Google gets Chinese approval for Motorola deal, must keep Android free and open

Over the weekend Chinese regulators gave their stamp of approval to Google's (NASDAQ:GOOG) $12.5 billion acquisition of Motorola Mobility (NYSE:MMI), the last remaining regulatory hurdle for the deal. Motorola said it expects the deal to close early this week.

However, according to multiple reports, the Chinese antitrust officials attached one major condition to the deal: For the next five years Google must keep Android free in China and must not discriminate against any handset maker seeking to use Android, according to the reports from the Wall Street JournalReuters and AP. Chinese handset vendors Huawei and ZTE are using Android smartphones to grow their share of the global handset market.

"Our stance since we agreed to acquire Motorola has not changed, and we look forward to closing the deal," Google spokeswoman Niki Fenwick told Reuters, confirming that the Chinese had approved the deal.

The Department of Justice and the European Union each gave their blessings to the deal in February, and the two companies have been waiting for Chinese approval since then.

The ruling that Google could not "discriminate" against Android OEMs is unclear in terms of how this will affect Google's distribution of Android source code to certain device makes earlier than others as part of its Nexus program. Last week the Wall Street Journal reported that Google plans to give multiple Android device vendors early access to the next version of its operating system as it expands its Nexus device program and tries to husband more control over the devices from carriers. Interestingly, the report also noted that the expansion of the Nexus program is being done to temper the concerns of other OEMs that Google might favor Motorola.

China's Ministry of Commerce said Google can still charge for services it might provide that are associated with Android. "If Android has to be free, then the definition of 'Android' is potentially open to interpretation,"  Rocky Lee, Cadwalader, Wickersham and Taft LLP's Asia managing partner in Beijing, told the Journal. "For instance, there could be a lot of fees and services for Android that come from the cloud side."

When the DOJ approved the deal, it said it had "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. Chinese regulators said they agreed with antitrust officials in the United States and EU that Google needs to ensure that Motorola's existing patent obligations continue to be licensed on fair, reasonable and nondiscriminatory--or FRAND--terms.

For more:
- see this SEC filing
- see this WSJ article (sub. req.)
- see this Reuters article
- see this AP article
- see this Bloomberg article

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