Google-Motorola Purchase May Help Defrag Android
By Jennifer LeClaire, VIA:newsfactor.com.
Why is Google buying Motorola? Could be for the 17,000 patents or a number of other reasons. Gartner VP Michael Disabato thinks the Google-Motorola buy is tied to setting direction for the Android operating system. "I think one of the reasons Google wants Motorola is because they have lost control of Android and they want to get it back."
U.S. and European regulators Monday approved Google's $12.5 billion acquisition of Motorola Mobility Holdings, giving the green light to move ahead, although government approvals are still pending in Israel, Taiwan, and most notably China.
Google describes the acquisition as a move to supercharge its Android ecosystem. The company estimates that more than 150 million Android devices have been activated worldwide -- and more than 550,000 devices are activated every day -- through a network of about 39 manufacturers and 231 carriers in 123 countries.
The announcement set off speculation about Google rocking the smartphone market. Analysts discussed everything from Google making Android exclusive to Moto phones, to Google subsidizing Motorola phones and making them free. There were also questions of whether Google did the deal solely to obtain Motorola's patents and whether or not Google can pull off the merger. Industry analysts are still discussing why Google really wants Motorola to begin with.
A Fragmented Mobile OS
"I think one of the reasons Google wants Motorola is because they have lost control of Android and they want to get it back," said Michael Disabato, vice president of network and telecom at Gartner . "Google wants all Android phones to look alike and operate alike and they know if they don't take back control, they are going to fragment [the Android] operating system into a million little pieces."
One of the promises of the Android operating system was its open-source model, which would allow for various flavors of the mobile OS. Disabato said that's a good model when consumers can create their own experience, but it's not so good when there are multiple vendors and more than a dozen experiences -- and consumers are left without the power to make it their own.
"You look at iOS. Apple comes out with a new version and everybody runs and crashes the servers and eventually upgrades," Disabato said. "Google comes out with a new version of Android and what happens? The vendors first have to decide if the phone can support it. Then, they put it in a phone. Then, they have to go beg the carriers to let it out. So they've eliminated the end user, which is not what Google ever wanted."
Google's Mobile Privacy Push
Disabato points to Apple, a single manufacturer with a single operating system, as well as Microsoft , which has multiple vendors with a single operating system that cannot be tweaked. Windows Phone 7 runs the same on all hardware platforms.
"Who's standing out in left field trying to figure out what to do next? It's Google," Disabato said. "They've allowed the handset manufacturers and the carriers to take control of the user experience and they want to get that back."
But there's another factor at play in the Motorola acquisition: Google's consolidated privacy policy. Google recently moved to offer a single privacy policy across all its products and services, Disabato said, so the company can share consumer information across the board. At this point, mobile is the only missing component. And now, with the Motorola acquisition, Google can wrangle that in, as well.
(Reuters) - U.S. and European regulators approved Google Inc's $12.5 billion purchase of Motorola Mobility Holdings Inc and said they would keep a sharp eye on the web search giant to ensure patents critical to the telecommunications industry would be licensed at fair prices.
It was one of a series of approvals on Monday that underscored the scramble by technology companies to acquire big pools of patents.
The U.S. Justice Department also approved an Apple Inc-led consortium's purchase of a trove of patents from bankrupt Canadian company Nortel Networks Corp and signed off on Apple's purchase of patents formerly owned by Novell Inc.
Google, whose Android software is the top operating system for Internet-enabled smart phones, said in August it would buy phone-maker Motorola for its 17,000 patents and 7,500 patent applications, as it looks to compete with rivals such as Apple and defend itself and Android phone manufacturers in patent litigation.
The acquisition, the largest in Google's history, will also mark the Internet search company's most significant foray into the hardware business - a market in which it has little experience. Some investors have worried that Google's profit margins may suffer as it becomes a hardware maker, although Google has said it intends to run Motorola as a separate business unit.
Regulators in China, Taiwan and Israel have still not signed off on the Google purchase of Motorola.
Google shares finished Monday's regular trading session up 1 percent at $612.20.
Antitrust enforcers on both sides of the Atlantic want to prevent companies from gouging rivals when they license patents essential to ensuring different communications devices work together.
"This merger decision should not and will not mean that we are not concerned by the possibility that, once Google is the owner of this portfolio, Google can abuse these patents, linking some patents with its Android devices. This is our worry," EU Competition Commissioner Joaquin Almunia told reporters in Brussels.
The U.S. Justice Department said it was reassured by Apple's and Microsoft's public statements that they would not seek injunctions in filing infringement lawsuits based on the Nortel patents.
"Google's commitments have been less clear," the Justice Department added in a statement. "The division determined that the acquisition of the patents by Google did not substantially lessen competition, but how Google may exercise its patents in the future remains a significant concern."
Almunia said the EU might be obliged to open some cases in the future.
"This is not enough to block the merger, but we will be vigilant," he said.
Regulators in China have until March 20 to decide whether to approve the deal or start a third phase of review, according to a source close to the situation.
The purchase would give Google one of the mobile phone industry's largest patent libraries, as well as hardware manufacturing operations that will allow Google to develop its own line of smart phones.
Google, the newest major entrant to the mobile market, is already being sued for patent infringement by Oracle Corp, which is seeking up to $6 billion.
The legal battles over patents between technology and smartphone companies has prompted the European Commission to open an investigation into legal tactics used by Samsung Electronics Co Ltd against Apple and whether these breach EU antitrust rules.
Some regulatory experts said the DOJ's comments in approving Google's acquisition of Motorola appeared to be more than mere boilerplate.
"They have to proceed with caution and tread lightly," said Shubha Ghosh, a professor at University of Wisconsin Law School who specializes in antitrust law and intellectual property, with regards to Google.
Regulators will be on the lookout for practices that might limit the entry of new smartphones or new technologies.
"If Google makes it more difficult for new technologies to emerge, by locking-in existing licensees of the patents so that it becomes not profitable for them to adopt other technologies, that's the kind of thing that might give rise to antitrust scrutiny down the road," said Ghosh.
Google's move to buy Motorola Mobility came shortly after it tried and failed to buy Nortel's patents. The winner was an Apple-led consortium, which includes Research in Motion Ltd, Microsoft Corp, EMC Corp, Ericsson and Sony Corp, which agreed in July to pay $4.5 billion for 6,000 patents and patent applications.
Google, which runs world's No. 1 Internet search engine, has been under increasing regulatory scrutiny. The U.S. Federal Trade Commission and the European Union are both investigating Google following accusations it uses its clout in the search market to beat rivals as it moves into related businesses.
(Reporting By Diane Bartz and Foo Yun Chee with additional reporting by Alexei Oreskovic; editing by Tim Dobbyn and Andre Grenon)
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