How Is Microsoft Making Billions Off Android?

Microsoft, at least officially, is a competitor to Google’s Android. Its Windows Phone 8 operating system offers much of the same functionality as that of Android, and despite a lower number of users and apps, is slowly growing to be a force worth reckoning within the smartphone world. While this relationship may seem reasonably simple, the truth is much more complicated.

As well as pushing its Windows Phone 8 software, new information has revealed that Microsoft is also hugely profiting off companies using Android. But how is this possible? Doesn’t Google own Android?

It turns out that while Google does own the rights to Android, a large number of the patents and software technologies used within the operating system itself are owned by Microsoft. This means that companies which use this operating system have to pay large amounts of money in royalties to Microsoft. So how much are these patents worth?

In 2013 Microsoft made at least $1 billion from Samsung alone for Android royalties

A recent court filing has revealed that in 2013 Microsoft made at least $1 billion from Samsung alone for Android royalties. This is a huge amount of money, worth more to the company than many of its core divisions, such as Xbox and Microsoft Entertainment Studios, and is only a fraction of what it generates annually from these patents. Surely if Samsung is handing over these huge sums, then other OEMs like Sony and LG must be doing the same.

These huge sums are made possible by the sheer number of patents which Microsoft owns that are used within Android. Allegedly the company believes that it owns at least 200 of such patented technologies used in the operating system. Furthermore, this would go at least some way to explain the company’s recent acquisition of Nokia’s flagging Devices and Services division. While the company may not believe that its mobile devices can be successful, it knows that its multitude of patents are highly valuable.