Google-Motorola Bid Sparks Many Debates

By Clint Boulton  |  Posted 2011-08-16 Print this article Print

As for the patently blatant patent play, others are curious: Why did Google opt to buy the whole Motorola Mobility enchilada? This Is My Next blogger Nilay Patel questioned why Google acquired all of Motorola instead of just its patent treasure trove:

"All that said, it's still curious why Google spent the full $12.5b on Motorola, instead of a smaller amount acquiring the rights to Moto's patents-or the rights to litigate with those patents."

We have a theory: Motorola CEO Sanjay Jha didn't give them a choice. By making Google buy Motorola at a 63 percent premium, Jha and the company's shareholders get a big win.

They get more money and protection from litigation, bundled with the ability to operate their core business, which is hanging on, independently. Motorola investor Carl Icahn can wax ecstatic.

How much did those patents cost Google? Jefferies & Co analyst Youssef Squali has an idea:

"We believe that Google is paying approximately $9.5B for MMI's patents, assuming $3B in value for MMI's home and devices businesses. This implies $560K per MMI patent vs. $700K that Apple/Microsoft consortium paid per Nortel patent."

Neither patent play came cheap. Speaking of the patents, FOSS Patents blogger and IP expert Florian Mueller doesn't see the Motorola patents as a major defense for current litigation versus Android, noting that Apple and Microsoft still sued Motorola despite its massive patent chest.

Looking to the future, the patents could provide good protection for Google, others believe. Sometimes the best defense is a good offense.

"From an intellectual property standpoint, the acquisition bolsters Google's negotiating position with Apple, in the event that Apple goes after Android-based products the same way it did with Samsung in Europe," said Francis Sideco, principal analyst, wireless communications, for IHS. "If nothing else, Google will be able to assert Motorola's IP for the 3GPP and 3GPP2 cell phone specifications, which are used in both the iPhone and iPad."

Lastly, what of the antitrust issues? When some people learned of the deal, they speculated the Federal Trade Commission and/or Justice Department would investigate it for antitrust issues. What antitrust issues?

"There are no antitrust or regulatory concerns that would constitute deal breakers," Stifel Nicolaus analyst Rebecca Arbogast said in a research note obtained by AllThingsDigital Aug. 15. "It would seem unlikely the deal would be blocked in the absence of any significant horizontal market concentration issues. We also don't see why the government would have a problem with Google arming itself in the smartphone intellectual property wars by gaining access to the 17,000+ patents Motorola brings to the battle-a primary Google objective."

What interesting tack are you seeing this story take during day two? Drop us a line in the comments section below.



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