Several months ago, Microsoft filed suit against Motorola over Android-related patent infringement. Motorola, of course, counter-sued, claiming patent infringement on the Xbox 360. That suit was a little surprising, considering the companies tend to stick to like-minded infringement cases. Microsoft didn't think too much about it and let the courts get involved. Sadly for Microsoft, they have lost 4 of the 5 claims.
Both Motorola and the judge in the case have recommended that the International Trace Commission block all imports of the Xbox 360 into the US. Motorola offered a deal, giving Microsoft 33 cents for every Android phone they have sold, while charging Microsoft 2.25% of each Xbox 360 sold. Microsoft has declined this offer, leaving the Xbox 360 in jeopardy of import blocking.
So, why did Microsoft decline the offer? Hit the break to find out.
Microsoft claims that the reason for declining the offer is because Motorola should be more reasonable in their licensing deals. While this is true, there is more at play here. First, Motorola is owned by Google, a large player in several markets that Microsoft is emerging in, such as smartphones and tablets. Android, the platform in question, has taken a lot of the steam out of Microsoft's former second place in the smartphone market. Microsoft does not want to give Google any money to help challenge them any more.
In addition, one of Microsoft's biggest competitors in the digital media realm is Google TV. While the Xbox 360 does appear to be the dominant media consumption platform, Google has gained a little ground this year, though still statistically insignificant. By losing sales of the 360, Microsoft would be encouraging a little slide in that arena, which they cannot afford with a new device coming next year, plus SmartGlass coming soon.
Lastly, after the ITC makes its recommendation, it still has to go to President Obama to be finalized. Good news for Microsoft is that Obama's CIO is a former Microsoft executive. I suggested when it happened that this was actually good news for Microsoft, and it might finally pay off in this case.