Microsoft and Nokia are joining forces to buy patent rights in the intellectual property market.
The two companies announced on Wednesday that they have entered into a memorandum of understanding to acquire Microsoft patents in a bid to bolster their intellectual property portfolio.
Under the deal, Microsoft will pay $8.6 billion for Nokia patents and $7.5 billion for Qualcomm patents.
The deal is expected to close in 2019.
“We look forward to working with Microsoft to improve our intellectual property and help make our business and technology stronger,” said Microsoft’s Chief Legal Officer, Mark Zaid.
“We believe this is a strategic transaction that is aligned with our long-term plans to become the leading platform and platform partner in the global cloud and mobile computing industry.”
Nokia will take on patents owned by Microsoft that cover a range of products including operating system, network hardware, applications and data center hardware.
Qualcomm will take over patents that cover wireless networking devices.
Microsoft and Qualcomm will jointly develop, develop, manufacture and sell mobile phones.
Microsoft will retain control over the patents that are licensed to its competitors.
Nvidia will take a minority stake in Qualcomm’s Qualcomm Technologies.
Microsoft and Qualcomm also announced a $50 million funding round for the intellectual properties development and commercialization program at a conference in Shanghai.
This is the third major purchase in the past year by Microsoft.
In January, the company announced it was taking a $250 million stake in Microsoft Azure.
In April, it said it was buying Microsoft Edge and acquiring its Skype, Windows Phone and Office products.
These acquisitions come at a time when the technology market is seeing a dramatic increase in innovation.
Last year, Microsoft acquired the Motorola Mobility division, which now includes the Android operating system and a number of other Android mobile operating systems.
According to the Microsoft, Google and Samsung are the top three smartphone vendors worldwide.
A key question mark in Microsoft’s business is the company’s efforts to drive down prices for its mobile devices, which have struggled in recent years.
It is the first time Microsoft has entered into an intellectual property transaction with a third party.
Apple recently purchased patents that it acquired from the British firm WPP and will begin to use them in its own devices.
Earlier this year, the Wall Street Journal reported that Microsoft and Samsung were in talks to buy Nokia patents.
