EU to Decide on Microsoft Takeover Bid of Nokia

EU to Decide on Microsoft Takeover Bid of Nokia

First steps taken toward Microsoft's absorption of Nokia

Microsoft has formally asked antitrust regulators in the European Union's (EU's) European Commission (EC) to approve its proposed $7.2 billion purchase of Nokia's devices and services businesses. The EC says it will issue a decision by December 4, about one month from now.

Microsoft announced its intention to purchase Nokia and license the firm's patent portfolio and HERE navigation services almost two months ago. In a recent conference call related to the firm's quarterly financial results, Microsoft CFO Amy Hood noted that the deal was expected to conclude in very early 2014.

For that to happen, Microsoft needs antitrust approval from various important markets, and the EU is obviously key among them, given the success of Nokia's products there. The EC has now set a deadline of December 4 for its decision, though it could extend the time period by 10 days if Microsoft needs to provide concessions to any possible antitrust concerns.

Related: "In Blockbuster Deal, Microsoft to Buy Nokia"

Microsoft's offer to purchase the phone-related parts of Nokia comes as the software giant is trying to quickly restructure itself for what it sees as a "devices and services" future. And although Nokia has almost single-handedly established Windows Phone as the third mobile ecosystem behind Apple iOS and Google Android, the firm has fallen hard from its one-time perch atop the global phone market. Six years ago, Nokia was rated as the most valuable European brand, but today the company operates out of a Finnish headquarters it had to sell to improve its cash flow.

But it could get worse for fans of the one-time market leader: In absorbing Nokia's devices and services businesses, Microsoft is also picking up some brands that might need to be retired. Nokia sells devices under the Nokia, Lumia, and Asha brands today, and though Microsoft will own the latter two, it also has the right to use the Nokia brand for 10 years. But Microsoft says these brands will need to be consolidated, so it's possible that the Nokia brand will soon disappear from phones forever.

"Microsoft intends to buy the right to use the Nokia brand on its phones for 10 years," a Nokia statement reads. "There's a commitment now that this will happen for the Asha and feature phones business going forward. On smartphones, it's more complicated and we'll be seeking to create a unified brand across Lumia and other Windows based devices. But we're still a long way from when that decision has to be made."

Microsoft CEO Steve Ballmer hinted previously that at least some of the Nokia brands would disappear as well. "[Having] one brand looks better," he said, noting that product names like "Nokia Lumia Windows Phone 1020"—which, by the way, is not what anyone calls that device—"has been confusing for consumers."

Branding issues aside, at least one antitrust body has already cleared the purchase: The Competition Commission of India (CCI) issued an order last week approving of the deal.

"As regards the proposed combination, it is noticed that in India, while Nokia is active in the D&S [Devices & Services] business of mobile handsets, Microsoft is not active in that business," the order notes. "[Thus, the purchase] is not likely to have an appreciable adverse effect on competition in India." Likewise, Nokia is not active in Microsoft's core software businesses, the agency stated.

Related: "In Dive to the Bottom, a Winning Strategy for Nokia"

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.