DOJ, European Commission Approve Google-Motorola Deal

Posted by · February 13, 2012 5:15 pm

Every rule has its exception. While most of us typically greet Mondays with a well-rehearsed groan and roll of the eyes, the folks over at Google certainly have plenty to celebrate as a new week just barely gets underway.

The party got started in Europe. After being put on hold for nearly six months pending antitrust investigations by European and American regulators, the search giant’s planned acquisition of Motorola Mobility received the broad, overwhelming approval that Google sought from the EU regulatory body. Writing for The Official Google Blog, Google VP Don Harrison expressed his jubilation at the commission’s decision.

“We’re happy that today the European Commission approved our proposed acquisition of Motorola Mobility, which we announced in August,” his post began. “This is an important milestone in the approval process and it moves us closer to closing the deal.”

Little did Harrison know—or at least that’s what it seemed—that the party was only getting started.

Hours after the announcement by the European Commission, the US Department of Justice released its own announcement regarding the Google-Motorola deal, as well as the joint venture by Apple, Microsoft and RIM to obtain a number of Nortel patents.

“After a thorough review of the proposed transactions, the Antitrust Division has determined that each acquisition is unlikely to substantially lessen competition and has closed these three investigations,” the DOJ began in a press release Monday afternoon. “In all of the transactions, the division conducted an in-depth analysis into the potential ability and incentives of the acquiring firms to use the patents they proposed acquiring to foreclose competitors.”

The release went on to provide details regarding the means by which the Justice Department conducted its investigation before it offered the following conclusion: “The division concluded that the specific transactions at issue are not likely to significantly change existing market dynamics.”

Although the approval of the deal by EU and US regulators marks the achievement of a major milestone for the search behemoth as it seeks to use its newly gained Motorola assets to bolster its Android business, Google is not being granted carte blanche to simply do as it pleases going forward. At least that’s what the regulators are publicly saying.

In a statement given after the European Commission approved the $12.5 billion deal, EU competition commissioner Joaquín Almunia warned Google that this “does not mean that the merger clearance blesses all actions by Motorola in the past or all future action by Google.” Further, the commissioner added that the EU would judge separately “the question whether Motorola’s or Google’s conduct is compliant with EU antitrust law.”

However, it seems any EU resistance to Google’s plans in how it uses Motorola will now be far more difficult than it would have been had there been clear limitations instated prior to the deal’s approval, especially given the US’s almost lockstep move in approving the acquisition with no preliminary restrictions to speak of either.

Whether Google is sincere in its promises to remain above the fray in the way that it treats Motorola compared to Samsung, HTC, and LG—companies who also use Google’s popular Android software— or not, the relatively painless approval of the deal serves to underscore the utter toothlessness (I know that’s not a word) of the European and American regulatory regimes despite the highly controversial nature of this deal.

Regardless of Google’s intentions, the sheer amount of power it now holds at its disposal is eons ahead of even its closest rival, leaving consumers relatively defenseless against a company that is yet to convince a growing segment of the population that it isn’t engaging in vertical integration and other anticompetitive activities.

As the majority of the world’s technological intellectual property continues to be consolidated into the hands of a smaller and smaller group of companies—this “patent arms race” to borrow from Rob Goodier of Popular Mechanics—the increased use of proactive regulatory checks becomes imperative. With a company so powerful and consumers so vulnerable, a weaker, more reactive strategy will likely prove way too little and far too late in the event of a broken promise.