While Microsoft and Google are rivals in many arenas, Microsoft makes a substantial profit from patents used by Android vendors. However, despite Microsoft’s commitment to transparency, these agreements have only been revealed in legal surroundings,until now. Patent licensing deals agreed between the Redmond giant and Android device makers grant Microsoft revenue for every device made using the company’s intellectual property. In November last year, Nomura analyst Rick Sherlund estimated that Microsoft was making as much as $2bn in Android patent licensing agreements. These funds are believed to be covering losses in the tech giant’s entertainment division, covering Xbox, Windows Phone and Skype.
Although Microsoft has a licensing agreement that cover over 70 percent of all Android devices sold in the US, the exact nature of the patents utilised by the Android ecosystem wasn’t divulged, until now. As part of the regulatory sign-off of Microsoft’s Nokia acquisition, China’s Ministry of Commerce (MOFCOM) has published a list of 310 patents that highlight the technologies that Microsoft collects royalties on. The Chinese agency found that 73 of the 310 patents were standard-essential, along with 127 patents that Microsoft claims are implemented in Android. The list also contains 110 non-standard essential patents along with the patents that Microsoft acquired during the Rockstar auction. MOFCOM launched the investigation to determine whether Microsoft would use its patent portfolio to gain an uncompetitive atmosphere following the closure of the Nokia deal. It is estimated that the Microsoft nets around $1 to $2 billion in revenues from Android licensing agreements with several manufacturers, and that number is likely to grow by a large margin considering the growth of Android in emerging markets. It is interesting that the list was discovered on the Chinese language version of MOFCOM, considering the English language site made no mention of the patent lists. Microsoft has come under criticism over the last few years for the way it handles patent litigation, which was highlighted in the Barnes & Noble case.