A Closer Look at the Google-Motorola Deal

Posted by Google Inside Staff at 6:16am EST on 08/26/2011

As with any tech industry merger, Google’s recent acquisition of smartphone-producer Motorola Mobility came to fruition for a number of reasons benefiting the participants.  The deal also should not be considered too much of a surprise, since Motorola and Google have been allies in the mobile wars since 2008, when Motorola committed all of its popular Droid devices to integration with the Android operating platform.  With both tablet and smartphone sales figures continuing to skyrocket across the board, and with the increasing popularity of Android and the need to defend it from the encroachment of competing tech companies, a closer look at this deal reveals a number of significant advantages for Google.  It also reveals a number of potential hairy spots, perhaps most significant being the likelihood of antitrust exploration of Google’s already dominant share of the mobile market through the Android platform.

First and foremost, Google publicly admitted that a main motivation for the acquisition was the access it would grant Google to the wide array of patents Motorola owns, patents which now can be maintained to help deflect competitors from exploring and parsing out Android technology and functionality for their own OS systems and mobile devices.  The importance of this was highlighted by the sale of thousands of Nortel Network patents to Apple and Microsoft among others this past July, to the tune of $4.5 billion.  With innovation and ingenuity perhaps the biggest competitive advantage in the ongoing mobile and tablet wars, it was a no-brainer from Google’s standpoint to purchase such a large folio of patents so that the company could further entrench its Android system from exploration by competing companies.

However, an equally significant aspect of this deal that is perhaps a bit less talked about is Motorola’s significant control of the development of set boxes for cable outlets, a realm that Google has publicly talked about wanting to focus on for future innovation and development.  Specifically, Google has talked about meshing internet into the basic television experience by designing a new type of set box that would allow for complete integration of web browsing and connectivity with a basic cable set box, one that could potentially be offered through another huge fish, Comcast.  Potential developments could include the integration of Google’s all-powerful search engine with TV listings and guides; creating the capability for interaction with Google Plus, allowing viewers to recommend shows and videos to friends and family by utilizing the “+1” already made popular through Google search results; and finally, it represents a potentially new market untapped by major competitors like Apple or Microsoft that would allow Google to set the market standard.  Of course, major questions surrounding cost, availability, and actual functionality of this type of set box remain, but the prospects and innovative power of Google’s brain trust are not ones to be counted out, and certainly had to be another major catalyst for the acquisition.

As was mentioned before, there are a few potential roadblocks and red flags to this deal, first and foremost being Google’s potential evaluation against antitrust laws because of its burgeoning control over the mobile industry in the U.S.  With the company already holding a near 50% market share, there are concerns that with further partnership with Motorola, Google could approach a market share in the realm of 75-80% that would allow it monopolistic control over the wireless industry (and further wireless innovative developments, especially regarding web browsing).  Also, there are concerns from other hardware manufacturers like HTC and Samsung that have partnered with Google on previous Android phone releases like the Nexus One.  Google has guaranteed that Motorola Mobility will remain an independent entity in regards to development contracts, required to bid along with other hardware manufacturers for future Nexus bids.  Whether this will be upheld remains to be seen.

No matter how you look at this deal, Google comes out looking like a winner with another trophy on its ever-growing mantle, one that allows it to remain a titan rivaling Apple and Microsoft for dominance in the ever-exploding tech industry of the 21st century.  If Google can unveil an innovative set box to integrate its web-browsing and ad network into the home television experience, on top of the increasing market share it will command due to its control of Motorola Mobility patents, the folks at Apple and Microsoft might have a bit more to worry about in the future.  For now, the market and gadget-lovers everywhere will watch in anticipation on the projects Google and Motorola will unveil in the near future, and see where the bar gets pushed from there.

Google has had their eye on Motorola for quite some time: http://www.ginside.com/2007/865/google-partnership-roundup/

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