Google mobilises to buy chunk of Motorola

The search giant has paid £7.7bn for the mobile manufacturer. Rivals: watch out.

by Emma Haslett
Last Updated: 16 Aug 2011
With $33bn sloshing around its piggy bank, there’s been plenty of speculation over what Google’s going to do with its spare cash. Today, we got the answer (or about a third of the answer, anyway): it’s decided to buy Motorola Mobility, in a deal worth $12.5bn (£7.7bn). Larry Page, the company’s CEO, announced the deal with the rather nausea-inducing sentiment that he looks forward to ‘welcoming Motorolans to our family of Googlers’. Quite. But this could have alarming connotations for rivals…

Contrary to what you might expect, Mobility has nothing to do with those scooters pensioners use to get to the shops. It’s actually Motorola’s mobile phone development and manufacturing arm, formed earlier this year when the company split in two (the other half being the imaginatively-named Solutions, which develops technology for governments and corporate customers). This is unquestionably big news for the mobile phone industry: having started out with just an operating system, Android, Google will now have significant advantage of being able to manufacture its own phones (at the moment, it farms Android out to other manufacturers).

But that might not its only incentive for buying Motorola: there have been suggestions that there’s more to this deal than meets the eye. Mobility apparently owns 24,500 patents: with that kind of power, Google could easily adopt Apple’s strategy, which is to slow down competitors (most recently, Samsung) by suing them over patent infringements. It’s a dirty game – and Google should be able to empathise, since it’s fallen victim to several challenges itself – but all’s fair in love and smartphones. Or something…

As an aside, an interesting effect of the deal is that Motorola’s old nemesis, Nokia, has also seen its share price rise by as much as 10% off the back of the news, as investors speculate whether or not it will be acquired under similar circumstances. Admittedly, it hasn’t been the easiest few years for the company (as illustrated by CEO Stephen Elop’s ‘burning platform’ speech) – but it has also struck a deal with Microsoft. Looks like phone manufacturers are forming their allegiances. Brace yourselves for out-and-out war…

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