Antitrust officials approve sale of Motorola Mobility to Google

February 13, 2012

U.S. and European antitrust officials approved Google’s acquisition of Motorola Mobility on Monday, clearing the way for the search giant to not only manufacture its own phones but also, more importantly, gain a much bigger patent portfolio.

While greenlighting the $12.5 billion purchase without any conditions, officials left a cloud hanging over Google, which is already under investigation for broad antitrust violations. They expressed concerns that Google could use its patents to hurt competitors, especially as the world’s most powerful tech firms increasingly sue one another over intellectual property.

“The division determined that the acquisition of the patents by Google did not substantially lessen competition, but how Google may exercise its patents in the future remains a significant concern,” the Justice Department said in a statement Monday.

European officials flagged the issue as well.

“This merger decision should not and will not mean that we are not concerned by the possibility that, once Google is the owner of this portfolio, Google can abuse these patents, linking some patents with its Android devices,” E.U. Competition Commissioner Joaquin Almunia told reporters Monday, according to Reuters. “This is our worry.”

The Justice Department approved a separate deal related to patents Monday by allowing some of Google’s competitors, including Microsoft and Apple, to acquire about 6,000 patents from the now-bankrupt telecommunications firm Nortel Networks. Antitrust officials also allowed Apple’s acquisition of some patents formerly held by Novell.

The patent system is widely viewed by experts to be dysfunctional. Vague ideas that are too inscrutable for even engineers to understand get regularly approved by the government and receive protection for years. As a result, companies are increasingly building up bigger patent portfolios to deter lawsuits initiated by rivals or opportunistic firms known as patent trolls.

“We strongly believe that this patent war has been unwise and harmful to the industry,” said Ed Black, president and chief executive of the Computer and Communications Industry Association. “We’ve been urging people to find some way out of this labyrinth.”

Antitrust officials are especially concerned that as tech firms sue one another, they may seek injunctions that would halt the sales of their rivals. With these companies bitterly competing for market share in the lucrative smartphone and mobile device industry, the threat of injunctions has become real.

On Monday, Apple asked a federal court in California to block the sales of Samsung’s Galaxy Nexus smartphones.

Earlier this month, Apple had to briefly suspend the sale of some smartphones and tablet computers in Germany after Motorola sought an injunction against the company over patent violations.

Firms including Apple and Microsoft have promised not to seek injunctions when disputes exit over patents covering technology essential to smartphones — for instance, ones that deal with a phone’s Internet capabilities.

But Google has said it reserves the right to seek injunctions if another company does not agree to its licensing terms.

The Justice Department said Monday that Apple and Microsoft’s moves have “lessened” the officials’ worries about abuse in the patent system; the agency called Google’s commitments “more ambiguous.”

“The combination of Google and Motorola Mobility will help supercharge Android,” Don Harrison, Google’s vice president and deputy general counsel, wrote on the company’s blog. “It will also enhance competition and offer consumers faster innovation, greater choice and wonderful user experiences.”

Jia Lynn Yang is a staff writer at The Washington Post who covers policy and business. Before joining the Post, she worked at Fortune magazine.
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