Quantcast
Last updated on April 18, 2014 at 5:30 EDT

FTC Signs Off On Nokia-Microsoft Deal Following DOJ Approval

December 3, 2013

Peter Suciu for redOrbit.com – Your Universe Online

On Monday the Federal Trade Commission signed off on Microsoft Corp.’s proposed acquisition of Nokia’s mobile devices and services business. This transition was given the nod following approval by the United States Department of Justice.

The deal, which first went public in September, is reportedly worth around $7.2 billion, and would allow the Redmond, Washington-based software giant to acquire the largest OEM (original equipment manufacturer) for its Windows Phone line of smartphones. At present Nokia controls more than 90 percent of Windows Phone hardware sales and with this deal Microsoft will gain nearly complete control over its own platform.

About 32,000 Nokia employees will reportedly become Microsoft employees as a result of this acquisition.

This acquisition wasn’t expected to encounter any significant roadblocks with US regulators, and Microsoft noted that it was pleased that the deal was cleared by the DOJ without conditions.

“We look forward to the date when our partners at Nokia will become members of the Microsoft family, and are pleased that the Department of Justice has cleared the deal unconditionally,” a Microsoft spokesperson said via prepared statement

“The FTC had no problems signing off on the merger due to the extremely weak position of both companies in the smartphone world and their continuing challenge of extending the strength of Microsoft onto the mobile world,” Roger Entner, principal analyst at Recon Analytics told redOrbit. “The two companies are now coming together and the Nokia group will integrate into Microsoft.”

The quick approval by the DOJ and FTC will also likely make for a smooth transition for Microsoft, and it should also allow the company to better compete in the smartphone market. However, it won’t improve Microsoft’s place in that market overnight.

“Generally mergers like that cause a slowdown and delay right when they need to speed up the most,” added Entner. “The combined entity will be substantially faster in iterating its software releases. For the next six month, there will be probably no significant changes in their market share.”

This acquisition also won’t mean the end of the line for Finnish-based Nokia either.

“Just because Nokia won’t be a standalone company any longer, don’t think the name will disappear,” said telecommunications industry analyst Jeff Kagan. “Microsoft has a decision to make. Keep the Nokia brand or dump it for the Microsoft mother ship brand. We have seen this same choice from other companies over the years as well.”

Nokia is one of the strongest brands in the business Kagan told redOrbit.

“It just needs to be freshed [sic] up and as I like to say, ‘youthenized!’ Does that mean keep the brand name or dump it? That is the question we have next,” Kagan added. “If Microsoft and Nokia are lucky, they will have the same fortune as AT&T did when SBC acquired AT&T, BellSouth and Cingular. At that time the AT&T brand was old and tired, but they re-energized it and embraced the brand. Now the AT&T brand is hot.”

Microsoft must now look for final approval from the European Union, where anti-trust regulars will have the final say whether or not Microsoft’s bid breaches the EU’s competition rules. Online reports suggest that the European Commission could decide this week.


Source: Peter Suciu for redOrbit.com - Your Universe Online