South Korea regulators finally OK Microsoft's Nokia deal

The country's competition watchdog gives Microsoft the green light, under several conditions, after 21 months of review.

Cho Mu-hyun
Cho Mu-hyun Senior Writer, ZDNet Korea
Cho Mu-hyun is a native of South Korea living in Seoul and working for ZDNet Korea as a senior writer covering Samsung, LG, Hyundai, SK and the Korean conglomerates, or chaebols, in general.
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South Korean regulators took almost two years to approve Microsoft's takeover of Nokia's smartphone business. Josh Miller/CNET

South Korea's Fair Trade Commission has approved Microsoft's acquisition of Nokia's smartphone operations after nearly two years of review by the country's authorities.

The FTC ruled in favour of the acquisition Monday, but imposed conditions intended to "block the possibility of Microsoft abusing its patents." In an initial review, the commission had voiced concerns that Microsoft might use the Nokia acquisition to create an unfair advantage against local smartphone makers Samsung and LG.

In September 2013, the US-based software giant announced its intention to buy Nokia's devices and services business, which included the Lumia line of smartphones, for $7.2 billion. Nokia, once the dominant phone maker in the world, had fallen behind in the face of competition from Apple and from Android phone makers like Samsung, while Microsoft's phone software had failed to catch on.

In the US and Europe, approval of the deal came relatively quickly, and it was completed in April 2014.

But the combination turned out to be a bust: In July of this year, Microsoft took an $8.4 billion charge because of the acquisition and related costs.

Last year, Microsoft submitted proposals to address the South Korean FTC's worries over anticompetitive behaviour. Those worries included Microsoft already being in a "business collaboration agreement" with local manufacturers that could serve as an excuse to share trade secrets.

The FTC, which said it listened to opinions of interested parties as well as experts during review, got an agreement from Microsoft to not file for sales bans on Korean companies locally or abroad.

Review by other government agencies, including South Korea's Prosecution Service (similar to a US district attorney), was completed without opposition during May and June.

The FTC denied accusations of protectionism by defending the interest of local firms and for its strict regulations against foreign companies, saying different countries have different laws.

An FTC spokesman declined to provide additional comment on the announcement.

Correction, August 25 at 9:07 a.m. PT: This story originally misstated the nature of Microsoft's deal with Nokia. The software maker acquired Nokia's devices and services operations, not the entire company.