Google did win from buying Motorola, but not in the way you might expect

Google did win from buying Motorola, but not in the way you might expect

Summary: Google might have needed Motorola's patents to defend other Android manufacturers from them rather than to make money, but they pulled Google into much more direct conflict.

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TOPICS: Android, Google, Patents
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In some ways, selling off Motorola at any price is a bargain for Google. The bump in Google's share price that came in response to the news, and how much less uncomfortable it will make the company's future earnings calls, are obvious benefits.

But did Google really come out of the whole Motorola business a winner?

The big bonus that Google was supposed to get out of acquiring the company in the first place was the patents that came with it. Those don't seem to be worth nearly as much as Google paid for them, given how few lawsuits the company won using them since the acquisition.

As well as the well-known judgement that reduced the amount Microsoft had to pay Motorola for its patents covering H.264 video and wi-fi from $4bn a year to $1.8m, Motorola also lost several patent cases in Germany, and for a time Motorola wasn't able to sell any Android handsets there due to injunctions.

And beyond the cost of litigating those cases, which really ought to be factored into the arithmetic of how bad a loss this is for Google, is the position it put the company in.

In the past, Google has helped out Android partners in court, but it's tried to keep patent lawsuits over Android at arm's length. Owning Motorola made that a lot harder.

Having Motorola meant Google was getting ever more involved in legal fights about Android handsets, because it's much easier for companies making handsets, rather than OSes, to get sued.

Selling Motorola to Lenovo means Google is no longer the only Android handset maker publicly refusing to take a patent licence from Microsoft (companies such as Foxconn, LG, Samsung and HTC are among those that have decided to license Microsoft's Android-related patents) and lets Google avoid the negative publicity that would come from having to sign such a deal with its arch-rival. 

Despite selling off Motorola, Google is holding onto the patents it bought when it acquired the company. It can still enforce those patents if it chooses — which is increasing unlikely without a handset business — but post-Motorola, it's equally unlikely to face the same legal hassles as a result.

In the end, Google did win by buying Motorola. It got to experiment with making its own handsets, as it once experimented with selling phones direct and then backed away from that.

And, as we've seen with Microsoft having experience building hardware can improve your software products (Windows 8.1 shows some lessons Microsoft learned by making Surface), the lessons learned with Motorola may help to make Android a better OS. 

With the patent cross-licensing it did with Samsung, and with Lenovo taking the handset business (and at least some of the legal headaches) off its hands, Google comes out of the whole Motorola experiment potentially out of pocket. However, it also comes out of the experience without the worry that its handset partners will drag each other to court over Android. 

In the best case scenario, Google would have got a thriving handset business out of the deal as well, instead of confirming that the only way to make a profit from Android handsets is to be Samsung. But avoiding internecine OEM warfare has to be worth a lot too. Never mind the figures: Google got what it wanted from Motorola and sold it when the handset experiment failed.

Further reading

Topics: Android, Google, Patents

Mary Branscombe

About Mary Branscombe

Mary Branscombe is a freelance tech journalist. Mary has been a technology writer for nearly two decades, covering everything from early versions of Windows and Office to the first smartphones, the arrival of the web and most things inbetween.

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23 comments
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  • not for nuthin..

    but there are much better ways to get experience than a 12.5 billion dollar flying leap into a pit of broken (google)glass.
    TrishaDishaWarEagle
    • That 12.5B was later adjusted to 13B. Add on the Billions moto lost, the

      litigation costs of moto patent case failures, etc. and google lost a lot more than 10B on the deal. Not to mention proving again that they don't know how to make money from anything but selling your personal data to advertisers.
      Johnny Vegas
      • When you are nothing but

        an advertising company, all you have to make money is other people's data. It amazes me people don't wakeup and realize that google just uses them for their "free" products.
        hoppmang
        • People do know that and have no problem with it, as they shouldn't

          You are being "used" by zdnet for its free product right now. Maybe you can wake up and realize that.
          drwong
          • bad comparassion

            ZDnet is not harvesting my name, searches or content creation.
            better comparison would be FaceBook , which I don't belong to either.
            chips@...
          • It seems somebody hit your nerve

            on the weakest point. Otherwise you would've mentioned something comparable. ZDNet just throws ads, I don't think they aren't personalized. OTOH, Google could personalize the ads specifically targeting me. How? that's the magic probably miss your closed eyes.
            Ram U
          • I like personallized ads and google now

            so I have no problem with them using my data for that. Don't forget, its who you don't know is harvesting you online that you might want to be concerned about.
            drwong
          • Google loses billions on a deal and nobody cares

            Microsoft writes down $900M on Surface and the stock plummets. Google loses $10B on Moto and the stock goes up. Motorola is is going to lose over $3B operating under Google before this deal closes. After the deal is done Google will have spent $7B just for Moto patents.

