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Christopher Dawson

With Motorola acquisition, Google makes itself a legal target

By | August 16, 2011, 12:40am PDT

Summary: The Google-Motorola deal may make perfect sense from an Android perspective. But with antitrust hearings looming, Google may have just painted itself a legal bullseye.

By now, you doubtless know all about Google’s acquisition of Motorola Mobility, a move that turns the search giant into a full-fledged player in the smartphone manufacturing market. But while this deal has many upsides for Google - a defensive shield against patent lawsuits, control over the Android ecosystem from software to hardware - there’s one major, overriding downside.

With the purchase of Motorola Mobility, Google may well have made itself an even riper target for the Federal Trade Commission’s ongoing antitrust investigation. And that’s not even mentioning the lawsuits Google could face from jilted Android handset manufacturers.

Rewind back to last week, when we heard reports that the FTC was broadening its probe of Google’s business practices to include Android.

The goal of the expanded probe: to find out whether or not the company was throwing its weight around and preventing its Android manufacturer partners from adopting competitors’ services - which could simply refer to mapping applications, or it could be about rival mobile operating systems like Microsoft Windows Phone 7.

If that’s true, then Google-Motorola just alienated Samsung, HTC, and any other Android partner that the company applied pressure to. After all, in this hypothetical scenario, Google likely promised them a level playing field and the full support of the Googleplex in exchange for their cooperation. But there’s no guarantee that Google won’t pull the Android rug out from under them now that it has Motorola Mobility to grant total control.

While Google has publicly reaffirmed its commitment to these smartphone partners in the wake of the deal, saying that Motorola will get no special treatment from the Android team, I imagine there are escape plans being formulated in manufacturer boardrooms across the world. There may even be a lawsuit or two levied for deceptive or anticompetitive business practices.

In short, Google isn’t making itself any friends with the Motorola acquisition, despite initial appearances, and thinking through the scenario I described is likely keeping teams of regulators busy as we speak.

And even if the FTC investigation of Google’s Android business practices comes to nothing, the Motorola Mobility acquisition still leaves Google on the hook. Google Android already commands 39 percent of the smartphone market, ahead of even Apple, a fact largely attributed to the company’s practice of giving away the operating system to recoup costs on search and mobile ads.

Regulators were already concerned with the idea that Android forced users to use Google services, as we’ve already seen. The fact that Google itself will now be ultimately behind the hardware that many consumers will end up using is only going to make those same regulators that much more determined to leave no stone unturned.

Google may have spent $12.5 billion on Motorola, but it’s only going to make the legal scrutiny around its business that much more intense. No matter the details, many are going to see this move as Google reinforcing its position at the top of the heap, and I have no doubt that the FTC will be looking deeply into the consequences to make sure that every single aspect is on the level.

Essentially, the short-term, possibly reactionary decision to acquire Motorola and its patents to fend off legal action may have longer-term consequences for Google as a whole. And come the start of antitrust hearings on September 21st, Google will have to prove it’s not a competition-stifling monopolist even as behind the scenes it works to integrate Motorola into its business.

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Matthew has written about consumer and personal technology for The New York Daily News and comic book culture for ComicMix.com.

Disclosure

Matt Weinberger

Matt Weinberger has no financial investments in the companies he covers.

Biography

Matt Weinberger

Matthew also covers software as a service (SaaS), cloud computing and recurring revenue models for the IT channel at TalkinCloud.com and MSPmentor.net. He has written about consumer and personal technology for The New York Daily News and comic book culture for ComicMix.com. Matthew is a graduate of the Stony Brook University School of Journalism.
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RE: With Motorola acquisition, Google makes itself a legal target
cambalkon 27th Aug
linux source may be available (mac os x isn't) but hardly cam balkon any one uses it which is why cam balkon it has so little malware. It would be no more cankiri secure than windows if linux were cam balkon on 90% of desktops and quite conceivably much less secure since bad guys would have the source cam balkon which would make it easier to find bugs. Also you couldn't have 3 day turn arounds web tasarim for patches anymore, as 100k PC shops are not going to deploy a patch with so little testing just to cam balkon see their entire cam balkon org. go boom. Basically gelinlik everything that makes linux sexy would evaporate if aluminyum everyone used profil it.
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google was forced to but motorola
programAngel 16th Aug
if it was not for apple asking ban on samsung galaxy tab and many many more ip violation suing by M$ and Apple, then google would not have bought Motorola, anyone can understand that.


