EU greenlights Microsoft purchase of Nokia

The European Commission has greenlighted Microsoft’s purchase of Nokia’s mobile phone and services business.

 

In a decision announced Wednesday afternoon, the Commission said it had failed to find any real reason to block the deal.

Microsoft originally announced its plans to purchase Nokia’s handset and services divisions back in September. Last month, Nokia’s shareholders approved the decision, pending regulator approval.

According to the Commission, the small size of the combined market share of the two companies means that competitors are unlikely to harmed by approving the purchase.

“The Commission concluded that the transaction would not raise any competition concerns,” it said in a press release.

“In particular because there are only modest overlaps between the parties’ activities and the links between Microsoft’s mobile operating systems, mobile applications, and enterprise mail server software with Nokia’s smart mobile devices are unlikely to lead to competitors being shut out from the market.”

It also highlighted Apple and Samsung’s dominant positions as reasons the deal presented no concern from a competition standpoint.

It said that although Nokia’s position within the Windows Phone 8 market was dominant, as a whole, Microsoft’s share of the mobile phone eco-system was “limited”.

As such, any merger would be unlikely to affect customers in an adverse way.

“In 2012, almost 700 million smartphones and 162 million tablets were sold worldwide,” the release added. "The Commission assessed the effects of the acquisition on competition in the field of smart mobile devices (including smartphones and tablets).

“The Commission found that the overlap of the two companies’ activities in this area is minimal and several strong rivals, such as Samsung and Apple will continue to compete with the merged entity.”

It also said that because of the dominant position of iOS and Android, Microsoft is unlikely to restrict access to apps such as Skype and Office to Windows Phone 8 for very long.

"Since Office apps are currently not available on tablets running third-party OSes, a potential supply restriction would be limited to other tablet suppliers using Microsoft’s Windows OSes.

"However, this strategy would hamper Microsoft’s interest to attract more app developers and ultimately users to its OSes for smart mobile devices. For smartphones, the share of Office apps is minimal and there are many popular competing apps.

“Similarly, with regard to Skype, other popular apps continue to be available. Moreover, given the low market share of Windows in mobile OSes, limiting interoperability with third-party mobile OSes would ultimately weaken Skype’s competitive offering.”

It also said that Microsoft would not be able to lock iOS and Android devices out of its Exchange Server services.

Microsoft is the dominant player in email server market for medium and large enterprises. Any move to lock out iOS or Android could potentially cripple the ability of phones running those operating systems from being used for work.

However, according to the Commission, Microsoft’s current patent licensing deals mean it would be extremely difficult – if not impossible – for it to do so.

“The Commission considers that any possible competition concerns, which might arise from the conduct of Nokia, following the transaction, in the licensing of the patent portfolio for smart mobile devices which it has retained falls outside the scope of the EU Merger Regulation,” the release noted.

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