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Microsoft’s Nokia Acquisition Hits Snag in China

by Todd Haselton | December 23, 2013December 23, 2013 10:00 am EST


Microsoft’s planned acquisition of Nokia’s devices and services business has so far moved ahead smoothly. Earlier this month, the Federal Trade Commission and the Department of Justice gave nods of approval to the deal, suggesting that there aren’t any monopoly concerns in the United States. In China, however, the story is a bit different.

According to the Global Times, most acquisitions are granted approval from China’s Ministry of Commerce during a 30-day initial investigation window. However, the investigation for Microsoft’s planned Nokia acquisition is taking longer and will reportedly have to undergo a second investigation to make sure there aren’t any anti-trust worries.

Global Times said local phone makers are concerned Nokia, which charges a patent fee that’s roughly two percent of a device’s cost to consumers, could attempt to command more once owned by Microsoft. That would mean that local players in the Chinese smartphone market such as ZTE, Huawei, Lenovo, Xiaomi and others would need to pay more to Nokia each time a smartphone is sold. Obviously that’s not ideal to China’s home-based phone makers, but Nokia also knows there’s a lot of money to be made in China by doing so; some estimates predict the company could stand to make $1.1 billion in profits from China alone next year.

Meanwhile, Microsoft will likely continue to try to target emerging markets such as China with new handsets in the coming years, which means that local vendors not only have to worry about increased patent fees, but increased competition from Windows Phone. Global Times did not provide an estimate on when the deal may or may not be approved in China.

Global Times Economic Times

Todd Haselton

Todd Haselton has been writing professionally since 2006 during his undergraduate days at Lehigh University. He started out as an intern with...