What else do you want google, watch apple and M$ killing it with patents?
@programAngel
"Do no evil". Hmmm, I wonder what Android phone manufacturers are now thinking? happy
@ptorning
what evil have they done by buying motorola?


They have to but it or else Android would be dead.
Why should they let M$ and Apple to kill android?
Which at this stage have nothing to do with Motorola.

Given the behavior of MS and the eventual settlement I wouldn't be at all worried of the DoJ if I was Google.
@Richard Flude
If you thing antitrust only focus on "illegal business practices", then you are truly lost.
@programAngel

Tell Google to quit violating others IP, and they wouldn't have been in this hole to begin with! IP is IP no matter who who think you are. Google is no different than anyone else.
@Cylon Centurion

IP=Imaginary Property
@DonRupertBitByte

Does it? Tell me, if you were to invent something, whether it be a product, service, process, code, etc. Would you not want to patent it, to protect your investment into making said invention? How would you feel if a bigger bully came into the fray, told you off, and stole your IP to make a competing product?
@Cylon Centurion Still waiting to see this IP they are violating!
@Peter Perry

They're violating something if HTC, Samsung, et al choose to settle with Microsoft rather than fight back.
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You tell 'em Cylon!
thx-1138_@... Updated - 16th Aug
" ... IP is IP no matter who who think you are ..."

That's right! Apple invented the beveled rectangle, so there!

If i was Steve Jobs, i'd try patenting the right angles in a rectangle too .. because i'd think i'd have earned the right to!
All the OEMs now understand that Google is the worst a**h*** out there. They might be feeling used and betrayed, especially Sony Ericsson.

Google took unethical shortcuts for creating android, now fan boys are crying about innovation /competition etc.

The death of android and probably the downfall of google are in the horizon.

Apple may be soon dumping google search/maps and Ballmer may be more pleased to see Apple coming to his camp.

S. Jobs still have a score to settle with google. That Schmidt idiot used to sit in apple board and steal iPhone ideas and secretly developed android. Apple will take revenge one day and it may be in the form of bing.

Once google search share goes below 50 percent, then they are doomed. Nobody take google docs seriously.
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Utter Nonsense
Dietrich T. Schmitz * Your Linux Advocate 16th Aug
nt
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Agreed....
linux for me 16th Aug
@Dietrich T. Schmitz * Your Linux Advocate
Since the Motorola Razor was a very popular phone, and before the iPhone, I wonder how many of Motorola patents that Apple, or even Microsoft, has infringed on from the early Motorola phones???
Umm no, Android is close to 50% marketshare and is far ahead pf Apple.

And this has nothing to do with their Antitrust issues as Android really is not part of them.

So please explain how an open and free operating system can get somebody in trouble for antitrust violations?
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@Peter Perry

Paul Thurrott has a very good article on his SuperSite:

h t t p : / / w w w .winsupersite.com/blog/supersite-blog-39/mobile-computing-devices/android-heading-fall-140173

Android is hardly "Open and free". It's a farce to think of it like it is.
@Cylon Centurion Okay, so I guess they should go after Apple for Dumping iTunes, MS for Dumping IE and Sun for Dumping Open Office huh?

While we are at it, let's talk about Apple bundling iLife and OS X with Hardware... Or MS for bundling Kinect with the 360 at a reduced rate.

Oh and next time try somebody a little more objective than an everything Windows Blogger.
So true. I'm expecting an antitrust suit to be filed against Google.
Is Google becoming the Wal-Mart of the information industry? in every single way, good and bad it seems.
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Google is an advertising company that uses a first rate search engine as their advertising vehicle.

Motorola is a manufacturing entity. Not too hot at marketing, but manufactures good products.

Advertisers typically destroy manufacturers when a deal like this is solidified. The metrics are totally different and Advertising management is ill equipped to deal with manufacturing needs.

Motorola will be dead in 24 months, and the fine print in the contract determines what patents Google really bought.

All that combined with the now uneven playing field for other Android adoptors means Google has some real problems to deal with.

Bet Samsung and all the others wished they had another OS about now. Heck, maybe even Windows 8 is looking really nice to these guys.

