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Tuesday, August 16, 2011

Google Thumbs Nose at Antitrust Regulators

Posted By on Tue, Aug 16, 2011 at 11:15 AM

You can't say Google doesn't have balls.

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, Slate, Wired, National Public Radio, The Chicago Tribune, and many others.

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