Google (NASDAQ:GOOG) jumped a crucial regulatory hurdle Feb. 13, as the European Commission approved the company's $12.5 billion acquisition bid for Motorola Mobility (NYSE:MMI) because it did not believe the deal would pose antitrust concerns in the mobile market.
Google in August 2011 agreed to buy Motorola for $40 per share in cash, a 63 percent premium. Motorola makes Android smartphones, tablets, mobile peripherals and set-top boxes for IPTVs.
While Google described the deal as way to "supercharge Android," Motorola also owns over 17,000 patents, with some 7,500 more pending approval.
"We have approved the acquisition of Motorola Mobility by Google because, upon careful examination, this transaction does not itself raise competition issues," wrote JoaquÃn Almunia, the European Commission's vice president in charge of competition policy, in a statement.
"Of course, the Commission will continue to keep a close eye on the behavior of all market players in the sector, particularly the increasingly strategic use of patents."
Google last week pledged to honor Motorola's fair and reasonable approach to licensing its patents, but it could use these patents to defend itself from the raft of patent-infringement lawsuits lobbed by Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and others.
Apple and Microsoft have at one point both sued Samsung, HTC and Motorola for patents related to Android-based products, with Microsoft striking licensing deals with several vendors.
How these companies use the patents in legal and strategic warfare continues to be a concern for regulators. The Commission vowed to keep an eye on this issue.
The key factor on which the Commission based its decision is that Google relies on Android to push its online content and services to as many users as possible, and therefore wouldn't prevent Motorola rivals such as Samsung or HTC from using Android.
Interestingly, Almunia also noted that the EC's clearance "does not mean that the merger clearance blesses all actions by Motorola in the past or all future action by Google with regard to the use of these standard essential patents."
FOSS Patents blogger and IP expert Florian Mueller noted in a statement: "This means the European Union's antitrust arm expressly reserves the right to investigate, and potentially penalize, any past and future actions by the combined entity, or any of its parts, with standard-essential patents."
Google had hoped to close the Motorola deal by the end of 2011 or early 2012, but it's been held up by regulatory reviews in Europe and by the U.S. Justice Department. The wait in Europe is over, though the DOJ has yet to provide its okay.
"This is an important milestone in the approval process and it moves us closer to closing the deal," wrote Don Harrison, vice president and deputy general counsel, in a corporate blog post. "We are now just waiting for decisions from a few other jurisdictions before we can close this transaction."
With the EC granting Google passage, it's likely the DOJ will offer its own this week or next.