Google intends to run Motorola Mobility as a separate business should the deal close in 2011 or early 2012.
Google surprised many
high-tech watchers with its $12.5 billion acquisition bid for key Android phone
maker Motorola Mobility on Aug. 15. The $40-a-share, all-cash deal is a 63 percent premium. Google intends to run Motorola Mobility as a
separate business should the deal close in 2011 or early 2012. Assuming the
deal meets with the approval of federal regulators, the search engine would get
a few things.
First is patent protection. Motorola has more than 17,000
patents, including ones for 3G and 4G wireless technologies, as well as
nonessential patents Google can use to defend itself in the litigious mobile
Second, like rival Apple, Google would own the hardware assets to build a
closed, integrated system, if it chooses to do so.
Third, Google would gain Motorola's set-top box business, which it could
use to fortify the Google TV Web
But this deal is
fundamentally about patent
protection. Oracle is suing Google
for patent infringement over its use
of the database software maker's Java technology in Android.
Plus, Google's Android
OEMs-including Motorola, Samsung and HTC-are being sued by Apple for using
hardware and software in their Android phones that resembles technology used in
Microsoft and Motorola are also embroiled in a patent
infringement suit related to hardware and software used in their Android
So aggressive is the
positioning against Google in the mobile sector that foes Apple and Microsoft
worked together to keep Nortel Networks' 6,000-plus wireless, technology and
other patents away from Google.
This led to Google publicly accusing
Microsoft and Apple of setting up patent consortiums to seize
control of valuable wireless patents. Twelve days later-boom!-Google dropped
the Motorola bombshell.
"Our acquisition of Motorola will increase competition by
strengthening Google's patent portfolio, which will enable us to better protect
Android from anti-competitive threats from Microsoft, Apple and other
companies," said Google CEO Larry Page in a corporate blog post.
Patent experts differ on
just how much patent protection Motorola will afford Google and Android OEMs in
the current lawsuits, but most agree that they will at least serve as
deterrents for future litigation.
Google may be buying patent
protection, but it could upset the balance the company created by cultivating
Android as open source. Google has
maintained that Motorola will remain a licensee of Android, which will remain
available to other OEMs under an open-source license.
Publicly, Samsung, HTC and
others expressed support for the agreement, pointing to the obvious patent
protection angle. But most industry watchers aren't buying the diplomatic
responses, wondering whether these vendors fear Google will favor Motorola for
new Android software builds.
These handset makers may not have to worry about
Google-Motorola favoritism. The Motorola merger is pending regulatory approval,
which is far from assured considering the close antitrust scrutiny Google has come under by the Federal Trade Commission over its
search and-allegedly-its Android software business.
No one saw this deal coming. As Gartner analyst Michael
Gartenberg said: "A master magician always has you looking at their left hand
while they try to get you to ignore what's going on with their right."