The Department of Justice and the European Union each gave their blessings to Google's (NASDAQ:GOOG) $12.5 billion acquisition of Motorola Mobility (NYSE:MMI), eliminating the last major obstacle to the transaction. The news is notable considering AT&T (NYSE:T) ultimately dropped its bid to acquire T-Mobile USA on concerns that it would not be able to obtain regulatory approval for the deal.
In a separate action, the DOJ also approved the $4.5 billion sale of Nortel Networks' patent portfolio to a consortium of companies, known as Rockstar Bidco. The consortium is comprised of Apple (NASDAQ:AAPL), EMC Corp., Ericsson (NASDAQ:ERIC), Microsoft (NASDAQ:MSFT), Research In Motion (NASDAQ:RIMM) and Sony. Google made the opening $900 million "stalking horse" bid for the patents prior to agreeing to acquire Motorola, but was outbid by the consortium.
The DOJ had been expected to approve both transactions.
Interestingly, the DOJ's assessment of the Google-Motorola transaction included some notable concerns by the agency. The Department of Justice said Apple and Microsoft have committed to licensing their patents on reasonable and non-discriminatory terms, and have said they will not seek injunctions in patent disputes. However, Google "does not directly provide the same assurance as the other companies' statements concerning the exercise of its newly acquired patent rights. Nonetheless, the division determined that the acquisition of the [Motorola] patents by Google did not substantially lessen competition, but how Google may exercise its patents in the future remains a significant concern."
Google will obtain 17,000 wireless patents through its acquisition of Motorola.
The action is the latest step in a legal dance among the world's smartphone and tablet vendors. Obtaining patents, and leveraging patents against rivals, has become a global legal chess match among the likes of Google, Samsung, Apple, Motorola, Microsoft and others. Google said one of the major reasons it acquired Motorola was to use Motorola's patent portfolio to protect Android licensees from patent lawsuits.
Apart from the issue of patents, Google must now work to integrate Motorola into the company's structure while maintaining the smartphone vendor's independence. Some critics have noted that Google could provide preferential treatment to Motorola as it works to advance and upgrade its Android operating system. Google, for its part, has said Motorola will have the same opportunities as other Android licensees.
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Article updated Feb. 14 to include information about the European Union.