Google-Motorola deal about patents

Associated Press

SAN FRANCISCO

Google Inc.’s $12.5 billion deal to buy cellphone maker Motorola Mobility Holdings Inc. is aimed at giving the Internet-search leader more legal firepower as it battles Apple Inc. and Microsoft Corp. to gain the upper hand in the increasingly important mobile- computing market.

The all-cash acquisition announced Monday is the boldest move in Google’s 13-year history.

Besides being by far the largest deal that Google ever has proposed, buying Motorola would push the company into phone and computer-tablet manufacturing for the first time, at the risk of alienating the other device makers that depend on Google’s Android operating system.

The proposed deal also is likely to increase government scrutiny on Google at a time when antitrust regulators in the U.S. and Europe already are parsing its business practices to determine whether it has been abusing its power to stifle competition. The inquiries are focused primarily on the company’s Internet-search and advertising businesses, but regulators also are looking into whether Google is using Android to ensure its services receive preferential treatment on devices using that free software.

If federal regulators approve the deal, Google CEO Larry Page’s ability to avoid a clash of cultures will be tested. With 19,000 workers, Motorola Mobility’s work force isn’t that much smaller than Google’s payroll of 28,800 employees.

But this deal is more about patents than people.

Google, which is based in Mountain View, Calif., is framing its Motorola acquisition as a way to protect the competitive landscape at a time when Android and the device makers using the software are facing a litany of lawsuits alleging that Google’s operating system pilfered the patent-protected technology of other companies.

Motorola, which introduced its first cellphone nearly 30 years ago, has more than 17,000 patents with 7,500 more still awaiting approval. That trove presumably will give Google and its Android more patent protection against a list of legal antagonists that include three of the technology industry’s most powerful companies: Apple, Microsoft and Oracle Corp.

Apple and Google once were so close that Google’s former CEO, Eric Schmidt, sat on Apple’s board. But the two companies have grown increasingly antagonistic as Android provided hardware makers with a way to counter the popularity of Apple’s game-changing iPhone and iPad. The friction prompted Schmidt to resign from Apple’s board two years ago.

Microsoft, one of Google’s bitterest rivals for years, is desperately trying to make inroads in the mobile- device market. Forrester analyst John McCarthy thinks Microsoft now may try to counter Google by pursuing a long-rumored takeover of its partner, cellphone marker Nokia Corp. Investors were betting on that possibility Monday as Nokia’s shares climbed 78 cents, or more than 14 percent, to $6.14 in afternoon trading.