Google Bought Motorola’s Phone Business, Patents for $12.5 Billion

Google, the web giant, forged a $12.5 billion deal to buy Motorola’s phone business, a plan to compete in the smart phone business, while it also offers Google dozens of patents which may lead to legal warfare with Apple and Microsoft.

 

The offer- the largest acquisition in Google’s history-is 63% above the closing price of Motorola Mobility shares on August 19^th, 2011. This deal will turn Google, the maker of the Android mobile operating system, into a full-ledged cellphone manufacture. Google would have to run factories, build up relations with supplier and retailers and manage its inventories which are different from what Google is now- a software maker. This deal is now under antitrust scrutiny by theJustice Department.

 

The buying of Motorola will offer Google more than 1,700 patents on areas such as wireless, audio, video, design and user interface technologies. Motorola can also offer Google a number of patents in the wireless industry standards such as 2G, 3G and 4G, an area that many phone companies are planning to upgrade their wireless networks. Mr. Page said on the company’s official blog that Google was purchasing the handset maker to bolster its Android mobile operating system and increase the number of patents it owned. “ Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us better protect Android from anticompetitive threats from Apple, Microsoft and other companies.”

 

Android, an open- source software that can be used on smartphones and tablet computers, is designed to providing a flexible, upgrade system that aims to suit its user’s preference. Companies can use the software to optimize the system for their device which leaves the system more vulnerable to intellectual property lawsuit.

 

Oracle Corp. has sued Google directly, claiming that Android violates patents covering the Java programming language. Apple and Microsoft have sued the Motorola, alleging that the applications run on Android system violate their patents. Mr. Page, Google’s chief executive said in a blog that the acquisition would help Android from future litigation. “Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which enables us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies,” Mr.Page Said. On the other hand, Motorola has accused Apple and Microsoft of infringing one of their patents. This patent contains the technology that will enable the smartphone to maintain a list of application software accessible to the device, according the court documents.

 

In order to prepare for the legal warfare, Google has geared itself with top patent lawyers to fight for the lawsuits after the deal is approved by FTC. Suzanne Michel, the former deputy director of police planning at the FTC is going to join Google’s legal team. Michel worked for FTC for more than 11 years, and was specialized in patent antitrust issues and patent policy.