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MS CEO sets mood for reconcilation

MS, Samsung discuss ways to improve relations during Nadella’s visit

Microsoft CEO Satya Nadella on Tuesday met with top South Korean officials and business moguls including Lee Jay-yong, vice chairman of Samsung Electronics, to discuss expanding ties with Korea and its tech industry.

Industry sources said Nadella finalized a deal with the government to set up a Microsoft data center in Busan. He reportedly visited the presidential office of Cheong Wa Dae and also met with Trade Minister Yoon Sang-jick during his two-day stay. 
Satya Nadella, chief executive officer of Microsoft Corp. (Bloomberg)
Satya Nadella, chief executive officer of Microsoft Corp. (Bloomberg)

Lee Jay-yong, president of Samsung Electronics (Yonhap)
Lee Jay-yong, president of Samsung Electronics (Yonhap)

At a separate meeting with the Samsung heir ― which comes after Microsoft filed a lawsuit against Samsung Electronics for unpaid interest on patent royalties last month ― Nadella discussed the possibility of future collaboration.

“It was obviously not a working-level discussion, but the two are said to have talked over how to narrow their differences and to step up cooperation,” said one industry watcher, declining to be identified.

In 2011, the two companies signed a contract on sharing patents, manufacturing prowess and sales strategies.

However, ties began to sour after Microsoft acquired rival smartphone maker Nokia in 2013. Since Microsoft now owns a manufacturer, Samsung called for revisions in their contract. Microsoft disagrees, and it claims Samsung has been falling behind on patent royalties.

Despite the legal discord, industry watchers painted a rosy outlook for the future of the partnership, saying that the two sides have no choice but to cooperate to fend off competition from China and other emerging markets.

Samsung and Apple, the world’s top two smartphone makers, previously agreed to drop lawsuits against each other.

Nadella also met with LG Electronics vice chairman Koo Bon-joon, with whom he discussed cooperation on the Internet of Things, as LG and Microsoft are participating in AllSeen Alliance, the sources said.

Meanwhile, the government has pinned high hopes on the Microsoft data center in Busan.

Cheong Wa Dae earlier said it expected the data center to lead to 5.5 trillion won ($5.2 billion) of investment for Korea.

Microsoft plans to build the data center by the end of this year on a 165,000-square-meter plot of land near LG CNS Busan Global Cloud Data Center, Korea’s first global cloud data center.

The company plans to invest 470 billion won over the first five years and trillions of won in the long run. When the Microsoft data center is established, it is likely to cover the entire Asian region.

“There will be jobs open for computer and software engineers once the center is established,” a government official said.

Nadella is scheduled to make a speech Thursday at the Microsoft Tech Days forum held at the Grand Intercontinental Hotel in southern Seoul. He will then visit China, Japan and India. 

By Park Hyong-ki and Lee Hee-ju
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