Google+ launch: search giant closes 10 products

By: Clint Boulton

2011-09-05

Google surprised many watchers in the high-tech world with its $12.5 billion acquisition bid for key Android phone maker Motorola Mobility on Aug. 15.

The $40-a-share, all-cash deal is a 63 percent premium. Google intends to run Motorola Mobility as a separate business should the deal close in 2011 or early 2012. Assuming the deal meets with the approval of federal regulators, the search engine would get a few things.

First is patent protection. Motorola has more than 17,000 patents, including those for 3G and 4G wireless technologies, as well as non-essential patents Google can use to defend itself in an increasingly litigious mobile market.

Second, like rival Apple, Google would own the hardware assets to build a closed, integrated system should it choose to do so. “They now have a mobile hardware business and they have tight integration into their software platform,” Gartner analyst Michael Gartenberg told eWEEK.

Third, Google would gain Motorola’s set-top box business, which, in theory, it could use to fortify its less-than-stellar Google TV Web television service.

It’s easy to be swayed by the sexy allure of Google trying to beat Apple at its own proprietary game—or to imagine a world where the search engine was a major player in television services, using Motorola’s connections to make nice with broadcasters.

But this deal is fundamentally about patent protection. Google is being sued by Oracle for patent infringement over its use of the database software maker’s Java technology in Android.

In addition, Google’s Android OEMs (original equipment manufacturers)—including Motorola, Samsung and HTC—are being sued by Apple for using hardware and software in their Android phones that resemble technology used in the iPhone.

Microsoft and Motorola are also embroiled in a patent-infringement suit related to hardware and software used in their Android phones. This case is being overseen by the International Trade Commission.

So aggressive is the positioning against Google in the mobile sector that venerable foes Apple and Microsoft worked together to keep Nortel Networks’ 6,000-plus wireless, technology and other patents away from Google.

This led to Google publicly accusing Microsoft and Apple of setting up patent consortiums to seize control of valuable wireless patents. Twelve days later—boom!—Google dropped the Motorola bombshell. 

“Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies,” said Google CEO Larry Page in a corporate blog post.

Patent experts differ on just how much patent protection Motorola will afford Google and Android OEMs in the current lawsuits, but most agree they will at least serve as deterrents for future litigation.

Where Google’s 1,800 or so patents must appear to the opposition’s litigation teams as though the search engine was bringing knives to a gunfight, Motorola’s patents resemble so much heavy artillery.

Google may be buying patent protection, but it could also upset the delicate balance the company created by cultivating Android as open source. The company has maintained that Motorola will remain a licensee of Android, which will remain available to other OEMs under an open-source license.

Publicly, Samsung, HTC and others expressed support for the agreement, pointing to the obvious patent-protection angle. But most industry watchers aren’t buying the diplomatic responses, wondering whether these vendors fear Google will favor Motorola for new Android software builds.

These handset makers may not have to worry about Google-Motorola favoritism.

The Motorola merger is pending regulatory approval, which is far from assured considering the close antitrust scrutiny Google has come under by the Federal Trade Commission over its search and, allegedly, its Android software business.

No one saw this deal coming. As Gartner analyst Gartenberg said:  “A master magician always has you looking at their left hand while they try to get you to ignore what’s going on with their right.”