By Kim Yoo-chul
U.S.-based Microsoft (MS) agreed with the country's top anti-trust regulator to cut royalties that it collects from Korean technology companies such as Samsung and LG Electronics, the regulator said Monday.
"In return for approving MS's planned $7 billion acquisition of Nokia's handset business, MS agreed to put a cap on the royalties Samsung and other local domestic handset firms pay for patents of the merged entity over the next seven years," the Fair Trade Commission (FTC) said in a statement.
The agreement is also calling for MS not to file lawsuits against Korean handset manufacturers over patent infringement, according to the statement.
MS-Nokia should strictly follow fair, reasonable and non-discriminatory (FRAND) principles in its licensing policies and give access to its standard essential patents (SEPs), FTC said.
"MS agreed to cut fees that it annually collect from Korean handset makers on even non-SEPs and commercial patents. Imposing sales or import bans against products produced by local tech companies is also impossible according to the mutual agreement," said the statement.
Some of MS-owned patents are considered as core technology to be used in Google Android software, meaning that it's impossible to use replacements.
The MS-Nokia deal will see MS absorb the largest OEM for its Windows Phone line of smartphones. Nokia controls over 90 percent of Windows hardware sales, meaning that MS is purchasing hegemony over its own platform.
Also, MS's steep turn into the device business is greatly expanding. Its Surface-branded line of tablets is its latest move, as MS has long relied on a third-party OEMs to sell PCs operating its Windows software.
But with the addition of the Lumia line of handsets, MS can effectively manufacture its own PCs, gaming consoles and smartphones.
Sun Joong-kyu, director at the FTC's M&A division said such tough measures are intended to protect Korean firms as Nokia confirmed its plan to re-enter the smartphone market sometime late next year, which could be a threat to Samsung and LG Electronics given Nokia's huge brand and its ability to create a new ecosystem.
FTC officials say it's very unlikely for Nokia to start its own manufacturing business as it has stronger interests in licensing its patents to OEM partners for phone-making impressed by the success of its N1 model.
Nokia plans to produce its handsets in China, India, Russia and Indonesia in the "near future" via OEM partnerships in each of these countries, in what FTC officials say is another consideration for the agency for such tough measures.
The regulator agreed to scrap the availability of what it calls a business collaboration agreement that MS signed with local business partners. Under the agreement, MS and its rivals could share confidential information.
"The FTC ordered MS not to share confidential data with its business partners for fair competition," Sun said, stressing the latest agreement will protect the rights of consumers.
The regulator said patents that will be owned by Nokia after the acquisition don't need for approval by the government agency for their availability.
"Because Nokia will hand over its handset business to MS, Nokia can hold mobile-related patents. But the regulator will closely monitor whether or not Nokia abuses its patent rights," said Sun.
The latest decision by the FTC comes a few months after MS separately agreed with Samsung on patent disputes over licensing fees in return for Samsung's decision to promote MS's own Office programs on new Samsung handsets.
"Samsung respects the decision by the FTC," an official said by telephone.
U.S.-based Microsoft (MS) agreed with the country's top anti-trust regulator to cut royalties that it collects from Korean technology companies such as Samsung and LG Electronics, the regulator said Monday.
"In return for approving MS's planned $7 billion acquisition of Nokia's handset business, MS agreed to put a cap on the royalties Samsung and other local domestic handset firms pay for patents of the merged entity over the next seven years," the Fair Trade Commission (FTC) said in a statement.
The agreement is also calling for MS not to file lawsuits against Korean handset manufacturers over patent infringement, according to the statement.
MS-Nokia should strictly follow fair, reasonable and non-discriminatory (FRAND) principles in its licensing policies and give access to its standard essential patents (SEPs), FTC said.
"MS agreed to cut fees that it annually collect from Korean handset makers on even non-SEPs and commercial patents. Imposing sales or import bans against products produced by local tech companies is also impossible according to the mutual agreement," said the statement.
Some of MS-owned patents are considered as core technology to be used in Google Android software, meaning that it's impossible to use replacements.
The MS-Nokia deal will see MS absorb the largest OEM for its Windows Phone line of smartphones. Nokia controls over 90 percent of Windows hardware sales, meaning that MS is purchasing hegemony over its own platform.
Also, MS's steep turn into the device business is greatly expanding. Its Surface-branded line of tablets is its latest move, as MS has long relied on a third-party OEMs to sell PCs operating its Windows software.
But with the addition of the Lumia line of handsets, MS can effectively manufacture its own PCs, gaming consoles and smartphones.
Sun Joong-kyu, director at the FTC's M&A division said such tough measures are intended to protect Korean firms as Nokia confirmed its plan to re-enter the smartphone market sometime late next year, which could be a threat to Samsung and LG Electronics given Nokia's huge brand and its ability to create a new ecosystem.
FTC officials say it's very unlikely for Nokia to start its own manufacturing business as it has stronger interests in licensing its patents to OEM partners for phone-making impressed by the success of its N1 model.
Nokia plans to produce its handsets in China, India, Russia and Indonesia in the "near future" via OEM partnerships in each of these countries, in what FTC officials say is another consideration for the agency for such tough measures.
The regulator agreed to scrap the availability of what it calls a business collaboration agreement that MS signed with local business partners. Under the agreement, MS and its rivals could share confidential information.
"The FTC ordered MS not to share confidential data with its business partners for fair competition," Sun said, stressing the latest agreement will protect the rights of consumers.
The regulator said patents that will be owned by Nokia after the acquisition don't need for approval by the government agency for their availability.
"Because Nokia will hand over its handset business to MS, Nokia can hold mobile-related patents. But the regulator will closely monitor whether or not Nokia abuses its patent rights," said Sun.
The latest decision by the FTC comes a few months after MS separately agreed with Samsung on patent disputes over licensing fees in return for Samsung's decision to promote MS's own Office programs on new Samsung handsets.
"Samsung respects the decision by the FTC," an official said by telephone.
