Google wins grudging approval for Motorola deal

Visitors crowd the Google stand at the CeBIT technology trade fair on March 1, 2011 in Hanover, Germany.

Story highlights

  • Deal approved despite competition concerns
  • Google buying Motorola Mobility for $12.5B
  • Set to shake up smartphone, tablet markets
  • Concern over the enforcement of patent rights
Competition regulators on both sides of the Atlantic have voiced unease with Google's $12.5bn acquisition of Motorola Mobility, with the US Department of Justice in particular raising a "significant concern" with the transaction.
However, the doubts were not strong enough for Washington or Brussels to try to stand in the way of the deal, and both on Monday announced the approval of a purchase that Google has said is needed to strengthen its weak legal position amid the smartphone industry's patent wars.
Clearance of the Motorola deal, along with Washington's approval on Monday of landmark sales of patents by Nortel and Novell, is set to redraw competition between Apple, Google, Microsoft and others in the smartphone and tablet computing markets.
The tech rivals have launched a barrage of lawsuits against each other as they scramble for an edge in the industry's most promising new markets. That has led to a spate of acquisitions of big patent portfolios like those owned by Motorola and Nortel, the bankrupt Canadian telecoms equipment maker.
Google agreed to buy Motorola, which has 17,000 patents, last August, while Apple bid $2bn for patents from Nortel, making it the largest buyer alongside Microsoft and Research In Motion after an auction that totalled $4.5bn.
The justice department said it was worried about how Google might seek to enforce the patent rights acquired from Motorola, potentially hampering competitors in the smartphone business. Like the European Commission, it expressed concern about the internet company's potentially aggressive use of patents that cover technology included in industry standards. Since other companies have little choice but to use the technology, they are particularly vulnerable to excessive royalty demands.
Announcing the clearance of the deal in Europe, Joaquín Almunia, competition commissioner, said he would "continue to keep a close eye on the behaviour of all market players in the sector, particularly the increasingly strategic use of patents".
The DoJ's unease over Google was made all the starker by its support on Monday for recent undertakings that Apple and Microsoft have given not to enforce their patents that are used in standards by trying to block products made by rivals.
By contrast, it called commitments that Google gave to standards bodies last week "more ambiguous", since it did not include the same promise not to seek injunctions.
The European Commission last week opened an investigation into Samsung, over claims the world's largest smartphone maker refused to grant access to its technology at a reasonable price. It cited a slew of lawsuits launched by the South group against Apple as one of its concerns.