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U.S. allows Google acquisition of Motorola Mobility

WASHINGTON — The U.S. Department of Justice approved Google Inc.’s acquisition of mobile-phone and tablet maker Motorola Mobility for about US$12.5 billion on Monday, following the European Commission’s approval earlier in the day.

Google is still waiting for approvals from China, Israel and Taiwan before the deal is final. Canada’s investigation is also ongoing. The search giant still says it hopes the acquisition will close in “early 2012.”

The DOJ on Monday also approved bids by Apple Inc., Microsoft Corp. and Research in Motion (RIM) to purchase some Nortel Networks patents, as well as Apple’s purchase of some Novell Inc. patents.
 
The DOJ’s Antitrust Division has “determined that each acquisition is unlikely to substantially lessen competition,” the agency said in a press release. The DOJ has closed its investigations into the three deals.
 
Google’s acquisition of Motorola and its thousands of patents is unlikely to cause major changes to the mobile industry, the DOJ said.

“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,” the DOJ said. “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.”
 
Apple’s acquisition of Novell patents that are important to the open-source community is unlikely to change the market because Novell had committed to providing the patents with royalty-free licenses for use in Linux, the DOJ said.
 
The acquisition of mobile patents by Microsoft and RIM should not hurt competition because the two companies’ “low market shares in mobile platforms would likely make a strategy to harm rivals … unprofitable,” the DOJ said.
 
Separately, the European Commission on Monday also approved the Google/Motorola deal. In approving the merger, Competition Commissioner Joaquín Almunia warned that the commission “will continue to keep a close eye on the behavior of all market players in the sector, particularly the increasingly strategic use of patents.” Speaking in Paris on Friday, he also said that he was prepared to use all measures available, such as fines of up to 10 percent of a company’s global turnover, to enforce the rules. The Commission is already involved in a formal investigation of Samsung Electronics for misuse of essential patents in its battle with Apple.

“Standardization processes must be fair and transparent, so that they are not in the hands of established firms willing to impose their technologies. But it is not enough. We must also ensure that, once they hold standard essential patents, companies give effective access on fair, reasonable and non-discriminatory terms” [dubbed FRAND by the industry], said Almunia.

 
Google has pledged to license its newly acquired Motorola patents on FRAND terms. However, in a letter to 15 standards bodies, Google also listed the exceptions for when it would abandon this promise and would continue to pursue injunctions.

Patent expert Florian Mueller says the letter changes nothing: “Google is basically saying that it will do exactly what Motorola is already doing now.”

Google announced its agreement to acquire Motorola Mobility, including 17,000 patents and 6,800 applications, in August. Many analysts saw the deal as an effort by Google to protect its Android operating system from patent claims by competitors.
 
Rockstar Bidco, a partnership including RIM [Nasdaq: RIMM; TSX: RIM], Microsoft and Apple, was formed to acquire Nortel patents in a June bankruptcy auction. The group paid US$4.5 billion.
 
Apple [Nasdaq: AAPL] proposed to buy 882 Novell patents from CPTN Holdings, a partnership including Apple, Microsoft [Nasdaq: MSFT], Oracle Corp. and EMC, after the DOJ in April reached an agreement that kept Microsoft from acquiring the patents. Novell is the distributor of the SUSE Linux OS. CPTN purchased the patents for US$450 million.

(With files from Jennifer Baker, IDG News Brussels) 

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