After all Google is now a direct competitor - I can imagine they are a bit peeved.
What antitrust. Google is not trying to kill its competition. Apple has their market share wit just one phone. Apple outsells Nokia and Motorola. There are alternatives to Android. Carriers are free to sell whatever handsets they choose. Customers are free to buy whatever they choose from whomever they want. Well, except an iPhone, where it must be Verizon or AT&T (just in the U.S.; other parts of the world mandate sales of unlocked phones).

Manufacturers are not required by Google to make or sell Android phones exclusively. I recall an anti-trust decision wherein it was found Microsoft basically forbid Dell, Compaq, HP and others from selling other operating systems.

I don't think this passes muster as a monopoly.
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Correct
thx-1138_@... Updated - 16th Aug
@nospam@... this is simply a case of the MS and Apple propaganda spreaders trying to propagate more FUD, lies and innuendo.

Truth be known, Apple painted themselves into the corner; i don't recall anyone forcing their marketing and legal departments to turn greed into their manifesto centerpiece. They really only have themselves to thank for 'recent reactions' in the industry.

Now that Google have acquired a hardware firm, i believe it was almost completely for the patents alone. I predict Google leverages the hardware arm of Motorola to expand and experiment with new design: a bonus on top of the patents, if you will.

The anti-trust legislation is meant to stop a vendor from dictating / controlling the behavior of other industry competitors and OEM partners. Since Google do no such thing, your assessment is correct..

" ... I don't think this passes muster as a monopoly. "

Besides, they are hardly a monopoly by definition if they do not control the configuration of phones by ISP's, OEM partners or indeed the manner in which Android is deployed. Add to that, the fact Apple is the single-most popular mobile phone platform producer, distributor and re-seller, in the strictest sense, since Android's popularity (percentage-wise) is due to it's use by numerous mobile OEM's - not any, individual vendor. There is absolutely no way that Google fall into the definition of 'monopoly.' Those that say so, know little to nothing of economics.

When people are absolutely frank and step back, any claim of monopoly is borderline laughably ridiculous.
@thx-1138_@...

Well, I went on to amplify a little on my observations, only to discover somebody had marked my post as spam.

Oh, well. happy

Openness of Android: Evidenced by either customization of the interface by Motorola, HTC, Samsung, and others.

Marketplace: Don't like the Google one? Fine, use Amazon's. Download apps, ROMs, or whole OS modifications from XDA, among others. Heck, download the Android Open Source Project codebase and roll your own.

Core OS: Code is free, development environment is free, Android App maker tools are free from Google. Update your own radio software, linux kernel, file system, whatever. Free.

Four years ago, when Apple introduced the iPhone, Nokia and Blackberry owned this market. Motorola was on the downslide from the Razor (still a great phone). Google launched Android with the G1. A year later, Google introduced their own phone, and started selling the Nexus 1 directly, along with the advent of Droid phones from Motorola and HTC. Google stopped doing so because of weak sales and the monumental task of running customer support. In less than four years, Apple and Google have come to dominate a market in which NOBODY thought they would be anywhere near as big as they have become.

As for allowing other competitor's software and services: Download the Microsoft-manufactured Bing app for Verizon, and get all the Bing stuff you love on your Android phone. Same for Yahoo. Get a different browser, if you prefer (Opera, Firefox, etc...). Google's own eBook reader, or Kindle? Google Maps, or OpenMap, or Gaia, or VZW Navigator, or... the list goes on and on in proof of openness.
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Matthew ..
thx-1138_@... 16th Aug
.. don't give up your day job .. b@!!washing at Cupertino.

You sure know how to keep your retainer there .. oops! watch out, you missed a bit.

... pffffft
linux source may be available (mac os x isn't) but hardly cam balkon any one uses it which is why cam balkon it has so little malware. It would be no more cankiri secure than windows if linux were cam balkon on 90% of desktops and quite conceivably much less secure since bad guys would have the source cam balkon which would make it easier to find bugs. Also you couldn't have 3 day turn arounds web tasarim for patches anymore, as 100k PC shops are not going to deploy a patch with so little testing just to cam balkon see their entire cam balkon org. go boom. Basically gelinlik everything that makes linux sexy would evaporate if aluminyum everyone used profil it.

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