Google's $12.5 billion bid to buy cellphone maker Motorola Mobility has won approvals from US and European antitrust regulators, moving Google a major step closer to completing the biggest deal in its 13-year history
Monday's blessings mean Google Inc just needs to clear regulatory hurdles in China, Taiwan and Israel before it can take control of Motorola Mobility Holdings Inc and expand into manufacturing phones, tablet computers and other consumer devices for the first time.
Getting government approval in China looms as the biggest stumbling block remaining. Google's relationship with China
's ruling party has been on shaky ground since the company blamed hackers in that country for breaking into its computers two years ago.
The breach prompted Google to move its Internet search engine from mainland China in protest of laws requiring some results to be censored.
Google prizes Motorola Mobility's more than 17,000 patents - a crucial weapon in an intellectual arms race with Apple, Microsoft and other rivals manoeuvring to gain more control over smartphones, tablets and other mobile devices. Google announced the deal six months ago
The deal will "enhance competition and offer consumers faster innovation, greater choice and wonderful user experiences," Don Harrison, Google's deputy general counsel wrote in a blog post.
Besides signing off on the Motorola Mobility deal, the Justice Department also approved two other moves in the mobile patent battles. The approvals cover the $4.5 billion purchase of Nortel Networks patents by a group including Apple, Microsoft and BlackBerry maker Research in Motion and a separate Apple acquisition of Novell Inc patents.
The Justice Department ended its investigations after concluding the new patent owners won't try to drive up the prices of competing mobile devices by demanding exorbitant licensing fees. The agency said it was particularly concerned about key patents held by Motorola Mobility and Nortel.
Apple Inc. and Microsoft promised to license the Nortel patents on reasonable terms while Google's commitments on the Motorola Mobility patents were "more ambiguous," according to a statement from the Justice Department's antitrust division.
Nevertheless, the Justice Department didn't find any evidence that Google's ownership of Motorola Mobility would lessen competition in a mobile device market that is becoming increasingly important as more people connect to the Internet on smartphones and tablet computers instead of desktop and laptop computers.
In granting its approval, the European Union also raised concerns about Motorola's aggressive enforcement of its patents. EU Competition Commissioner Joaquin Almunia said regulators will "keep a close eye on the behavior of all market players in the sector, particularly the increasingly strategic use of patents."
In its statement, the Justice Department also vowed to crack down on any sign that mobile patents are being used to throttle competition. Microsoft said it was encouraged by the regulatory commitments.
Other key concerns centered on Google's Android operating system, free software that now powers more than 250 million mobile devices made by a variety of manufacturers, including Motorola Mobility. Competition could be hurt if Google gives Motorola Mobility the most advanced versions of Android or withholds the mobile software from other cellphone makers.
Google, though, has pledged to make Android available to all its mobile partners. Even if Google were to discriminate, cellphone makers still could rely on mobile software from Microsoft Corp., Research in Motion and Hewlett-Packard Co., among others.
The European regulators see no danger that Google will prevent other device makers from using its popular Android operating system after the takeover.
The government reviews in US and Europe have come as regulators also have been conducting a broader inquiry into whether Google has been abusing its dominance in Internet search to hobble its rivals. Those investigations are still ongoing.
Assuming Google eventually takes over Motorola Mobility, the union will open new opportunities and pose potentially troublesome challenges for a management team that so far has concentrated on Internet search, ad sales and other software-driven online services.
Motorola Mobility's expertise in mobile devices and set-top boxes for cable TV will allow Google to play an even more influential role in shaping the future of hand-held computing and home entertainment. Even as it navigates the regulatory gauntlet, Google has begun testing a device for connecting electronic components within homes, according to a filing with the Federal Communications Commission.
Absorbing Motorola Mobility also threatens to crimp Google's earnings growth and drag down its stock price. That's because Motorola Mobility has been struggling on its own as Apple's iPhone and other smartphones made by rivals such as Samsung Electronics undercut sales of its products.
Google is making a huge bet that Motorola Mobility can do better. The $12.5 billion price is more than the combined amount that Google has paid for the 185 other acquisitions that it has completed since going public in 2004.