The Deal between Microsoft and Korean Fair Trade Commission

Microsoft and Korea's Fair Trade Commission (FTC) has finally struck a deal, with the former agreeing to lessen the royalties collected from tech companies using supported by Android. These include LG Electronics and Samsung.

An article by The Korea Times on Monday has reported that the FTC released a statement.

"In return for approving MS's planned $7 billion acquisition of Nokia's handset business, MS agreed to put a cap on the royalties Samsung and other local domestic handset firms pay for patents of the merged entity over the next seven years."

The deal includes Microsoft not filing lawsuits over infringement issues against local manufacturers. The US-based tech company should not impose import or sales bans against devices or any products. Its licensing policies should be guided by Fair, Reasonable and Non-Discriminatory (FRAND) principles. There should be considerable access to Standard Essential Patents (SEPs) as well.

This recent turnaround comes after Samsung and Microsoft's separate agreement regarding patent row over licensing charges. The latter has asked the former fees for integrating Office programs on new handsets.

Google Android software uses MS-owned patents as its core technology, making it difficult for companies like Samsung and LG to replace some devices with another OS. Hence, the FTC has imposed conditions to "block the possibility of Microsoft abusing its patents," according to CNET in its article on Monday.

Nokia is the largest original equipment manufacturer (OEM) of Windows smartphones, controlling 90% of hardware sales. This means that MS-Nokia deal will give the former full control of its platform. It has also expanded into the creation of its own devices, such as the Surface-brand tablets.

The FTC has also asked Microsoft to scrap its "business collaboration agreement" with manufacturers in Korea. This might end up as a way to exchange trade secrets and, in turn, affect buyers.

The director of M&A division, Sun Joong-kyu, says, "The FTC ordered MS not to share confidential data with its business partners for fair competition."