Christina Steinbrecker / August 16, 2011

Google’s $12.5 Billion Purchase

Last month a consortium of leading technology companies including, but not limited to, Apple, Microsoft, and RIM bid $4.5 billion for a portfolio of 6,000 patents previously owned by Nortel Networks, a Canadian based telecommunications equipment manufacturer. The consortium, bidding as the Rockstar Bidco, ultimately beat out Google despite their role as the original dark horse bidder. The loss by Google was largely considered a setback to their fast-growing Android mobile operating system whose rivals, known for their active patent litigation, gained significant ownership of the technologies behind much of what is, and will likely become, standard mobile technology. Today Google’s loss appears markedly diminished after the announcement of their $12.5 billion purchase of Motorola Mobility, the maker of popular Android-powered smartphones, and owner of some 14,600 patents and 6,000 patents pending. The move considerably bolsters Google’s ability to pre-emptively ward off so-called patent trolls ensuring the uninhibited growth of the Android mobile operating system.

In a post on Google’s Official Blog, Larry Page, the co-founder and current CEO of Google, outlined Google’s plans for Motorola Mobility specifically citing their intention to, “run Motorola as a separate business” and “increase competition by strengthening Google’s patent portfolio…[enabling] us to better protect Android from anticompetitive threats from Microsoft, Apple and other companies.” The authenticity of the statement was sustained by several nods of approval from an array of hardware manufacturers producing handsets for use with Google’s Android operating system. The companies involved seemed to feel that the purchase would not diminish their competiveness, but would provide an additional defensive layer for the software of which they have all invested so heavily. All smiles aside, it appears that more than a few industry veterans suspect the deal to be laying the groundwork for a more involved Google when it comes to Android hardware production. Andrew Ross Sorkin of the NY Times cites the emerging pattern of Google gently treading around a new industry before making a splash and surprising us all with a new offering. Alas, it appears that we are left waiting to see what Google is going to do—again.

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