(Image Source: Google/Motorola)
BY STEVEN HSIEH
ANCHOR KYLIE MCGIVERN
You're watching multisource business news analysis from Newsy.
Google has agreed to acquire mobile phone manufacturer Motorola Mobility for $12.5 billion – the biggest deal in the tech giant’s history. A writer for Forbes says Google’s primary motive -- is increasing its patent portfolio. He says the company needs to protect its Android operating system from the likes of Apple and Microsoft.
“…the key thing for Google to do was to have some countering intellectual property it could use to threaten back. Among big companies with big patent portfolios, these things are usually settled out in a swap.”
On Bloomberg, Jeff Jarvis, author of ‘What Would Google Do?,’ says buying Motorola is a smart move, but criticizes the business climate that made it necessary.
“I think it’s mainly a commentary on how pathetically messed up our patent system is – that 12.5 billion dollars are going not to innovation and invention and creation, but instead in defending themselves against lawyers.”
A CNBC analyst says the deal marks a trend of consolidation in the Smartphone business.
“I think this is an early attempt to replicate Apple’s business model and getting more vertically integrated… I think Microsoft will come to the same conclusion—that there is not really a business model for selling 3rd party OS in a mobile world. The only way to monetize your investment is by owning devices…”
So, how did the market react to the merger? Here’s Bloomberg.
“Just observing Google’s shares right now—they’re really not moving—actually they’re going down. So, the market is unclear as to whether investors really think this is a good deal – that they’ll actually be able to compete with Apple.”
Google’s deal with Motorola has an unusually high $2.5 billion reverse termination fee. A Wall Street Journal writer says the fee stems from regulatory worries, pointing out that…
“Google got poked and prodded in its purchase of flight-software company ITA Software. Groupon last year rejected a potential $6 billion takeover from Google in part because of expectations Google’s role in the acquisition could have bogged the two companies down in antitrust limbo for more than a year.”
HTC, Samsung and LG all say they were happy to hear that Android OS will remain an open platform.
Follow @Newsy_Videos on Twitter
Get more multisource video news analysis from Newsy.
Transcript by Newsy
