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Foss Patents: Motorola's four threats that secured its $12.5 billion Google deal

Foss Patents: Motorola's four threats that secured its $12.5 billion Google deal
Florian Mueller of Foss Patents has concluded four threats against Android were the reason Google spent $12.5 billion on Motorola Mobility.

Analysing publicly available data, he argues that Google was acting to protect itself, not from rivals such as Microsoft or Apple, but from Motorola Mobility.

Threat one: Fallout

Firstly, Mueller argues that if Google hadn't bought Motorola, it could have done a deal with Microsoft over Android patents, and perhaps even have settled with Apple. This would have been catastrophically damaging to the Android.

"MMI's likely capitulation would have been a disastrous signal and resulted in pretty much every other Android device maker's surrender on the patent front," Mueller said.

"It would have made it clear to everyone that Android infringes patents held by Microsoft."

Threat two: Competitors

Secondly, had Google not moved forward with its offer, Motorola would have been obliged to revisit its exclusive focus on Android, possibly adopting Windows Phone.

"On August 9, MMI's CEO described Windows Phone as "an interesting option for us to consider" under certain circumstances," said Mueller.

"I don't know whether Microsoft offers Windows Phone adopters sweeter business terms than others, but generally speaking, companies that have (or are in the process of forming) a commercial partnership find it easier to sort out legal issues - such as intellectual property infringement - with each other."

Threat three: Attacks

Thirdly, had the merger not gone ahead, Motorola Mobility could have attacked other Android OEMs, with its patents, raising the cost of their competitive devices.

"Among Android device makers, MMI could have found many suitable targets for patent attacks. Most Android device makers are weaker than MMI in terms of patents (even though MMI is weaker than Apple and, especially, Microsoft). Also, MMI's patents are broadly-licensed in the industry because they had to cross-license with other established players at some point."

Threat four: Auction

Finally,Motorola Mobility could have decided on a public auction of its patents.

"In the second half of July, MMI shareholder Carl Icahn proposed that MMI explore alternatives for its patent portfolio, such as an auction of large parts of it," Mueller states.

Google’s raised offer seemed to have put the notion of such an auction to be,  though, as Mueller mentions "It seems that discussions between Google and MMI shifted pretty quickly to the idea of buying the entire company."

"The SEC filing explains that after Google made its $40-per-share offer, MMI's board concluded that it was better to try to finalise a deal with Google on those terms "rather than to conduct a private or public 'auction' of Motorola Mobility." Mueller said.

[source: Foss Patents]

When Matt was 7 years old he didn't write to Santa like the other little boys and girls. He wrote to Mario. When the rotund plumber replied, Matt's dedication to a life of gaming was established. Like an otaku David Carradine, he wandered the planet until becoming a writer at Pocket Gamer.

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