Did Google buy Motorola Mobility to block Microsoft?

According to a Gigaom "exclusive," Motorola Mobility was in talks with Microsoft, as well as other parties, to discuss acquisition.  Their sources tell them that Microsoft was primarily interested in Motorola's 17,000 patents and 7,500 patent applications, which would have have become a WMD of sorts against Google.  Acting in self-defense, Google moved about 5 weeks ago, opening talks of their own with MM, which included CEO Larry Page and Motorola CEO Sanjay Jha, though more recently, Android co-founder Andy Rubin was brought into the mix.  Allegedly, Motorola preferred a deal with Google because Microsoft was only in it for the patents, and no the hardware manufacturing.  The result, Google's $12.5 billion payout or a 63% premium over previous stock estimates of Moto. Good deal?

If these claims are accurate, it is the next giant step in a patent war that's been brewing between Google and Microsoft for a while now.  It is also a possible sign of the decline of Android and the rise of Windows Phone 7.  Google now owns one of the many companies that use its Android platform, and has become a competitor to itself.  Google's new position as a player in the manufacturing game could drive other companies away from Android and into the arms of another operating system, say, perhaps Windows Phone.  Throw Microsoft's deal with Nokia, and now you have what could be a huge boost for WP7.

While this has the potential to be exciting for those of us who would like to see Windows Phone flourish, the situation is, sadly, one more example of how patents are being used to crush competition, rather than to bolster innovation. 

Source: Gigaom


Reader comments

Did Google buy Motorola Mobility to block Microsoft?


No matter the reason, Google just wasted $12.5 Billion AND alienated their Hardware Partners, all in all a good day for anyone NOT named Google

The hardware partners are happy for now because it seems like Motorola was getting ready to sue them as well, it needed cash. So that's why, at least for now, HTC, LG, Samsung are all happy with this deal.

Right, because they all responded with"We are happy google is defending us""We are happy google is defending us""We are happy google is defending us""We are happy google is defending us"That must mean they are very happy!

lol that sounds like a chant... Scene: Boardroom full of execs all with that wide-eyed stare of the hypnotized. Andy Rubin standing in front of them "One more time!" The execs: "We are happy google is defending us.."

"Invasion of the Body Snatchers", "The Stepford Wives", ... I know I've seen this movie somewhere.

I guess Google realized that Motorola suing Samsung, HTC, Sony, etc. would have been the end of Android. They really didn't have a choice. If the Android licensees turned on each other on top of the Apple/Oracle/Microsoft lawsuits it would have made Android radioactive.Problem is that this doesn't do too much to protect these companies from Apple/Microsoft/Oracle. Microsoft already sued Motorola so clearly they are not afraid of Motorola's patent portfolio. Android is still very vulnerable and Google is burning through it's cash reserves buying patents. Maybe Google can turn things around for Motorola, but I don't know how you do that without burning bridges to every other handset maker in the industry. Seems to me like Motorola was sacrificed to the gods in order to save Android.

I also heard that Motorola was thinking of suing other android OEMs with it's own 17k patents, so this just compounded the trouble Google had to deal with.I don't think those 17k patents will stop someone like Apple or even MS from going on. MS has been in mobile for a very long time, if Motorola had anything to counter MS they would've used it, but it seems they don't. This is a Google stop gap at best, I still think "motorola" as a brand will end up dead now. Google won't care about the hardware side of this at all, they don't make hardware etc. They'll sell of the manufactoring business for sure. Get ready to add Motorola Mobility to the RIP mobile list next to Palm and, maybe, RIM.

Motorola did countersue Microsoft as usually happens. HTC and Samsung countersued Apple after Apple brought it's patent lawsuits against them.

Correction Motorola countersued both Apple and Microsoft after they brought their patent lawsuits back in October. I honestly don't think that means much though. Everyone countersues when a lawsuit is brought against them and companies like Apple and Microsoft wouldn't bring a lawsuit in the first place if they were really afraid of Motorola's patents. So really this deal is only about protecting the other Android OEMs from Motorola. Basically what happened is Motorola was failing as a phone maker and threatened to bring lawsuits against fellow Android manufacturers to recoup their losses. Motorola was basically holding a gun to the head of the OHA and Google basically golden parachuted Motorola execs to disarm the company and save the OHA. It's interesting to me how close Android was/is to mutual destruction. The whole alliance seems built on a deck of cards with no underlying patent protection and now Google is scrambling to build a foundation that should have been there in the first place.

