What’s Behind Google Acquiring Motorola Mobility?

Posted by on August 15, 2011 in Business News, Patents and Trademarks [ 0 Comments ]

With the economy teetering on the brink of another possible recession, is now a good time to be buying other companies?

Search engine giant Google thinks so, having moved forward with acquiring Motorola Mobility for a cool $12.5 billion, its biggest acquisition to date. The two companies announced the deal Monday (pending regulatory approval), with Google claiming it had several reasons behind the acquisition.

As Google sees it, the move is good because:

  • It allows the number one search provider to gain a business it believes will assist it in growing even more in the mobile marketplace. Google has licensing rights over Android, a popular mobile operating system, which is rivaled by Apple’s iPhone and iPad, the Blackberry from Research in Motion, and Microsoft’s Windows Phone to name a few;
  • It also reportedly allows the company to defend against patent lawsuits brought forward by the competition.

According to a posting from Google’s Larry Page on the company’s official blog, “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.”

So, will buying the inventor of the cell phone three decades ago allow Google to acquire more of the mobile marketplace against the fierce competition, or is this for all intent purposes a legal maneuvering?

Google is presently involved in a patent battle with Oracle, which alleges that Google’s Android infringes a portion of the Java patents Oracle controls.

According to Page, Google will oversee Motorola as a separate entity, with the latter continuing to license Android from Google, paying the search giant for the core applications that are part of the operating system.

Page added on the blog that “The combination of Google and Motorola will not only supercharge Android, but will also enhance competition and offer consumers accelerating innovation, greater choice, and wonderful user experiences. I am confident that these great experiences will create huge value for shareholders.”

What makes the move intriguing to a degree is that Motorola hasn’t exactly been rolling in the dough as of late. In the previous quarter, the company dropped $56 million, with analysts projecting results for the present quarter would be less than expected.

So, a wise move by Google, figuring the steep acquisition cost will over time outweigh potential liability costs involving patents in a courtroom, or a move that doesn’t make sound financial thinking?

Safe to say, the jury will be out on this one for a while.

Photo credits: nexus404.com and techcrunch.com

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