            In the end Nokia, Rockstar, Apple and whoever else wants to sue will continue going after Android manufacturers (maybe Sony or Blackberry will be next). Sony is in poor financial health, they own Ericsson patents, and are part of Rockstar.
            cool8man
        • People love "free".

          Well, at least they THINK it's free. :P
          Userama
        • I'm already awake

          I don't need to wake up when I am fully aware what Google does and don't care. They are not the NSA, the only thing they do to me by tracking my info is give me more relevant ads, and in return I get a ton of awesome free stuff of theirs to use, I'm more than fine with that.
          Leahelm
          • Right, what we need to wake up to is not

            google, or the NSA, but the BAD GUYS out there. Terrorists, hackers, pedophiles, drug dealers - you name it. Anyone who needs to warn me about google is probably being paid by the competition.
            drwong
      • certainly add $14.5 million

        that's the fine for Moto for being unreasonable about FRAND
        mary.branscombe
        • Google Had To Pay That?

          Google assumed that $14.5M liability in the original purchase of Motorola?
          This 'fact' i've seen nowhere else. That would change things around if Google had to pay it out on Moto's behalf.
          PreachJohn
          • oh, this was AFTER the purchase

            In September 2013 a federal jury found Motorola Mobility failed to license standard patents at a reasonable rate and ordered them to pay Microsoft $14.5 million damages. Google appealed and lost the appeal. They took on the case, lost it and won the fine themselves (Google counsel in court). Add in the German Google Maps trial and Google was in two cases with Microsoft directly; I don't think it wants that. The PR as well as the monetary costs of lawsuits is high and should be counted.
            mary.branscombe
    • Better'n You Think

      From more info on this Deal, available on the Net elsewhere, a different view appears:
      " …company (Google) valued those patents and other developed technology at Motorola at $5.5 billion, according to a regulatory filing last year."

      (In terms of whether Google has lost money on the deal, the New York Times and others note that Motorola had about $3 billion in cash on hand and $1 billion in tax credits when it was acquired, reducing the effective purchase price to about $8.5 billion. Google also sold Motorola’s set-top business to Aris for nearly $2.4 billion. With the sale to Motorola and the value of the patents, which it has used as a strategic asset to protect the Android ecosystem, Google seems to have fared better than you may think.)

      As Connie Guglielmo/Forbes said, “Note the Math…”. Google did VERY well on this Deal. You can bet your bottom dollar that ‘Creative’ Accounting will insure that, well within the Infernal Revenue Service rules.
      PreachJohn
  • Advertising drives a lot of services

    You get TV for free (your cable bill is for access to the network, not the content), radio for free and most web sites for free (again, your Internet bill is for access to the network, not the content). Even magazines and newspapers are subsidized by advertisements. Google is no different than any other business that makes its money from advertisements. Most people understand this. Google doesn't sell your secrets. They use your information to determine which advertisements will be most effective to you. This allows them to charge their customers (advertisers) more. It's not like I can call up Google and pay to get a list of the porn sites that you went to or buy your tax return information. The anti-Google people seem to be saying this is what they are doing and it's just not true. Google does USE your personal information but they do not SELL your personal information. Why would you expect that anything that you typed into a company's website and stored on their servers belonged to you anyway? It is obviously something that you chose to give to them. They clearly tell you ahead of time that they will use the information that you give them to direct advertisements to you. All big online services do this to some degree, even Microsoft. At least all of Google's services cost the consumer zero dollars. I'll gladly trade some advertisements for their services. If you don't like ads, just install adblock and you'll never see them.
    robert_rowe@...
    • unfortunately your response will fall on deaf ears

      Many of these guys are in fact paid commenters from microsoft.
      drwong
      • closed mind, closed answer.

        it is pretty clear you just call people paid shill or whatever when you can't have a discussion on the issue or you get made to look foolish.

        and no, not deaf ears. Google mines users data any way they can, even breaks laws to acquire it and no one really knows how much they have or to what ends they do with it. Trying to make this a problem of users as if they are entering all this information is flat out disingenuous at best. From you though it is simply deceitful.
        Emacho
  • They saved billions in taxes

    They saved billions in taxes, that they won't be paying to the US Treasury and CA state treasury.
    GaryDMN
  • They saved billions in taxes

    Of course that comes at the expense of the US Treasury and the CA State Treasury.
    GaryDMN