Bloomberg reported late last week that Google and Tencent Holdings Ltd had agreed to partner on patents that would cover a range of products as well as technologies. This was going to be a cross-licensing deal between two of the largest companies in the world. Alphabet Inc., the world’s second largest company, and Tencent Holdings, the fifth largest company in the world, are going to join hands to develop future technologies.
It is to be a symbiotic deal which will help Google make inroads into China and will help Tencent expand beyond the Chinese mainland.
This type of an arrangement is quite normal among large corporations and is designed to minimize the danger of patent infringements and the resulting fights. According to Reuters, Alphabet has also signed pretty similar deals with Samsung Electronics, Cisco Systems as well as LG Electronics, to name a few. However, this alliance is Google’s first with a large Chinese conglomerate.
Google was forced to exit from China in 2010 after the search engine refused to comply with the Chinese government’s demand to censor its search content. Since 2017, the company has renewed its efforts to get back into the Chinese market by sharing its AI software tools with local companies. Sundar Pichai, Google’s Chief Executive Officer, visited China in December 2017 to speak at a conference that was hosted by the Cyberspace Administration of China (the censorship body of the country).
Google is also increasing its investment in China by building a new research and development base in the country. Google’s other tools such as its app store, its search engine as well as its email service continues to remain blocked in China. The company also announced this month that it had already invested in the Chinese livestream gaming application called Chushou. This app is similar to Google’s YouTube game livestream service.
It was also just revealed that Google had also very quietly opened up a new office in Shenzhen – it’s third in China – near Honk Kong. Huawei and Tencent both have major offices in Shenzhen.
Google’s alliance with Tencent comes at a perfect time. Tencent is a giant in China, with the company’s social media platform – WeChat – literally permeating every aspect of Chinese life. WeChat has almost 1 billion users across China. Tencent also owns one of the country’s most popular application stores and also hosts the country’s largest gaming and livestream platforms.
According to Mike Lee, Google’s Patents’ Head, technology companies can focus on developing and building better products and services for their customers through alliances such as this.
Tencent’s Deputy General Counsel as well as Head of Intellectual Property Sam Xu also made a statement. He said that Tencent was also happy about the collaboration between two of the leading technology companies in the world.
Reuter’s also stated that neither Google nor Tencent responded to questions related to the scope and size of the deal or which products the deal would cover.
According to the Financial Times’ report, this was to be a long-term arrangement and both companies have the freedom to access each other’s patent portfolios. Also a part of the deal is that neither party will be allowed to file a lawsuit against the other for patent infringement. Both companies said that by keeping legal battles out of the scene, they would increase the pace of development hugely.
Data from the World Intellectual Property Organization shows that Chinese investors applied for more than 43,000 patents in 2016. The country is also poised to become the world’s largest user of the international patent structure.