European Commission clears Google, Motorola merger

European Commission clears Google, Motorola merger

Summary: The European Commission has cleared Google's bid to acquire Motorola Mobility for $12.5 billion. But the fight is not over yet, with several (albeit smaller) hurdles to clear.

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TOPICS: Banking, Google, Mobility
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Google is one step closer to acquiring Motorola Mobility, the smartphone maker, after it cleared the hurdle of the European Commission this afternoon. It is also expected that U.S. antitrust regulators will approve the deal, following the lead from European authorities.

The executive body of the 27 member states falls within its deadline of ruling by February 13th.

The Commission said: "it would not significantly modify the market situation in respect of operating systems and patents for these devices."

It also acknowledged that Google would be unlikely to "restrict the use of Android solely to Android", which is a "minority player" in Europe.

"The Commission therefore concluded that the transaction would not significantly impede effective competition in the EEA or any substantial part of it".

Google said today that the decision was an "important milestone", but acknowledged it has further hoops to jump through. "We are now just waiting for decisions from a few other jurisdictions before we can close this transaction."

Google, the search giant and maker of the Android mobile operating system, set out its proposals to acquire Motorola Mobility last year for $12.5 billion.

Not only does it create a stable ecosystem for Android devices, Google is set to receive over 17,000 patents which would bolster its portfolio, and help protect itself from patent disputes.

The Commission has not asked for any further details from the two companies, nor has it decided to open up an antitrust investigation, two decisions that could have been widely damaging to the two companies.

Earlier this week, Google pledged to license Motorola patents on 'fair, reasonable and non-discriminatory' (FRAND) terms to other mobile manufacturers, even competitors, should the deal succeed.

"The Commission's guidelines on horizontal cooperation agreements adopted last year make clear that commitments to license on FRAND terms are crucial to ensure access to standardised technology for all interested parties," a statement from the Commission said.

However, European Competition Commissioner Joaquin Almunia said that it would "continue to keep a close eye on the behaviour of all market players in the sector, particularly the increasingly strategic use of patents".

Often in cases such as this, high cost mergers or acquisitions, the U.S. antitrust authorities --- as the home turf of many of these companies --- work closely with its European counterparts to secure a similar or identical resolution. A European decision was necessary due to Google and Motorola both having a presence in the region, and having European customers.

But regulators in Israel and Taiwan have not yet ruled on the decision. While it would not be impossible to go ahead with the deal --- with Europe as the second greatest hurdle after U.S. authorities, which are expected to rule this week --- it would be a complication that the three parties would have to reach an agreement on.

Chinese authorities must also clear the deal. Google does not have a permanent base in the country since it pulled out of the region over claims the Chinese government hacked into its networks. But Motorola has an invested future in the region, with much of its supply chain coming from China.

There is little speculation on what the Chinese could do in such a situation. They may veto the deal, which would cause logistical nightmares for Motorola particularly, but Google alike, and may force the two companies to postpone the merger altogether.

ZDNet's Hana Stewart-Smith, based in Tokyo, reports that China has flaunted its power over Western brands within their territory before. As we've seen with the ongoing Apple 'iPad' trademark dispute, even the largest Western companies are making considerable concessions to get to the coveted Chinese market.

As for Google's relationship with China, they have recently expressed an interest in pushing back into the country. Despite its withdrawal, Google is still popular with the Chinese, and Motorola is one of their biggest mobile sellers.

Stewart-Smith understands the Chinese authorities would not go so far as to actually veto the deal, but nevertheless does not think they will make it easy either. "I wouldn't be surprised if they hold back the merger and delay a decision to keep Google and Motorola guessing," she said.

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18 comments
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  • great

    this is a decisive blow to the axis of evil software: apple, M$ and Oracle. Good things will start happening to you now.
    The Linux Geek
    • RE: European Commission clears Google, Motorola merger

      @The Linux Geek
      I think it's good too, because this will put them under much closer scrutiny by regulators, which is good for everyone. You only need to have about 40% market share to be regarded as a "dominant" company in European competition law.

