Microsoft inks a deal with Samsung, which doesn't believe Google can provide it adequate patent protection. Motorola Mobility is the last major Android OEM to hold out.
Google (NASADAQ:GOOG) accused Microsoft (NASDAQ:MSFT) of
extortion after the software giant inked a cross-licensing deal with Samsung
, which agreed to pay
Microsoft undisclosed fees for every Android smartphone and tablet it
Samsung joined HTC as the second major Android OEM
with Microsoft to head off prolonged patent infringement litigation.
Brad Smith and Horacio Gutierrez, Microsoft's general counsel and deputy
general counsel, drove home this point in a blog post announcing the pact Sept.
: "Today's agreement with Samsung means that the top two Android handset
manufacturers in the United States have now acquired licenses to Microsoft's
Indeed, Samsung and HTC accounted for over half of Android U.S.
smartphone sales. Naturally, the licensing deal is a huge coup for
Microsoft, and a blow to Google, which didn't veil its anger at the
"This is the
same tactic we've seen time and again from Microsoft. Failing to succeed in the
smartphone market, they are resorting to legal measures to extort profit from
others' achievements and hinder the pace of innovation," a Google spokesperson
. "We remain focused on building new technology and supporting
The use of the word "extort" underlines the
frustration building within Google. The company has watched its open-source
operating system grow from living on a single T-Mobile smartphone in 2008 to appear
on smartphones, tablets, TVs and peripherals from dozens of hardware and
software partners. Android is currently the leading smartphone platform
Samsung is the largest Android OEM worldwide. The company
last week revealed it sold more than 10 million Galaxy S II smartphones without
major U.S. penetration in less than six months. Samsung also sells the Galaxy Tab
10.1 and 8.9 tablets, several Android-based Web devices and TVs fitted with
the Android-based Google TV service.
Now, each time Samsung sells an Android device, some of
that money goes to Google rival Microsoft, whose own Windows Phone 7 platform
is woefully behind in the market.
However, it is important to remember that
Android grew smartphone share from zero to 40 percent in three years, taking
massive amounts of market share from both Nokia and RIM all over the world.
Moreover, Microsoft's Smith and Gutierrez acknowledged
that the company's agreement with Samsung opens the door to the OEM possible
building Windows Phone handsets: "The agreement also gives both companies
greater patent coverage relating to each other's technologies, and opens the
door to a deeper partnership in the development of new phones for the Windows
Motorola Mobility (NYSE:MMI) is the third and final major
Android OEM with which Microsoft seeking a licensing agreement. Seeking patent
protection of its own for Android and other businesses, Google is trying to
acquire Motorola Mobility for $12.5 billion.
That deal may well pass muster with the Justice
Department's antitrust division, which is reviewing the deal. But if Google
were to buy Motorola it would assume the patent infringement missile Microsoft
has lobbed at the phone maker.
And Microsoft's lawyers are also positioning the signing of
licensing agreements with the two Android OEMs as precedent that Google
should pay be prepared to pay: "If industry leaders such as Samsung and
HTC can enter into these agreements, doesn't this provide a clear path
With Oracle (NASDAQ:ORCL) already making a
strong case in court to command licensing fees from Google over the use of Java
in Android, Microsoft could then come from the other side and squeeze Google.