Motorola Mobility Acquisition — the Patent War Intensifies

Dec 24, 2011
Soumen Purkayastha

Google acquires Motorola Mobility - Wikimedia Commons

By acquiring Motorola Mobility, Google has found a treasure-trove of technological patents. This has also intensified the war for patents.

Google acquired Motorola Mobility for approximately $12.5 billion last August. Google dug deep into its cash reserves to bring the acquisition to fruition — an action indicative of the amount of importance it attaches to the exercise. According to Google co-founder and CEO Larry Page, Google stands to gain a lot from the Motorola Mobility acquisition — deeper expertise with Android smartphones and video solutions and home devices. However, the more compelling reason really seems the goldmine of patents Motorola Mobility has right now. The acquisition will right away give Google a head start in the patent war with Apple, Microsoft and other corporations.

How is Google Viewing the Acquisition?

Google has already spent about 32% of its cash reserves (which is approximately $39 billion) on the acquisition. It has bought each Motorola Mobility share at a premium of 63%. Also, Motorola Mobility will be running as an independent business unit. These facts probably indicate that Google was highly keen, if not desperate on the Motorola Mobility acquisition.

Main reasons for the Google Acquisition

The background for the Google acquisition could probably be traced to the lost Nortel deal. Google lost an intense patent war to a consortium of corporations (which comprised Apple, Microsoft, Sony and Research in Motion) which paid $4.5 billion to acquire 6000 of Nortel’s wireless technology patents. Google licked its wounds, slammed its competitors and prepared for the next acquisition onslaught. David Drummond, Google’s Senior Vice President and Chief Legal Officer clearly summed up Google’s mood in its official blog. Drummond slammed Google’s competitors for trying to strangle Android by gobbling up patents, whatever were available. Drummond added that Google’s competitors would pay an inflated sum to acquire dubious patents which finally would push up the price of Android devices for the consumer. Very importantly, Drummond also added Google’s plans as well — Google would go on a patent-shopping spree.

The main reason is therefore, pretty clear — buy patents before anyone else does. Motorola Mobility has a treasure-trove, as far as patents are concerned — 14,600 granted and 6,700 awaiting approval. Improved technological acumen and markets are the other reasons, as Larry Page has offered, but in an ambience of an intense and bitter patent war, they do not seem half as important.

What does the Acquisition mean for everyone?

Google has made a smart move, as far as acquiring patents go and this is going to intensify the patent war. Strategists in its rival boardrooms will be spending midnight oil to chalk out their next move. Given how quickly events unfold in this industry, you could see the next patent battle ensue even before you could even say “patent”.

The customers and smartphone fans are going to love this as the technology giants battle it out to win their attention. The smartphone prices are probably unlikely to escalate significantly, no matter the claims David Drummond made in the Google blog.

Google will no longer be content by just making an operating system for smartphones. The acquisition gives it the personnel and the acumen to make a foray into device-making.

Conclusion

To put things into perspective — it is all about money and markets and it will always be like that. But as it seems in the short-term at least, the customer is the winner in the battles among the technology giants. While a corporation cannot be blamed for profit-motive, improved product quality will be one tangible gain from the patent wars.