      Axis is an odd choice of word, since it implies some degree of cooperation.
      A.Sinic
    • Good Things? like what?

      @The Linux Geek
      Motorola making a profit? Android actually working? I'd call that nice if those things actually happen.
      William Farrel
      • RE: European Commission clears Google, Motorola merger

        @William Farrel
        What I see is Motorola will still procude nasty looking junk and Android OEM's will be more willing to look at WinMo 7/8.
        global.philosopher
      • RE: European Commission clears Google, Motorola merger

        @William Farrel
        "Android actually working?"
        Galaxy Nexus in hand, I laugh in your face. How them grapes taste? Hahahahaha!
        Nathan A Smith
    • RE: European Commission clears Google, Motorola merger

      @The Linux Geek The way I see it is Google now has an anchor attached to it. Is this a decisive blow to its competition or is it dead weight. We will see in about 12-24 months.
      global.philosopher
      • RE: European Commission clears Google, Motorola merger

        @global.philosopher
        If only they'd asked you for your wisdom before pressing the "buy it now" button. Or not.
        Nathan A Smith
    • RE: European Commission clears Google, Motorola merger

      @The Linux Geek

      I fully concur :D

      I have put the champagne in the cooler, soon it will be opened.

      Apple has gotten particularly rotten lately :(

      one side of me thinks it would be nice to see google to go out and legally r@pe M$, Apple etc (karma), but the good person in me says Google should not stoop to their level.......................
      DejaVu2
  • It's almost time ...

    to start shorting Google.
    Rabid Howler Monkey
    • RE: European Commission clears Google, Motorola merger

      @Rabid Howler Monkey
      huh???
      The Linux Geek
    • RE: European Commission clears Google, Motorola merger

      @Rabid Howler Monkey
      Depends on how their OEM partners react. Going into competition against your own customers is rarely a great idea. Time will tell.
      A.Sinic
      • RE: European Commission clears Google, Motorola merger

        @A.Sinic

        Right, so you shorted Apple when they opened their own stores, right?
        tkejlboom
      • RE: European Commission clears Google, Motorola merger

        @tkejlboom
        Good observation, and a very similar situation. Sometimes it works, often it doesn't, and it takes time to find out. The fallout comes early as partners desert, while the advantages come later. That takes nerve and deep pockets. GOOG certainly has the latter.
        A.Sinic
      • RE: European Commission clears Google, Motorola merger

        @A.Sinic In the long term it didn't work for MS. If the handset/tablet market really relives the PC industry then what we will see is Android still making inroads as the commodity generic OS which OEM's will use but as the market matures then the wil be a consolidation of the market with a few big Android OEM's (Samsung and HTC and ZTE possibly) and then Google will continue to stomp on the little guy using its platform monopoly (Android) and then something new will come along and no one will partner with Google again because of allthe enemies it makes along the way.
        global.philosopher
    • RE: European Commission clears Google, Motorola merger

      @Rabid Howler Monkey "It's almost time ...
      to start shorting Google."

      Only if you hate money.
      Nathan A Smith
  • RE: European Commission clears Google, Motorola merger

    Could this mean we ALL get a phone that runs all the wonders of Android OS, rather than the watered down version, without having to buy a Nexus and hope for a good carrier?
    SpectreWriter
    • RE: European Commission clears Google, Motorola merger

      @SpectreWriter
      Your forgetting why the OEM's and carriers like Android. It is because they can change, taylor it and forcefully add their own products on top. If you take that away then how will the OEM's and carriers be able to differentiate their products. Without being able to put their own GUI and bloatware they are doomed to only eek out profits from low margins and high volumes...similar to the PC industry. The only companies making money in PC's these days are the high volume OEM's and Apple.
      global.philosopher
  • It's confirmed

    Motorola is with the NWO.
    Jow_Blow