Samsung has purchased the development operations of British chip maker CSR, a move which grants the Korean giant 21 US-registered patents, as well as a perpetual license to use CSR’s handset technology. In exchange, CSR has agreed to cease developing handset connectivity and location technology, and to transfer 310 human brains to Samsung. Resistance is futile…
Samsung is already one of the dominant players in the technology market, and with the acquisition of CSR, it has grown even stronger. The more technology that Samsung controls the rights to, the more power it will have in the market. This is especially evident with this move because Samsung effectively eliminated some of its competition. Through the acquisition, CSR agreed that it will no longer develop mobile connectivity and location technology; i.e., it will no longer compete with Samsung’s development of this technology. Instead of Samsung competing with another company to develop better technology for the consumer, it just purchased the company, and eliminated the competition. Again, less competition means less innovation and higher prices.
The patents that Samsung acquired are very important to wireless communication, as well. Much of the technology that CSR developed were in the areas of Bluetooth and Wi-Fi – in some ways the core of wireless technology. Now that Samsung has a perpetual license to use the technology of CSR, it no longer has to pay royalties. Of course, they did pay $310 million dollar for the acquisition, but now Samsung will be able to charge its own royalty fees to other companies that use this important technology. This will certainly not ease the already contentious nature of technology licensing.
At the end of the day, the consolidation of power amongst the technology giants means that there is less competition. This undoubtedly leads to less innovation and higher prices. It also means that there will be an increase in contentious litigation regarding the licensing fees that Samsung will now be able to charge. The major technology players have made clear that litigation is preferred over settlement.
Unfortunately for the consumer, settlement is much better than litigation.