It looks like Google’s going to be in the hardware game. Both the European Union and the US Department Of Justice have cleared Google to go ahead with its planned purchase of Motorola Mobility, which makes cellphones, tablets and set-top boxes.
Google Looking For Patent Protections
Google announced its intention to purchase Motorola Mobility last August. Google positioned the move as one to obtain patents to help it fend off challenges by Apple, Microsoft and others over its Android operating system. Google also argued that Motorola Mobility wouldn’t get any special advantages to develop Android over other handset makers.
From Google’s post back then:
This acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business. Many hardware partners have contributed to Android’s success and we look forward to continuing to work with all of them to deliver outstanding user experiences…. 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.
Both the EU and the US Department of Justice seem to believe that the acquisition won’t harm competition, clearing Google of any anti-trust worries.
The EU Ruling
The EU wrote today (I’ve bolded the key parts):
The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Motorola Mobility, a developer of smartphones and tablets, by Google, the world’s largest internet search and search advertising company and developer of Android, one of the most popular mobile operating systems. The Commission approved the transaction mainly because it would not significantly modify the market situation in respect of operating systems and patents for these devices…. All smartphones and tablets need an operating system. The Commission considered whether Google would be likely to prevent Motorola’s competitors from using Google’s Android operating system. The Commission’s investigation showed Android helps to drive the spread of Google’s other services. Consequently, given that Google’s core business model is to push its online and mobile services and software to the widest possible audience, it is unlikely that Google would restrict the use of Android solely to Motorola, a minor player in the European Economic Area (EEA), as compared to operators such as Samsung and HTC…. Finally, the Commission also examined whether Google would be in a position to use Motorola’s standard essential patents to obtain preferential treatment for its services, including search and advertising. The Commission found that Google already had many ways in which to incentivise customers to take up its services and that the acquisition of Motorola would not materially change this. The Commission therefore concluded that the transaction would not significantly impede effective competition in the EEA or any substantial part of it.
EU: Motorola Too Small To Matter, Google Could Cut Deals Anyway
In summary, the EU seems to have felt:
If Google were to favor Motorola, that would harm Google rather than its competitors, given Motorola’s small marketshare in the EU.
If Google wanted to favor Motorola, it could do that already regardless of this deal.
The last part feels pretty odd. It suggests that Google can cut deals with companies however it likes without worries about anti-trust issues. However, there’s probably much more to this ruling than I’m seeing. It’ll be dissected, no doubt, in the days to come. We’ll have further coverage as makes sense.
The DOJ Ruling
As for the US Department Of Justice, it wrote (with me again bolding key parts)
After a thorough review of the proposed transactions, the Antitrust Division has determined that each acquisition is unlikely to substantially lessen competition and has closed these three investigations. In all of the transactions, the division conducted an in-depth analysis into the potential ability and incentives of the acquiring firms to use the patents they proposed acquiring to foreclose competitors. In particular, the division focused on standard essential patents (SEPs) that Motorola Mobility and Nortel had committed to license to industry participants through their participation in standard-setting organizations (SSOs). The division’s investigations focused on whether the acquiring firms could use these patents to raise rivals’ costs or foreclose competition. The division concluded that the specific transactions at issue are not likely to significantly change existing market dynamics. During the course of the division’s investigation, several of the principal competitors, including Google, Apple and Microsoft, made commitments concerning their SEP licensing policies. The division’s concerns about the potential anticompetitive use of SEPs was lessened by the clear commitments by Apple and Microsoft to license SEPs on fair, reasonable and non-discriminatory terms, as well as their commitments not to seek injunctions in disputes involving SEPs. Google’s commitments were more ambiguous and do not provide the same direct confirmation of its SEP licensing policies. In light of the importance of this industry to consumers and the complex issues raised by the intersection of the intellectual property rights and antitrust law at issue here, as well as uncertainty as to the exercise of the acquired rights, the division continues to monitor the use of SEPs in the wireless device industry, particularly in the smartphone and computer tablet markets.
DOJ: OK Even With Google’s “Ambiguous” Promises
The DOJ seemed reassured that the three different deals it reviewed and approved of today, of which Google-Motorola was only one, wouldn’t lessen competition. In particular, it was stressed that licensing promises that Apple and Microsoft made it more comfortable issuing its approval.
Oddly, the DOJ wasn’t as reassured by Google’s promises, calling them “ambiguous” yet still giving the Google-Motorola deal the green light. A further part from the DOJ ruling sheds more light on this:
The evidence shows that Motorola Mobility has had a long and aggressive history of seeking to capitalize on its intellectual property and has been engaged in extended disputes with Apple, Microsoft and others. As Google’s acquisition of Motorola Mobility is unlikely to materially alter that policy, the division concluded that transferring ownership of the patents would not substantially alter current market dynamics. This conclusion is limited to the transfer of ownership rights and not the exercise of those transferred rights.
The DOJ seems to be saying that since Motorola was already aggressive on the patent front, letting it be part of Google wasn’t going to necessarily change that.
Back To Google & Motorola To Close The Deal
As for when the deal will actually happen, that may still take several day or weeks. Google posted today about this:
We are now just waiting for decisions from a few other jurisdictions before we can close this transaction.
Google also told me:
We’re still expecting the deal to close in “early 2012.” We have a few outstanding jurisdictions where we await approval. The latest public release comes from Motorola’s earnings announcement in January, relevant language pasted below: “Antitrust clearances, or waiting period expirations, are required by the U.S. Department of Justice (DOJ), by the European Commission, and in Canada, China, Israel, Russia, Taiwan and Turkey. Requisite filings have been submitted to the appropriate regulatory body in each of these jurisdictions. Clearances have been received in Turkey and Russia. In Canada and the United States, the statutory waiting period for the transaction has expired although the parties have been informed that the reviewing agencies have not closed their respective investigations. In December 2011, the Chinese Ministry of Commerce proceeded to phase two of its investigation. In February, the European Commission is expected to announce whether it will close its investigation or proceed to a phase two investigation.”
As said, we’ll have more coverage to come, and you can also see coverage from others through this round-up at Techmeme.
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