Google Gets Governmental Green Light To Buy Motorola

  • Currently 0/5 Stars.
  • 1
  • 2
  • 3
  • 4
  • 5
0 vote

BUSINESS

  • Regulators in US, EU approve Google’s $12.5 billion bid for Motorola
  • Motorola purchase largest in Google history, first real experience in hardware market
  • Google to be closely monitored in its use of patents licenses

The US Department of Justice and the European Commission have approved a bid from Google Inc. to purchase Motorola Mobility Holdings Inc. for $12.5 billion. Regulators concluded the purchase would not lessen competition in the market.

Google will purchase Motorola for $40 a share, which represents a 63% premium. Motorola will be operated as a separate business unit.

Google first announced its intention to purchase Motorola in August 2011, and once the purchase is finalized, it will be the largest in Google's history.

The search engine giant wants to compete against its rivals and "super-charge" its Android operating system, and the Motorola buy will be its first real experience in the hardware market. Some investors are concerned Google’s profit margin will fall.

The buy still needs to be approved in China, Israel and Taiwan. Chinese regulators have until March 20 to approve the deal, and if they do not approve it, a third review phase will begin.

In addition, Google had bid to purchase Nortel Networks Corp. but was out bid by Rockstar Bidco, an Apple-lead consortium. Rockstar Bidco will pay $4.5 billion for Nortel’s 6,000 patents.

Close Eye To Be Kept On Patent Licensing

Despite approving the bid, regulators are concerned over the potential for patent licensing abuse. Both the US Department of Justice and the European Commission will monitor Google, stepping in to stop any anti-competitive use of patents.

Patent licensing is vital to ensure different types of communication devices work with each other. Regulators want to prevent companies like Google from asking exorbitant fees from rivals when licensing standard essential patents (SEPs).

Motorola holds 17,000 patents that are used in 7,500 applications, and some analysts say the patents are the only reason Google purchased the hardware manufacturer. Using Motorola technology, Google will be able to develop its own line of smartphones.

The US Department of Justice said in a statement that it is concerned over how Google will use patents and demand royalties, and will keep an eye on how SEPs are used in tablets and smartphones.

EU Competition Regulator Joaquin Almunia told reporters: “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.”

Google is already being sued by Oracle for $6 billion regarding patent infringement issues.

Key Statistics - Top 5 Global Mobile Phone Manufacturers by Market Share for December 2011 (source: comScore)

  • The world’s top mobile manufacturer is Samsung, which controls over 25% of the market share.
  • LG is the second-largest phone maker, with a 20% market share, and Motorola is third with more than 13%.
  • Apple is fourth with over 12% market share.
  • The world’s fifth-largest mobile manufacture is RIM, which has nearly 7% of the market.

By Melina Druga for
Melina Druga is an American writer and editor. She is the author of Enterprising Women: Practical Advice for First Time Entrepreneurs.

Share this news with a friend or colleague

Share

Follow

Browse our categories

Browse our archives

ReportLinker is an award-winning market research solution that finds, filters and organizes the latest industry data so you get all the market research you need - quickly, in one place.