News

Google-Motorola Mobility Deal Gets U.S., EU Approval

• By Kurt Mackie
• February 14, 2012

Google's planned acquisition of Motorola Mobility Holdings Inc. for $12.5 billion was approved by both the Antitrust Division of the U.S. Department of Justice and the European Commission on Monday.

While the approvals partly clear the way for the deal to proceed, Google's bid still faces scrutiny from regulatory agencies in other countries.

Google first initiated its bid for Motorola Mobility in August 2011. At the time, Google indicated that it was seeking the acquisition to help protect the Android open source mobile operating system in the market. "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," wrote Google CEO Larry Page in a blog post announcing Google's intention to buy Motorola Mobility.

Google helped to foster the Linux-based Android OS and offers it to mobile device makers without royalty costs. However, hardware manufacturers of late have faced legal pressures and lawsuits from both Apple and Microsoft over alleged patent infringements, typically based on software user interface technologies rather than on wireless patents.

Page had also complained that Microsoft, Oracle and Apple had banded together to acquire Nortel's patents in an effort to thwart Android. However, in addition to approving Google's bid for Motorola Mobility on Monday, the DoJ also cleared the Nortel patents acquired by Rockstar Bidco and Apple during a bidding process. The details of the DoJ's reasoning along those lines are spelled out in a DoJ press release.

The DoJ is most concerned about overseeing competition issues based on "standards essential patents," which are the patented technologies considered by standards-setting organizations to be essential for a standards-based technology to be used. The DoJ indicated in its press release that it was assured by statements from Apple and Microsoft that they would not impose injunctions to hold up competitors in the market, but instead would license their intellectual properties based on "reasonable and nondiscriminatory" (RAND) terms.

As for Google, the DoJ held some doubts about whether it would comply on RAND licensing principles.

"Google’s commitments have been less clear," the DoJ explained. "In particular, Google has stated to the IEEE and others on Feb. 8, 2012, that its policy is to refrain from seeking injunctive relief for the infringement of SEPs [standards essential patents] against a counter-party, but apparently only for disputes involving future license revenues, and only if the counterparty: forgoes certain defenses such as challenging the validity of the patent; pays the full disputed amount into escrow; and agrees to a reciprocal process regarding injunctions."

The DoJ indicated it had a "significant concern," but did not think that the Motorola Mobility acquisition would lessen competition. The agency plans to monitor how competitors in the mobile market space are using their patent rights, especially with regard to standards essential patents.

The European Commission, while approving Google's acquisition of Motorola Mobility, also offered cautionary statements about competition in the mobile markets and the licensing of essential patents.

"We have approved the acquisition of Motorola Mobility by Google because, upon careful examination, this transaction does not itself raise competition issues," stated Joaquín Almunia, commission vice president in charge of competition policy at the European Commission, in a released statement. "Of course, the Commission will continue to keep a close eye on the behaviour of all market players in the sector, particularly the increasingly strategic use of patents."

Almunia indicated that the European Commission would resort to antitrust enforcement should patents be misused, as reported last week by The Guardian.

Google had indicated before the European Commission that it would continue Motorola's policies on "fair, reasonable and nondiscriminatory" (FRAND) licensing. However, Microsoft and Apple both have been involved with litigation against Motorola on RAND/FRAND licensing.

According to FRAND tracker Florian Müller, a judge in Germany recently dismissed Motorola's patent infringement case against Apple concerning 3G/UMTS patents held by Motorola. However, Motorola seems to have prevailed on other counts. At one point, Apple iPhone sales were briefly prohibited in German stores, for instance. Motorola is seeking 2.25 percent in royalties on the cost of every iPhone sold. Google vowed to seek the same terms in a letter to the European Commission.

So far, regulatory authorities have only expressed concerns over RAND/FRAND licensing and how it might affect mobile competition. However, a lot of the recent litigation over mobile technologies has been around software usability patents that may not be associated with standards. It has certainly affected the mobile competition, with Microsoft and Apple having sued or settled with multiple device manufacturers over alleged intellectual property violations.

See Also:

• What Google's Motorola Buy Means for Microsoft
• Will Microsoft Snatch Motorola's Patents from Google?
• Google: Android Lawsuits Part of 'Hostile' Campaign by Microsoft, Others