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Google acquiring Motorola (and its patents) for $12.5 billion

by Phil Hornshaw

Google just dropped a bombshell – the Android maker is purchasing Motorola Mobility to the tune of $12.5 billion, with an eye toward expanding the reach and power of the Android mobile operating system.

Motorola is going to Google for $40 a share, which amounts to the $12.5 billion number, according to a press release from Google. The acquisition “will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing,” according to the release. The transaction gives Google about 63 percent of Motorola share, and was approved by the boards of both companies, the release says.

Google CEO Larry Page said that taking on Motorola will help Google to “supercharge” the Android ecosystem, whatever that may mean:

Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.

The acquisition is interesting because Google provides the Android operating system to lots of device makers around the world, allowing them to use the (mostly) open-source software on whatever devices they choose, and often with device-specific tweaks. Google grabbing Motorola, already a “dedicated Android partner,” immediately calls into question those other relationships with mobile device makers that are in competition with Motorola.

On a conference call regarding the deal announcement this morning, however, Google reaffirmed that it plans to work “on an equal basis” with other device makers and saying that it doesn’t make sense for Android to be available only to a single OEM (original equipment manufacturer), according to a story from TechCrunch. At least right now, Google claims that things won’t be changing between it and other device makers like HTC and Samsung, but one wonders how things might change given the fact that Google now has a vested interest in giving Motorola an edge over other Android-reliant smartphone and tablet makers.

Don't forget the patents

Along with Motorola’s device manufacturing business, Google is getting a whole lot more in the deal. In a blog post, Page wrote that Google is interested in Motorola also because it is a “market leader in the home devices and video solutions business.” Motorola also brings to the table a significant crop of mobile patents: “approximately 14,600 granted patents and 6,700 pending patent applications, worldwide, as of January 2011,” as TechCrunch reports.

And it seems that it’s the patents that Google is really grabbing in this deal, as suggested by a few responses that Google had available from other Android device manufacturers. CEOs from LG, Sony Ericsson and HTC are all quoted by Google as saying they support Google’s move to “defend Android,” presumably through patent acquisition, given the fact that Google just lost a big patent portfolio to a group of companies led by Apple and Microsoft. Here’s a quote from Page’s blog post:

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.

Motorola is coming off a $56 million loss in the second quarter of 2011, according to Engadget. It remains to be seen what Google intends to actually do with the company, although it was reported during the conference call that Google would be running Motorola as a separate company. The deal is expected to be completed in late 2011 or early 2012.