Google's $12.5 billion bid for Motorola Mobility has been approved by the Justice Department, which expressed concern about the search engine's FRAND licensing terms.
Hours after
the
European Commission OK'd Google's (NASDAQ:GOOG) $12.5
billion bid for Motorola Mobility (NYSE:MMI), the Department of
Justice followed suit, granting the search engine permission to buy the Android
OEM.
The DOJ also
extended its blessing to the controversial acquisition of Nortel patents by
Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Research In Motion
(NASDAQ:RIMM), a group that called itself Rockstar Bidco.
The DOJ's move
clears the way for Google to consummate the deal it inked last August to
acquire Motorola, a deal the search engine said was designed to "super-charge"
its Android operating system ecosystem.
The DOJ concluded
the Motorola acquisition and patent purchases would not lessen competition in
the mobile market.
However, the
regulator also echoed the concerns of its European counterpart about whether
the acquirers would abuse the licensing structure of standard essential patents
(SEPs) owned by Motorola and Nortel. Motorola commands more than 17,000
patents, while Nortel has more than 6,000 patents.
The Commission
and DOJ were concerned Google, Microsoft, Apple and RIM could wield some of the
SEPs to boost rivals' costs to license them or otherwise impede competition.
While Google,
Apple and Microsoft have all claimed they would license SEPs under fair,
reasonable and non-discriminatory (FRAND) terms, the DOJ is concerned by
Google's murkier position on SEP licensing.
Google said last week that it reserves its right
to "seek any and all appropriate judicial remedies against
counterparties" that refuse to license its FRAND patents.
Google
essentially left the option open to levy injunctions to those who did not
accept royalty demands, which include demanding 2.25 percent royalties for each
device Apple and others sell.
The DOJ noted in its statement:
"Google's
commitments have been less clear. In particular, Google has stated to the IEEE
and others on Feb. 8, 2012, that its policy is to refrain from seeking
injunctive relief for the infringement of SEPs against a counter-party, but
apparently only for disputes involving future license revenues, and only if the
counterparty: forgoes certain defenses, such as challenging the validity of the
patent; pays the full disputed amount into escrow; and agrees to a reciprocal
process regarding injunctions."
To that end,
the DOJ pledged to continue to monitor the use of SEPs in smartphones and
tablets and said it will "not hesitate to take appropriate enforcement
action to stop any anti-competitive use of SEP rights."
Google
is paying $40 per share for Motorola;
that's a 63 percent premium for the struggling maker of Android phones, tablets,
and set-top box and other IP video gear. Many industry watchers believed Google
simply targeted Motorola for its massive patent war chest.
Google's bid came one month after Apple, Microsoft and RIM
agreed last July to pay $4.5 billion for Nortel's patents.
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