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The Google-Motorola deal is a go, as far as the U.S. Department of Justice’s (DOJ) Antitrust Division is concerned.
The Department gave the go-ahead to Google’s $12.5 billion acquisition of Motorola Mobility. With European Commission’s approval in the bag, Google can now complete the process of bringing home the storied mobile handset maker that in recent years has seen its fortunes wane.
Losing Razr’s Edge
Motorola was once synonymous with mobile telecommunications, thanks to iconic cell phones like the StarTAC and Razr. But the iPhone’s arrival in 2007 kicked off a deluge of smartphones that continues unabated today. In the following years, Motorola found itself in the rare position of playing catch-up, leading the company to publicly hitch its wagon to Google’s own Android platform for smartphones like the Droid and tablets like the Xyboard.
Motorola’s affinity for Android is one of the reasons that makes it such an attractive acquisition target, according to Google CEO, Larry Page. “In 2008, Motorola bet big on Android as the sole operating system across all of its smartphone devices,” he blogged at the time of the announcement last summer. “It was a smart bet and we’re thrilled at the success they’ve achieved so far.”
Another reason to be thrilled: A patent portfolio that includes approximately 17,000 issued patents and 6,800 patents pending.
Though a little behind schedule — Google estimated the deal would close late last year when it was announced in August — the deal calls for $40 per share cash payout for Motorola Mobility shares. Delayed timing aside, the approval process cast a spotlight on the patent turmoil that has seized the mobile industry.
Spoils of (Patent) War
The DOJ also cleared the way for Rockstar Bidco, a partnership that includes Microsoft, Apple and Research in Motion (RIM), to purchase Nortel Network’s portfolio of approximately 6,000 patents for $4.5 billion. The group vastly out-bid Google, which was willing to part with $900 million for the IP haul during the telecommunications company’s bankruptcy proceedings.
The decisions arrive as patent wars are being waged across the mobile industry, pitting companies like Apple and Samsung and Microsoft and Motorola against one another. The legal dramatics haven’t escaped the DOJ’s notice. In its analysis of the Google-Motorola and Rockstar Bidco-Nortel deals, the DOJ echoes the fears of the mobile marketplace’s stakeholders.
The DOJ wrote, “the critical issue is whether the patent holder has the incentive and ability to hold up its competitors, particularly through the threat of an injunction or exclusion order. The division’s analysis focused on how the proposed transactions might change that incentive and ability to do so.”
Despite those concerns, “The division concluded that each of the transactions was unlikely to substantially lessen competition for wireless devices.” Even with respect to the fact that “Motorola Mobility has had a long and aggressive history of seeking to capitalize on its intellectual property,” the DOJ believes that the IP transfer “would not substantially alter current market dynamics.”
Pedro Hernandez is a contributor to the IT Business Edge Network, the network for technology professionals. Follow him on Twitter @ecoINSITE