MS and Apple are already suing Moto, so it's pretty useless. It just saved them from even more court drama.

Somehow, I don't think we'll hear much whining about how Google didn't give anyone else a chance at buying Motorola Mobility.I see Google might have learned their lesson and didn't bother trying to be cute with their offer amount.Meanwhile, good for Motorola Mobility for trying to keep the manufacturing lines running. But Google is not a device manufacturer, and may decide to shut down the lines anyway.

Android is declining? I haven't seen one person using a windows phone since owning one in December 2010. I travel using the train in San Diego so I see quite a few people. Most people have Android or iPhone. I know this is not a scientific study, but perception is reality. Windows phone has done diddly to gain any traction within the U.S. Google is eating Microsoft's lunch.

"It is also a possible sign of the decline of Android and the rise of Windows Phone 7."Why would you think that. Google owns Motorola mobility, and MS is in very deep with Nokia. Point out the difference please?

Google paid a 63% premium over what Moto was actually worth in stocks. Getting your competition to drop $12.5 billion, forcing them in the hardware business and alienating your OEM partners is different than what Microsoft did.Microsoft was smart to not buy Nokia--would have sent the wrong message and plus there's no messy integration they have to worry about. Do you think it will be easy to fold Moto into Google's culture? Plus, MS's OEM partners will benefit more from the MS-Nokia deal than the Google-Moto one as the latter promises services to enhance all WP devices.

Google has already said that they have no plans to change the way Motorolla mobility operates. Moto mobility has been operating independently from the core moto business for years now. Alienating their OEM is exactly what MS and Google did. Did you not see pretty much the same exact same "press statement" from HTC, once it was announced the Nokia/MS deal was announced. As far as overpaying, if it will help them from getting their socks sued off, I think they paid just the right amount.

Saying and doing are two entirely different things. Do you honestly think Google would say they were going to change the way Motorola operates if they intended to change the way Motorola operates?

@1jaxstate1The question is this: Did Google buy Motorola because they really wanted to or was their hand forced because Microsoft was going to buy them?The answer to that results in a very different analysis of the situation. If it's the former, then good deal for Google (even if they over payed by a lot). If it's the latter and it looks like it might be, then this was a defensive move that they were forced into--that's usually not an ideal position for software companies.

"Google has already said that they have no plans to change the way Motorolla mobility operates."Every major company that buys another major company says that during the first press conference. Lets see what they announce at their 6 month presser. Kinda like buying an old house. Chances are your gonna remodel.

Wait, where did you get 'Microsoft buying Nokia is good' from? That hasn't happened and when it was discussed in editorial form in various places most said it was not a good idea.

Because Microsoft saved themselves a buttload of cash and just went for the stragetic partnership. MS doesn't need to build hardware and have shown themselves less than stellar at it anyways. But still 12.6b for patents is some serious cash that may or may not be good deal and steps on the toes of Samsung and HTC.

@astroXP "Wait, so how come Google buying Motorola is bad whereas Microsoft buying Nokia is good?"It looks like MS partnered with Nokia on their own volition and were not forced by external circumstances e.g. Google was going to buy them. MS also as far as we know, did not overpay by 63% for the Nokia deal.No one is saying this a death blow to Google, but rather it is not perhaps the position nor the amount of money they would have liked to have spent.As I tweeted earlier, alternate headline: "Google drops $12.5 Billion to license Android to themselves, others". That's the real story.

This would make Android OEMs angry and very likely to look at other mobile OSes closer.. If that is Google charged them for Android. If Motorola is not getting a better deal than them then what do they have to be angry about? Seriously, what do HTC, Samsung, LG and the others have to be angry about? Nobody is getting preferential treatment, they all pay the same.

No. Google bought Motorola's patents to protect Android... from Motorola. Microsoft is not afraid of Motorola's aging patents, plus MS is not a cellphone manufacturer. The only people afraid of Motorola's patents are other cellphone makers with small patent portfolios, such as HTC, LG (not Samsung) and Motorola expressed their plans to go after them for profits. Google was forced to buy Motorola to prevent it.