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Nokia Might Face Patent Probe From EU Antitrust Regulators

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As Nokia Corporation (NOK - Free Report) gears up for the upcoming technology cycle with an end-to-end portfolio, it is facing certain roadblocks from some unlikely corners. The latest impediment appears to come from German automobile manufacturer Daimler AG (DDAIF - Free Report) , which registered a complaint with EU antitrust regulators to initiate a probe against Nokia’s patents.

The bone of contention is Nokia’s patents relating to the automotive industry, which Daimler alleges are essential for the development of new products and services for connected driving. The auto major argued that fair and non-discriminatory access should be provided for the overall benefit of the auto industry. However, Daimler accused Nokia of using its patent rights to claim licensing fees for technologies used in navigation systems, vehicle-to-vehicle communication and self-driving cars.

Nokia countered the arguments by alleging that Daimler has intentionally raised the issue to side-step the licensing program and avert paying fees for its technological innovations. The telecom equipment manufacturer further pointed out that unlike other auto majors, Daimler had long been resisting efforts to take a license for using its technologies in its cars and has thus sought the refuge of the antitrust regulators to bypass the legitimate licensing fees to Nokia.

Despite the underlining tensions between the two firms, Nokia has maintained that it is open to constructive dialogue on the issue for a workable solution for the overall improvement of the automotive sector. Meanwhile, the EU antitrust regulators have confirmed the receipt of the complaint and are in the process of assessing it.

Notwithstanding the hullabaloo, Nokia’s shares have recorded an average return of 4.4% in the past six months against the industry’s decline of 11.8%.  

Nokia remains focused on its strategy that hinges on four strategic priorities. These include its aim to lead in high-performance end-to-end networks with its communication service provider customers. The second priority is based on its relentless pursuit to expand network sales to select vertical markets, specifically energy, transportation, public sector, technical extra-large enterprises and webscale players such as Alphabet Inc. (GOOGL - Free Report) and, Inc. (AMZN - Free Report) . Building a strong standalone software business remains the third strategic priority of the company. The fourth pillar aims to create new business and licensing opportunities in the consumer ecosystem.

In order to strengthen its leading position in the market, Nokia facilitates its customers to move away from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and flexible automation needed to support dynamic operations, reduce complexity and improve efficiency. The company is continuously expanding its business into targeted, high-growth and high-margin vertical markets to address growth opportunities beyond its traditional primary markets. Rollouts of next-generation 5G networks are anticipated to improve market conditions significantly in 2019 and beyond for this Zacks Rank #4 (Sell) firm.

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