Microsoft No Longer Has An X On The Back Of Its Box For Antitrust Enforcers

By Jean Kim

The European Commission (the “EC”), as expected, has approved Microsoft’s proposed acquisition of Nokia’s handset devices business, demonstrating that antitrust enforcers no longer view the operating system Goliath of the 1990s as a tempting target.

The European approval was the last remaining regulatory hurdle for the parties to go forward with the $7.2 billion acquisition.  The FTC granted “early termination” approval last week, which means that it will take no action to block the merger.

These relatively easy approvals by U.S. and European regulators are consistent with the similar ease with which Microsoft’s acquisition of Skype (worth $8.5 billion) sailed through U.S. and EC merger review in 2011.  Antitrust enforcers apparently are not concerned with Nokia’s 3% share of the smartphone market going to Microsoft, particularly when Apple and Samsung together account for almost 50% of worldwide smartphone sales in 2013.

Microsoft, after emerging in 2011 from a decade of oversight by the U. S. Department of Justice following the settlement of the DOJ’s 1998 antitrust suit, has truly entered a new era.  Antitrust enforcers have turned their gaze to bigger fish like Google and Apple, and no longer have a knee-jerk reaction to Microsoft’s every move in tech markets.

The EC has not completely withdrawn its scrutiny of Microsoft, however.  As late as March of this year, the EC fined Microsoft $730 million for breaching its five-year commitment to give customers a choice of browser in connection with the upgrade of its Windows 7 operating system.  This penalty was in addition to the more than 1.6 billion euros in fines that the EC had already levied on Microsoft over the last decade.

But Microsoft’s commitment with the EC expires in 2014 (unless extended), and Microsoft may well be left unfettered to pursue an acquisition strategy aimed at making it more competitive in a technological world that is no longer dominated by the personal computer.  Microsoft certainly has the funds for a shopping spree with its $77 billion war chest.

With the rollout of Surface tablets, and Xbox’s healthy 30% plus share of the console market, the Nokia acquisition will round out Microsoft’s portfolio and give it a foothold in three device markets where it can deploy and unify its Windows platform.

— Edited by Gary J. Malone