Google has announced its plans to acquire Motorola Mobility Holdings for $40 a share, a 63 percent increase on Motorola’s closing share price on Friday. Motorola manufactures many smartphones that run on Google’s Android platform. At $12.5 billion, the deal represents Google’s largest acquisition to date.
The surprise announcement has many wondering how the deal (if passed by the FTC) will impact search advertisers, Android, and Google’s current patent struggle against Apple and others. What’s clear is that the deal would also grant Google ownership of Motorola’s 14,600 patents and 6,700 pending patent applications, in turn greatly improving Google’s standing in the increasingly hostile world of mobile technology. If approved, the deal also would turn Google into a mobile phone manufacturer, giving Google its own range of smartphone and tablet hardware. As Mike Solomon, VP Marketing Strategy at The Search Agency, explains, “This deal certainly gives Google more ammo in its ongoing patent wars with Apple and Microsoft. Android has always existed as an open platform, which limits Google’s ability to affect the total mobile experience. If they can extend their proficiency in product development and user experience to capitalize on the growing mobile advertising market, it will be a huge win for them and for advertisers.”
Let’s take a closer look into these issues and how we can expect Google’s potential acquisition of Motorola to affect them:
Patent Wars- As we recently reported, Google’s Android has been the object of ongoing patent disputes between Google, Apple, Microsoft, Oracle and others. The group, including Apple and Microsoft, recently purchased roughly 6,000 wireless technology patents and patent applications from Nortel for a whopping $4.5 billion. Google expressed concern over the lawsuits in a recent post from their Senior Vice President and Chief Legal Officer David Drummond, in which he accuses Android’s competitors of waging an anti-competitive campaign through “bogus patents.”
Google’s acquisition of Motorola’s thousands of patents will improve their legal position against Apple and others. As Google co-founder and CEO Larry Page explained on Aug. 15 in a blog post announcing the Google-Motorola deal, “We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to “protect competition and innovation in the open source software community” and it is currently looking into the results of the Nortel auction. 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.” (Emphasis added)
How will Google’s acquisition of Motorola affect Android?- According to Google, the deal has very little to do with Android itself. Android is an open-source platform that’s used by Motorola, HTC, Samsung and others. To date, it’s the world’s most popular smartphone operating system, used by more than 150 million devices across 39 manufacturers. Google has said that it will keep the Android platform open to other mobile manufacturers. As Daniel Alegre, president of Google Inc. Asia Pacific division, explained to Bloomberg.com, “The Android platform has been successful because of the openness and it will continue to be an open platform. No way is this acquisition a departure from that.” According to Google, Motorola will continue to operate as a separate entity and to make mobile phones and tablets under the Motorola brand.
But does that mean that the deal won’t affect Android? Not really. As an open-source operating system, Android has faced a problem of fragmentation, as every mobile manufacturer uses a slightly different version of Android. As a result, “not every piece of hardware could support every version of Android, and versions of Android built for smartphones began powering tablet and media player devices they were never designed to handle.” Thanks to the deal, though, Google and Motorola could create a uniform Android operating system, which could ultimately improve their product.
What’s clear from the deal is that Google is a mobile company. It is invested enough in the future of the Android platform to spend $12.5 billion in a defensive deal in order to rescue it from the grips of patent trolls. Whether or not Google plans to build the Über Android is still unclear, but it seems absurd to assume that the deal will have no affect on Android in future.