News

Google Gets Final Regulatory Approval To Buy Motorola Mobility

• By Kurt Mackie
• 05/21/2012

Google late last week received approval from China on a proposed bid to acquire Motorola Mobility Inc.

The approval was the last one needed by Google to proceed with the deal, which is expected to close in two days. Google plans to pay an estimated $12.5 billion to acquire the company, which is a subdivision of Motorola. An Associated Press story indicated that China imposed two conditions on the deal: Google must keep the Android mobile operating system both royalty free and open for five years.

Google fostered the Linux-based Android OS and offers it royalty free to hardware device manufacturers. However, Android has been a target by Apple and Microsoft over alleged intellectual property claims for several years.  

Google will use Motorola Mobility's patents to bolster its intellectual property holdings, including for legal defensive purposes. An increased collection of patents can help Google when it's sued directly, as in the case of Oracle's legal claims that Google has infringed on Oracle's Java patents.  

Whether the patents will help defend Android from legal attack is less concrete. Google offers some legal help to its hardware partners, but it apparently hasn't helped them much. Microsoft claims that about 70 percent of original equipment manufacturers have struck deals with it over alleged intellectual property ascribed to Android use. Google doesn't provide legal indemnity to the hardware manufacturers that use Android, so they are largely on their own in fending off such legal claims.

Two companies that have most resisted intellectual property claims on Android have been Barnes & Noble and Motorola itself. In a patent infringement case regarding Barnes & Noble's Nook electronic-reader devices, a U.S. International Trade Court judge delivered the harsh assessment that Microsoft can use its patents in hard bargaining tactics, even to destroy another company's products. That legal fight ended with Barnes & Noble and Microsoft agreeing to a licensing deal and an investment deal in which Microsoft plans to invest $300 million into a Barnes & Noble subsidiary.

Motorola and Microsoft have kept up the patent wars, exchanging blows on other matters besides mobile technologies. Motorola recently lost a lawsuit at the U.S. International Trade Commission in which Microsoft claimed that Motorola used patented ActiveSync technology in imported mobile devices. However, Motorola previously won a German court case regarding Microsoft's ActiveSync technology infringing on Motorola's mobile push technology.

A showdown is now brewing in Europe between Microsoft and Apple vs. Motorola and Google over the cost of "standard essential patents." In Microsoft's case, Motorola wants 2.25 percent of each Microsoft Xbox gaming console sold in Germany to use its intellectual property associated with the H.264 video codec and Wi-Fi wireless standards. That dispute, as well as Apple's complaints about Motorola's interpretation of "fair, reasonable and nondiscriminatory" (FRAND) licensing, has led to a European Commission (EC) inquiry. Under FRAND licensing, patented technologies that are used in common standards are supposed to be available for other companies to license, but whether Motorola's offer is "fair" and "reasonable" appears to be under consideration at the EC.

In other competition news, An EC official announced today that the organization is revving up a separate antitrust inquiry regarding Google's competitive practices with regard to search advertising. Joaquín Almunia, EC vice president for competition policy, offered Google a chance to respond to four complaints. If the responses aren't satisfactory, the EC could lodge a "statement of objections," which is a formal regulatory antitrust action. The EC was prodded into investigating the matter after four Internet companies and Microsoft complained about how Google handles its search competitors and search rankings in Europe.