Google and China's Tencent Find Being Friends Has Benefits
19 Janeiro 2018 - 07:55AM
Dow Jones News
By Liza Lin in Shanghai and Alyssa Abkowitz in Beijing
Alphabet Inc.'s Google and Tencent Holdings Ltd. will license
each other's technology patents, a deal that could help the former
broaden its toehold in the Chinese market and accelerate the global
expansion of the latter.
They entered a long-term patent cross-licensing agreement for a
broad range of products and technologies, the two companies said
Friday, adding they were open to more cooperation in the
future.
"By working together on agreements such as this, tech companies
can focus on building better products and services for their
users," Mike Lee, Google's head of patents, said in a
statement.
Financial terms weren't disclosed, and neither company commented
beyond their statements.
Cross-licensing deals allow companies to license each other's
technology for use in different markets, said Lester Ross, an
attorney at WilmerHale in Beijing. Mr. Ross said that
cross-licensing deals can restrain competition, but that they also
create market efficiencies--for example, reducing the cost of
having to file for patents in multiple countries.
Companies such as Samsung Electronics Co. and Apple Inc. have
signed such agreements in the past to prevent infringing each
other's technology and regional patents and therefore avoiding
expensive lawsuits.
The arrangement is the latest in a string of moves by Google to
expand its reach into mainland China, after it pulled out its main
search business in 2010 due to concerns about hacking and
censorship. Several weeks ago, the Mountain View, Calif.-based
company opened an artificial-intelligence lab in Beijing, and this
week said it is opening a new Chinese office--in Shenzhen, the city
near Hong Kong, where Tencent is based.
Google already operates offices in Beijing and Shanghai,
employing about 600 staff. Although Google's search engine is
blocked in China, the offices are used mostly for its ad sales
staff and engineers working on its global products. Google will use
the new base in Shenzhen in part to tap into the region's
electronics hardware supply chain, according to an email sent to
its Chinese employees.
Tencent is China's largest tech company by market
capitalization, and it makes most of its money from videogames. Its
WeChat social network app is dominant in China, but has scant reach
beyond.
Chris DeAngelis, China general manager for technology
consultancy Alliance Development Group, sees the tie-up with Google
as a sign of Tencent's global ambitions.
"It represents that China's technology giants have grown up,"
Mr. DeAngelis said. "Tencent is now a global player."
Write to Liza Lin at liza.lin@wsj.com and Alyssa Abkowitz at
alyssa.abkowitz@wsj.com
(END) Dow Jones Newswires
January 19, 2018 04:40 ET (09:40 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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