Microsoft’s competition with Google proved the highlight of the week, as a series of Tweets and blog postings by the respective companies’ executives threatened to make an already-tense relationship even more acrimonious.
The stage was set earlier this year, when Microsoft and a handful of other companies submitted a winning $4.5 billion bid for the 6,000 wireless technology patents and patent applications formerly owned by Nortel Networks. Google had previously offered some $900 million for the patents. In July, U.S. Bankruptcy Judge Kevin Gross, in Wilmington, Del., and Ontario Superior Court Judge Geoffrey Morawetz signaled their approval of the deal in a joint session.
According to unnamed sources speaking to The Wall Street Journal, federal regulators are examining whether members of the winning consortium are planning to file additional patent-infringement suits against Android device-makers: “The Justice Department wants to know whether it intends to use [the patents] defensively to deter patent lawsuits against its members, or offensively against rivals.”
But now Google’s crying foul over the deal.
“Microsoft and Apple have always been at each other’s throats, so when they get into bed together you have to start wondering what’s going on,” David Drummond, Google’s senior vice president and chief legal officer, wrote in an Aug. 3 posting on The Official Google Blog. “Fortunately, the law frowns on the accumulation of dubious patents for anti-competitive means-which means these deals are likely to draw regulatory scrutiny, and this patent bubble will pop.”
He went on to claim that the Justice Department is “looking into whether Microsoft and Apple acquired the Nortel patents for anticompetitive means.”
Google’s competitors have taken to the courts to stop Android’s rise. Over the past several months, Microsoft has convinced several manufacturers to pay it royalties on their Android-based devices, and is currently locked in patent-infringement lawsuits with Motorola and Barnes & Noble. Meanwhile, Apple is embroiled in court cases with HTC, Samsung and Motorola over the use of Android technology.
Following Drummond’s blog post, Microsoft decided to take the battle to the Internets.
“Google says we bought Novell patents to keep them from Google,” Brad Smith, Microsoft’s general counsel, wrote in an Aug. 3 Tweet. “Really? We asked them to bid jointly with us. They said no.”
The same day, Frank Shaw, Microsoft’s corporate vice president of corporate communications (say that three times fast), also Tweeted: “Free advice for David Drummond – next time check with Kent Walker before you blog.”
He included a link to an Oct. 28 email sent to Brad Smith by Kent Walker, Google’s general counsel, suggesting that “a joint bid wouldn’t be advisable for us on this one.”
Drummond felt compelled to update his post Aug. 4: “If you think about it, it’s obvious why we turned down Microsoft’s offer,” he wrote. A joint acquisition of the patents “that gave all parties a license would have eliminated any protection these patents could offer to Android against attacks from Microsoft and its bidding partners.”
However the legal side of that patent battle turns out, the two companies will continue to batter each other for smartphone market share-although Google Android continues to handily outpace Microsoft’s own efforts in the space. According to research firm comScore, Microsoft saw its smartphone market-share decline in the three-month period ending in June, from 7.5 percent to 5.8 percent, over a period when both arch-rivals Google and Apple experienced gains.
Microsoft’s market share included both its antiquated Windows Mobile platform and the newer Windows Phone, which was supposed to reinvigorate the company’s fortunes in the smartphone space.
Instead, Windows Phone is showing signs of anemic adoption by consumers and businesses. According to data from Nielsen, Microsoft occupied some 9 percent of the U.S. smartphone market in June-trailing Google Android with 39 percent, Apple’s iPhone with 28 percent, and RIM with 20 percent.
During a July 11 keynote speech at the company’s Worldwide Partner Conference, CEO Steve Ballmer described Windows Phone’s market share as “very small,” but insisted that other metrics (such as consumer satisfaction) boded well for the platform overall.
Meanwhile, former Microsoft executive Steven VanRoekel has been tapped to become the nation’s second federal CIO. He will replace Vivek Kundra, who accepted a fellowship at Harvard University.
VanRoekel worked at Microsoft for 15 years, eventually rising to senior director for the Windows Server and Tools Division. After leaving the company in 2009, he served as the Federal Communications Commission’s managing director before leaping to USAID in 2011.