Jack Ellis

Google and Samsung have asked China’s Ministry of Commerce to review Microsoft’s proposed $5.4 billion acquisition of Nokia’s mobile devices business, expressing their concerns that the deal could lead to higher licensing fees for device manufacturers, according to Bloomberg.

It has previously been reported that domestic telecoms companies including Huawei and ZTE have submitted similar requests to China’s competition regulators. Their worries seem to arise from the fact that Nokia will retain ownership of its mobile-relevant patents while selling the related operating business to Microsoft – likely leading to the Finnish company redoubling its assertion and licensing activities. Speaking to Want China Times back in December, the CEO of one Chinese mobile company suggested any increased focus on patent monetisation from Nokia following the sale of its devices business “would spell disaster for the entire communications and mobile phone industry” – though, as this blog stated at the time, any significant disruption caused to the wider mobile sector would surely be to Nokia’s disadvantage.

The impact of Chinese antitrust regulation is an issue that Google itself has had to contend with, when its $12.4 billion purchase of Motorola Mobility (which has since been sold on, sans patents, to China’s Lenovo) was only approved by the Chinese government on the condition that Android should remain free and open for at least five years following the takeover. InterDigital, too, has been under the glare of Chinese competition regulators recently; the country’s Xinhua news agency reported last month that the US company has “promised to stop discriminatory licensing practices against Chinese firms”. In December last year, it emerged that senior InterDigital executives had cancelled trips to China because of reported threats that they might be arrested upon arrival in the country.

Whatever the impact of the Microsoft/Nokia transaction, the fact that foreign companies, as well as domestic companies, are engaging the country’s antitrust watchdogs points to the ever-increasing competition stakes for patent owners operating in China. With a vast and ever-expanding consumer market, and a sizeable domestic handset industry, the Chinese authorities are unlikely to wave the deal through without looking at it very carefully. Microsoft and Nokia have seen their agreement approved by EU and US regulators. In days gone by, that would have been that essentially; not anymore though.