EU signs off on Microsoft-Nokia deal

Acquisition won't change the competitive landscape in smartphones, tablets, regulators say

As expected, European Union regulators today approved Microsoft's $7.4 billion acquisition of Nokia's devices and services business.

Antitrust officials with the European Commission, the Brussels-based antitrust agency, said they okayed the deal because there was "only modest overlaps" between the two companies, and believed that the acquisition was "unlikely to lead to competitors being shut out from the market."

"We look forward to the date when our partners at Nokia will become members of the Microsoft family, and are pleased that the European Commission has cleared the deal without conditions," a Microsoft spokesperson said in an email.

The EU's approval followed that of the U.S. Department of Justice's two days ago, and came two weeks after Nokia's shareholders signed off on the acquisition at an emotional meeting in Helsinki.

Approval had been expected: Previously, Reuters reported that the EU would clear the deal unconditionally.

Microsoft announced the acquisition of Nokia's devices and services business in early September, when it said it would pay the Finnish firm a total of 5.4 billion (approximately $7.4 billion at today's conversion rate), a figure that included 1.65 billion ($2.2 billion) for a 10-year license of Nokia patents.

At the time, analysts contended that the purchase was a defensive move to keep the phone maker -- which sells the bulk of the world's smartphones powered by Microsoft's Windows Phone operating system -- from going under or falling into the hands of an Android-first rival.

Nokia under Microsoft's watch does not change the competitive landscape, said EU regulators, who argued that "several strong rivals, such as Samsung and Apple, will continue to compete with the merged entity."

They also dismissed concerns that Microsoft would wield its Windows Phone operating system as a club, pointing out that it will be in the Redmond, Wash. company's best interest to not restrict the OS to Nokia.

"Indeed, Microsoft's share in the mobile OS market is limited," the EU said in a statement. "Moreover, to better compete with the leading Android and Apple OS platforms, Microsoft likely needs to continue relying on third-party device suppliers to broaden consumer adoption and attract mobile app developers."

Ironically, the EU also argued that Microsoft would be unlikely to limit availability of its own mobile apps -- officials cited Office and Skype by name -- to mobile device rivals, something the firm, in fact, does with Office. Although Microsoft's CEO-for-now Steve Ballmer has promised that Office would reach Apple's iPad at some future point, neither he or any other executive has detailed a timeline.

The EU sidestepped Microsoft's no-Office-on-iPad policy by focusing only on competitors that would be likely to use Windows Phone. "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," the EU said.

Microsoft has said it expected to finalize the Nokia acquisition in early 2014.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

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