from the acquisition,” the KEA explained, continuing, “We also suggested an approval on condition of Microsoft’s acquisition of not only the business unit but also its patents.”