Google to Buy Motorola Mobility for $12.5 Billion

Google announced early Monday morning that it will acquire smartphone maker Motorola Mobility for $12.5 billion in cash.

Google announced early Monday morning that it will acquire smartphone maker Motorola Mobility for $12.5 billion. Motorola Mobility is already a partner of Google, but will remain as a separate business and licensee of Android, which will also remain an open platform. Photo: Robert Scoble/Flickr

According to a Google press release, published in full at TechCrunch, “The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing.”

Google CEO Larry Page expanded on what that might mean in a blog post. In addition to citing Motorola’s home devices and video solutions business, Page references recent patent wars that Google believes to be anti-competitive.

“The U.S. Department of Justice had to intervene in the results of one recent patent auction to ‘protect competition and innovation in the open source software community’ and it is currently looking into the results of the Nortel auction,” Page writes. “Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.”

Motorola Mobility is already a partner of Google, but will remain as a separate business and licensee of Android, which will also remain an open platform.

In a blog post, Google co-founder and CEO Larry Page writes that Google has acquired Motorola not only because of its strength in Android smartphones and devices, but also for being a “market leader in the home devices and video solutions business.”

It’s also a move to build up the company’s patent portfolio, he adds, as it will “enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies”.

According to Motorola Mobility’s website, the company holds approximately 14,600 granted patents and 6,700 pending patent applications, worldwide, as of January 2011.

In January 2011, Motorola announced that it would split into two companies: Motorola Solutions, which would manufacture tech products aimed at businesses; and Motorola Mobility, which would focus solely on consumer technology.

A few years ago, Motorola bet its future in the mobile devices market by going full Android, launching the “Droid” – initially on the Verizon network – on November 6, 2009. The “Droid X” and “Droid 2″ followed in 2010.

Shares of Motorola Mobility, which focuses on smartphone and TV set-top boxes, jumped 59 percent in premarket trade on Monday.

The Motorola Mobility deal may represent a victory for activist investor Carl Icahn, Motorola’s biggest shareholder. He has urged Motorola to consider splitting off its patent portfolio to cash in on surging interest in wireless technology. As of July, Icahn held an 11.36 percent stake in the company.

Earlier this month, fresh from losing a bid to buy thousands of patents from bankrupt Nortel, Google Chief Legal Officer David Drummond blasted Microsoft, Apple, Oracle and “other companies,” accusing them of colluding to hamper the increasingly popular Android software by buying up patents.

Business Insider sees Google’s mega-deal putting pressure on Microsoft’s smartphone business: “Other handset makers, like RIMM and Nokia are both up pre-market on the news as the focus obviously turns to Microsoft: Is it now forced to buy one of them? Or does Microsoft benefit because the remaining handset makers (Samsung, etc.) now turn more towards Windows?” [via TechCrunch, Huffpost, Reuters and Mashable]

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