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China launching a second round of probes on the Nokia-Microsoft deal

The Nokia-Microsoft deal is marching steadily to a conclusion as being approved by the United States, the European Union, and of course, Nokia's shareholders. However, China is still reluctant to give its word. Recently China's Ministry of Commerce has started a second round of probes into Microsoft's acquisition case. This time the government has a new emphasis: antitrust.

"Antitrust" is a knee jerk reaction -- something that pops up without involving real thought -- when it comes to business related to Microsoft. However, an antitrust probe is ridiculous in this particular case. According to statistics, Windows Phone maintains a very low market share (less than 5%) in China, and Nokia is only a shadow of its former self in terms of brand appreciation. Even if Nokia comes into absolute domination (100% ownership, I mean) within the Windows Phone ecosystem after the acquisition, the impact on the Chinese smartphone industry will be next to zero.

Rumors say that the Chinese government is now probing on behalf of local smartphone brands, most of whom have built their business entirely on low-to-medium range Android phones. These OEMs have been engaging in a heated civil war against one another. The smartphone war, like many other business competitions in the country, ultimately boils down to a price war, cutting the profit margin for everyone involved.

If Nokia "turns into a patent troll", as some have been worrying about, a combined patent portfolio from Microsoft and Nokia could blow many Chinese brands into oblivion. But such a thing probably won't happen if you really think about it: Nokia will keep its own patents, only licensing them to Microsoft through the selling of its mobile division. Thus there's no such thing as "combined portfolio" to speak of. 

But anyway, this might be a good chance for the Chinese government, and Chinese smartphone brands, to think again about their actions: If all participants in an industry are competing on such a low level, that everyone is making essentially the same thing, only differentiating from names, prices, and marketing gimmicks, is it worthwhile to go that far in order to protect it? And if a platform is not very legally sound (as Android has been triggering patent lawsuits globally in recent years), is it not wise to at least try out something sounder? By "something sounder" I don't even mean Windows Phone specifically. Chinese brands could invest in developing their own smartphone operating systems, like HTC is doing, if rumors are to be trusted. Nowadays Chinese Android OEMs bashing one another on social media platforms with blunt specs or prices or both (as in "with the same price, you get about 300 MHz more from us") has become quite a tiresome scene. It's about time for some fresh elements in the game.

Anyway, we will keep an eye on the developments of the probe, and keep you informed.

Source: WPDang

36 Comments
  • Made in "China"
  • Go home China, your drunk.
  • There not just drunk the higher than the clouds on the sun.
  • Nice one
  • You're* Why do people get so confused with you're and your?
  • He's also drunk, perhaps.
  • Same reason why people get confused by there, their, they're.. Besides, maybe KD just didn't finish the thought...Maybe what KD meant to type was "Go home China, your drunk sister, India, is already in line first to screw Nokia"
  • ^LOL!
  • Whenever you want to screw a big company, use the anti-trust argument. Even if it's a complete BS.
  • Communism fails when it resorts to using lawyers. Laughable if it wasn't so dangerous.
  • Not sure what antitrust has to do with this deal... Microsoft owning Nokia is not going to remove competition in China.  Quite the opposite, as Microsofts commitment to Windows Phone might start to give more choice and therefore competition from Andoid which currently dominates China.  With no patent holder changes it's not like anyone is going to get slammed that wouldn't otherwise rightly be paying patent royalties today.
  • China have no worry about Microsoft, its about Nokia. If you charge higher amounts and/or start demanding licenses for more patents while you are in the smartphone industry, it is highly likely you will get counter sued. By selling the hardware devision, that is no longer a worry for Nokia. OEMs in China are thriving on lower prices. If Nokia starts demanding more money, the Chinese government are going to find it very hard to stop them and phone prices will have to go up, causing Chinese OEMs to have one main advantage taken away.
  • This is correct. The device makers fear Nokia, sans the D&S division. Here is an article, from the Chinese "Global Times" that better explains this: http://www.globaltimes.cn/content/833560.shtml#.UrxUVLR2Hf1
  • So, your point is valid that could be a reason China is concerned about the deal, however, it doesn't have anything to do with antitrust laws. Also, considering China doesn't really respect patents at all, it seems to me that the only way they would care about patents is because it could hurt Chinese companies outside of China. Which, I have a bit of a problem with but I suppose that is what you get when you have a communist government; they can do whatever they want.
  • Our beloved nokia <3
  • Sigh.....not another patent war. In the end, the losers are us consumrs.
  • I find that to be a kneejerk, popular comment to make. How have customers been hurt so far? Specific examples?
  • Customers are hurt because these incremental cost increases get passed right along to them. Between rising hardware prices and service fees (simply for existing) from carriers, the cost of owning these devices we love will continue to rise. They all say its just a couple of dollars, but those dollars add up and we as consumers aren't getting an appreciable benefit for footing the bill.
  • Technology didn't just come from nowhere. People worked to make the services that you're using. It's their intellectual property. And like any other kind of property, they deserve to reap the rewards from selling it, or even selling the rights to it. Consumers would be hurt MORE in the long run if patents are not enforced, because the creators of technology will not have the incentive to spend their time and money creating.
  • I agree, Daniel. Google and Android feel they can copy what ever they want because they have this idea that they're the only ones that matter. Instead of working to differentiate their product and give consumers more options, they just copy where they like from WP, iPhone and, in a few areas, even WebOS. While many of the patent lawsuits are rather frivolous, they do push Google and OEMs to actually create their own product and give consumers MORE choices.
  • It's sad the rest of the world is on board with this deal - yet china are reluctant... Well everyone has to look out for their own interests... Oh happy boxing day!
  • Yes, the chinese OEMs fear that they will be forced to pay for their usage of (among others) Nokia's patents, and it is about time if you ask me. They have been freeloading way too long at the expense of European and American innovation.
  • Agreed
  • That's kind of Europe's and America's fault. They're the ones who started to take factories to China for cheap labour. So if they got their property rights stolen, it's not like they didn't gave them on a silver tray...
  • Good point. Sadly this continues to be the trend.
    No need any more to ship manufacturing jobs in these regions. Nowadays the labor market conditions differ greatly to what used to be back in 80's and 90's.
    In some countries even in EU tax rate is barely 10% flat, access to quality cheap labor market, established regulations. Any takers...
  • Right. China is all about the rule of law and doing the right thing. How profoundly absurd that they of all countries, would be concerned about patent infringement!
  • and this is exactly the reason why microsoft did not include the patents in the acquisition. There will not be a combined patent portfolio so this chinese probe is baseless, approval will come whether the chinese OEMs want it or not. Microsoft played their cards very cleverly
  • Microsoft didn't include the patents because Nokia didn't allow them. Nokias patents are very valuable. And they should remain with Nokia in case Nokia decides to return to phones in 2016. And they didn't include HERE because Microsoft wasn't willing to pay for the actual value of the platform.
  • It looks like this companies don't have any choice at all... Allow it or pay up!!
  • Nokia should turn into a "patent troll". After all, it's their most valuable asset once the D&S is gone. So they better make sure no one ever uses a patent from them without proper payment. That said, if the Chinese Government is the one that makes the deal go down the drain, I'll publicly apologize for every critic I've ever made about Communist China.
  • Communism and Google, a perfect match.
  • lmao this is the most biased article i've read this month
  • that's the truth, love it or hate it
  • Well to be honest when the facts are essentially 'China looks for legal loophole to protect local businesses illegal practices.' its pretty hard to find a middle ground.
  • Go home china your drunk
  • what? china is invesgating "antitrust" case? lol, the entire economy of that country is run by a handful state owned conglomerates.