First appeared in Associated Press
Google's $12.5 billion bid to buy cellphone maker Motorola
Mobility has won approvals from U.S. and European antitrust regulators, moving
Google a major step closer to completing the biggest deal in its 13-year
history.
Monday's blessings mean Google Inc. just needs to clear
regulatory hurdles in China, Taiwan and Israel before it can take control of
Motorola Mobility Holdings Inc. and expand into manufacturing phones, tablet
computers and other consumer devices for the first time.
Getting government approval in China looms as the biggest
stumbling block remaining. Google's relationship with China's ruling party has
been on shaky ground since the company blamed hackers in that country for
breaking into its computers two years ago. The breach prompted Google to move
its Internet search engine from mainland China in protest of laws requiring
some results to be censored.
Google prizes Motorola Mobility's more than 17,000 patents -
a crucial weapon in an intellectual arms race with Apple, Microsoft and other
rivals maneuvering to gain more control over smartphones, tablets and other
mobile devices. Google announced the deal six months ago.
The deal will "enhance competition and offer consumers
faster innovation, greater choice and wonderful user experiences," Don
Harrison, Google's deputy general counsel wrote in a blog post.
Besides signing off on the Motorola Mobility deal, the
Justice Department also approved two other moves in the mobile patent battles.
The approvals cover the $4.5 billion purchase of Nortel Networks patents by a
group including Apple, Microsoft and BlackBerry maker Research in Motion Ltd.
and a separate Apple acquisition of Novell Inc. patents.
The Justice Department ended its investigations after
concluding the new patent owners won't try to drive up the prices of competing
mobile devices by demanding exorbitant licensing fees. The agency said it was
particularly concerned about key patents held by Motorola Mobility and Nortel.
Apple Inc. and Microsoft promised to license the Nortel
patents on reasonable terms while Google's commitments on the Motorola Mobility
patents were "more ambiguous," according to a statement from the
Justice Department's antitrust division.
Nevertheless, the Justice Department didn't find any
evidence that Google's ownership of Motorola Mobility would lessen competition
in a mobile device market that is becoming increasingly important as more
people connect to the Internet on smartphones and tablet computers instead of
desktop and laptop computers.
In granting its approval, the European Union also raised
concerns about Motorola's aggressive enforcement of its patents. EU Competition
Commissioner Joaquin Almunia said regulators will "keep a close eye on the
behavior of all market players in the sector, particularly the increasingly
strategic use of patents."
In its statement, the Justice Department also vowed to crack
down on any sign that mobile patents are being used to throttle competition.
Microsoft said it was encouraged by the regulatory commitments.
Other key concerns centered on Google's Android operating
system, free software that now powers more than 250 million mobile devices made
by a variety of manufacturers, including Motorola Mobility. Competition could
be hurt if Google gives Motorola Mobility the most advanced versions of Android
or withholds the mobile software from other cellphone makers.
Google, though, has pledged to make Android available to all
its mobile partners. Even if Google were to discriminate, cellphone makers
still could rely on mobile software from Microsoft Corp., Research in Motion
and Hewlett-Packard Co., among others.
The European regulators see no danger that Google will
prevent other device makers from using its popular Android operating system
after the takeover.
"Android helps to drive the spread of Google's other
services," the Commission said. "Given that Google's core business
model is to push its online and mobile services and software to the widest
possible audience, it is unlikely that Google would restrict the use of Android
solely to Motorola," which only has a small market share in Europe.
The government reviews in U.S. and Europe have come as
regulators also have been conducting a broader inquiry into whether Google has
been abusing its dominance in Internet search to hobble its rivals. Those
investigations are still ongoing.
Assuming Google eventually takes over Motorola Mobility, the
union will open new opportunities and pose potentially troublesome challenges
for a management team that so far has concentrated on Internet search, ad sales
and other software-driven online services.
Motorola Mobility's expertise in mobile devices and set-top
boxes for cable TV will allow Google to play an even more influential role in
shaping the future of hand-held computing and home entertainment. Even as it
navigates the regulatory gauntlet, Google has begun testing a device for
connecting electronic components within homes, according to a filing with the
Federal Communications Commission.
Absorbing Motorola Mobility also threatens to crimp Google's
earnings growth and drag down its stock price. That's because Motorola Mobility
has been struggling on its own as Apple's iPhone and other smartphones made by
rivals such as Samsung Electronics undercut sales of its products. Google SEO is curious what the change
could bring.
Google is making a huge bet that Motorola Mobility can do
better. The $12.5 billion price is more than the combined amount that Google
has paid for the 185 other acquisitions that it has completed since going
public in 2004.
Google's stock rose $6.29, or 1 percent, to close Monday at
$612.20. Motorola Mobility's gained 18 cents to $39.63, just below the proposed
sale price of $40 per share. Google is based in Mountain View, California,
while Motorola Mobility has its headquarters in Libertyville, Illinois.
