Google-Motorola Deal Sparks Antitrust Concerns

Google’s proposed deal to acquire Motorola Mobility for $12.5 billion may have the approval of both company’s boards, but will likely face scrutiny for antitrust concerns before being finalised.

The dominant search giant draws regulatory scrutiny almost as a matter of course, and is the subject of an ongoing investigation by the Federal Trade Commission already. But this proposal, based on its sheer size alone, is very likely to spark concerns.

“We’re quite confident that this will be approved,” said David Drummond, Google’s chief legal officer. “We believe very strongly that is a pro-competitive transaction.”

Regulators will look to see if the Motorola acquisition benefits Android in a way that unfairly increases Google’s market power.

Drummond doesn’t deny that the move will fortify Android but says, “Protecting that ecosystem is pro-competitive, almost by definition.”

Drummond reasons that because Android is an open platform, strengthening it will not hurt the industry.

Google’s biggest competitors, Apple and Microsoft, haven’t commented publicly regarding antitrust implications, but may very well see it very differently.

One tangible benefit for Google is Motorola’s vast patent portfolio, a point that likely won’t be lost on the increasingly patent-focused mobile market.

Motorola has about 17,000 approved patents and another 7,500 pending approval, a collection substantially larger than the group of patents recently sold at Canadian based-Nortel Networks’ bankruptcy auction, which were snapped up in June by a consortium of mostly Android competitors, including Apple and Microsoft, for a whopping $4.5 billion.

Just last month, Motorola’s largest shareholder Carl Icahn urged the company to consider options for its vast patent portfolio.

Not all of Motorola’s patents are related to mobile devices, but Google’s acquisition of them will go a long way to defending the Android ecosystem and its handset partners from patent infringement cases.

“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,” said Larry Page, Google CEO, on Google’s blog.

The phone makers who use and rely on Android for their smartphones may likely benefit from Google’s access to Motorola’s patents as their own legal troubles over Android’s vulnerabilities in patent lawsuits proceed.

While hardware makers like HTC, Samsung, LG, Kyocera and Sony Ericsson — all of whom produce smartphones using Google’s Android — may have reasons to be wary, the merger may result in a strong competitor with an inside edge, and the companies are publicly supporting the proposal.

But as the details of the deal are worked out, Android handset makers may start to look at their patent protector as a company who is now going into business against them, fueling antitrust issues. Google has been phone makers’ software partner now, but getting into the hardware business will put the search engine giant in direct competition with them.

Scrutiny over the Motorola deal will be nothing new for Google. Regulators will review the details, and competitors like Apple and Microsoft may support antitrust complaints. What may be less certain is how Android handset makers will navigate the change the acquisition will surely bring and how that affects Google, as well as the mobile industry.

This post originally appeared at Mobiledia.