Despite increasingly heavy antitrust scrutiny by the federal government, the Internet behemoth is charging ahead with a deal that brings all kinds of potential for cornering a market. It will pay $12.5 billion for Motorola Mobility, a leading maker of handsets that use Google's Android operating system.
Google is emphasizing the 17,000 patents the deal will give the company, protecting it from future lawsuits from patent trolls. (That doesn't mean patent suits in the mobile industry will vanish, of course. Just today HTC, a Taiwan-based handset maker, sued Apple, which has its own patent suits against HTC. And so it goes.)
But patents are only part of the story, and maybe not even the most important part.
With this deal, Google will become a major manufacturer of mobile
phones. And despite its promises that it will not favor Motorola over
companies like HTC and Samsung in its deals to deploy Android, there's
nothing to prevent it from doing so anyway.
Ever since Google started getting into mobile-phone software more than
half a decade ago, it has insisted that it isn't a mobile phone company
and doesn't intend to be. Each instance of insistence has been followed
by yet another move deeper into mobile. With this acquisition, though,
it's more of a mobile phone company than any other company on Earth.
It owns the most popular mobile-phone software, and soon, a big chunk of
the industry's hardware. And yet it's still downplaying its industry power
Its customers are now also its rivals. Google says Motorola Mobility
will be run independently and that it won't treat its new
acquisition any differently from other Android customers.
But several observers think that, eventually, Google will begin to
assert the power it has amassed by deploying Android ubiquitously over
the past several years. It gives the software away for free -- for now.
One analyst outright predicted
to the New York Times
' DealBook that "Google can't admit in public that
what they intend to do is eventually make Android proprietary," but that
this is exactly what it has in mind. In a few years, Google might
decide that some handset makers can't have Android, or some makers might
get only a watered-down version. Google of course is denying this.
Another aspect of the deal -- one not getting as much attention as
the implications for the mobile market -- is that Motorola Mobility also
is a leading maker of set-top boxes for cable TV. Columnist Dan Frommer
observes that perhaps with Google's software knowhow, the cable
industry could finally create usable interfaces
The onscreen menus in place today seem as though they might have been
designed by chimps, and they're infuriating enough that screens across
America are in constant danger of being smashed by a hurled remote.Dan Mitchell has written for Fortune, The New York Times,
National Public Radio, The Chicago Tribune, and many others.
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You can't say Google doesn't have balls.