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Google, needing patents, buys Motorola wireless for $12.5 billion
By Casey Johnston | Published 33 minutes agoLast updated 11 minutes ago
Google announced plans to acquire Motorola Mobility this morning for $12.5 billion in cash. One of Google's biggest motivations for the purchase is to bolster its patent profile, which has been under relentless attack by companies including Microsoft and Apple. With the purchase, Google will gain control of more than 17,000 mobile-related patents worldwide, with 7,000 more Motorola patent applications in the pipeline.
Google first announced the acquisition on its blog early this morning. On a call for investors, Larry Page, CEO of Google, stated that "Motorola has a strong patent portfolio, which will help protect Android." Earlier this month, the company accused Apple, Microsoft, and Oracle of bullying Google over patents in what David Drummond, Google's senior vice president and chief legal officer, called "a hostile, organized campaign against Android."
Drummond noted that Google has intended for some time to bolster its patent portfolio as a defensive move "so that Android and other businesses can be successful." The company recognizes that current lawsuits against both Google and Motorola will continue, but it won't yet comment on the legal strategies it intends to pursue with its new slate of patents.
Google says that the purchase will drive innovation for the Android platform—true, perhaps, but it's difficult to ignore the fact that through this purchase, Google is entering into direct competition with other equipment manufacturers that use Android, including HTC, Samsung, and LG. Google insists that little will change regarding hardware competition. "We plan to operate Motorola as a separate business," said Page. "Our plan is that Motorola will remain a licensee of Android."
When asked directly how the acquisition will affect other OEMs, Page said, "There's no change in how we're running Android… our partners are very excited about this." Their excitement is corroborated on a page Google created regarding the acquisition, where leaders from Sony Ericsson, Samsung, LG, and HTC are all quoted endorsing the purchase with eerily similar language.
Andy Rubin, Google's senior vice president of Android, went even further, saying that the acquisition would be "pro-competitive almost by definition." None of the company's representatives appear concerned at all about the potential OEM competition that could stem from their ownership of Motorola; rather, both the company and other OEMs are focusing on the purchase as a crucial measure for Android's survival as an "open platform." Rubin went on to say that "it doesn't make sense for [Android] to have a single OEM, it makes sense to go as wide as possible."
While recent research has shown that Android falls short of many definitions for the term "open platform," Google's main openness-related concern is that successful patent lawsuits against Android could result in the company instituting licensing fees that would have to be passed on to OEMs, and then to customers.
Google cited its Nexus line of phones as an indication of past OEM agnosticism, where a different OEM each year is selected to bring a "Nexus"-branded device to the market as a flagship for each generation of the Android operating system. Samsung and HTC have both carried the Nexus banner in the past, but the new acquisition suggests Motorola may be next in line.
The purchase is still subject to regulatory approval, according to Rubin, though the companies intend for the transaction to complete as quickly as possible. Once approved, Motorola shareholders will receive a payout of $40 per share, a premium of 63 percent over Motorola's current market valuation.
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