Google acquires Motorola Mobility: the full story

It seems like Google's search for office space back in May has come to a swift conclusion, as Motorola Mobility announced today that it will be moving its headquarters away from Libertyville, IL and into the top four floors of Merchandise Mart in downtown Chicago. This puts Motorola just a few blocks away from Google's Chicago offices in the River North neighborhood. Google hasn't made many public interactions with Motorola Mobility since its acquisition, but now that the two are such close neighbors that may be set to change.

The unusual stock split (and Larry Page's lost voice) isn't the only news to come out of Google's shareholder meeting. Speaking to said shareholders, CFO Patrick Pichette reiterated Google's intention to hold Motorola at arm's length and allow it to "stay on its own battlefield." Just as that messaging is not at all different from what Google broadcasted before the acquisition was completed and the new CEO installed, it looks like major shakeups at Motorola won't happen as quickly or as rashly as the original decision to purchase the company appeared.

In fact, Google says that we "shouldn't expect a full integration," the AFP reports. Eric Schmidt characterized it as essentially "taking Motorola private," presumably so that it could focus on Android. Schmidt added "We bought Motorola for the sum of the patents, the products, the people, the innovation." We're sure that Motorola's employees and fans all hope that he wasn't speaking in descending order of importance.

Everyone is keeping a very close eye on what Google does with Motorola Mobility — not the least of which are Android manufacturers like Samsung, HTC, and LG, which are concerned that the acquisition will put them at a disadvantage if Motorola gets insider access to the latest builds of the operating system. We still know very little about Google's plans — we've heard rumors that it was considering selling the handset business to Huawei and the cable box unit to another suitor — but today The Guardian quoted executive chairman Eric Schmidt saying that Motorola will have "more investment in products and a lot more focus on Android and the tools even than they have today." That statement lines up well with longtime Google executive and newly-appointed Motorola Mobilty CEO Dennis Woodside's assurances that "Google has always been interested in hardware" and that "my job is to make Motorola as successful as possible and deliver innovative hardware as a licensee of Android." Google may not know what to do with the hardware manufacturer's cable box and other consumer device units, but for now it looks like the search company intends to make Motorola's smartphone business successful again — it just better be sure to maintain that "firewall" between itself and Motorola if it hopes to keep Android OEMs happy.

It's been months in the making, but Google has finally secured approval from the US, EU, and China to purchase Motorola Mobility, the consumer-facing side of the legendary hardware manufacturer, and as of today the $12.5 billion deal is complete. Other than the fact that Google now owns a massive hardware company and a portfolio of useful patents, the biggest news today is that Motorola Mobility's CEO, Sanjay Jha, has been replaced by a Google executive named Dennis Woodside.

Don't be concerned if that name doesn't ring a bell — it's likely that the first time you heard of Woodside was when Bloomberg rumored in February that he would be given the top spot at Motorola Mobility following the acquisition. However, we suspect that we'll be hearing a lot from the new CEO over the coming months and years as Google works to keep other Android OEMs happy while attempting to make Motorola profitable. While Woodside may have kept things quiet in the public sphere, he's certainly been making waves in Silicon Valley. In fact, Apple CEO Tim Cook attempted to poach him from Google by offering him the position to become the Cupertino-based company's head of sales — a role that Woodside turned down thanks to assurances from Google that he'd be given "greater responsibilities," according to Bloomberg Businessweek. It looks like the search company has made good on its promise.

Completing a nine-month journey through regulatory approvals on multiple continents, Google has closed its acquisition of Motorola Mobility today. The move comes just days after Google cleared the last major hurdle — approval in China, where Motorola has had a particularly strong presence for many years — and means that the Chicago-area phone maker will stop trading on the New York Stock Exchange effective immediately.

As reported in February, CEO Sanjay Jha has stepped down and will be replaced by Google's Dennis Woodside. "One of his first jobs at Google was to put on his backpack and build our businesses across the Middle East, Africa, Eastern Europe and Russia," Google chief Larry Page notes, though he's most recently been in charge of growing revenue as president of the company's Americas region. Woodside is bringing a bunch of outsiders into the business as part of the leadership transition: Regina Dugan, former DARPA director, Mark Randall of Amazon and Nokia, Google's former VP of consumer marketing Gary Briggs, and Scott Sullivan — with stints at Visa and Nvidia under his belt — are all joining the business.

Now that Chinese regulators have approved Google's acquisition of Motorola, the deal should be closing very soon, though it looks like it might also include a significant number of layoffs. TechCrunch reports that layoffs are coming imminently — the site initially reported that as much as 30 percent of Motorola's worldwide staff could be cut, though the number has since been pulled from the article. Last week it was revealed that the purchase was was expected to close this week, and it looks like the process is moving ahead as planned — in an 8-K form filed today, Motorola explained that with the China approval "the companies are moving to close the transaction within two business days." The purchase was approved in both the US and Europe in February, though in China the approval required a major stipulation — Google will have to keep Android free for at least the next five years.

According to the Wall Street Journal, Reuters, and the Associated Press, Google had to agree to keep Android free and available for anyone to use for at least the next five years in order to gain China's approval to purchase Motorola Mobility. There's no more information given on the exact reason for this request, but it seems likely that it was included to allay fears that Google would give Motorola preferential treatment compared to other Android manufacturers. This stipulation removes the possibility of Google closing off Android to other OEMs — though it's worth noting that Google has never given any indication that it was considering such a move.

Of course, Android isn't technically the property of Google — it was created and developed by the Open Handset Alliance, of which Google is a member. While it's obviously the biggest contributor, Google probably couldn't just close off Android from other manufacturers without a bit of a fight. It's also worth noting that Chinese carriers and manufacturers often put forked and heavily customized versions of Android on their devices — this deal keeps Google building and developing the basis for their customizations.

Google's purchase of Motorola has been a long time in the making, but it looks like the last hurdle has finally been cleared: the Associated Press is reporting that China regulators have approved the transaction. A Google spokesperson confirmed that the Chinese government cleared the purchase on Saturday; the deal is now expected to close next week.

Update: Since this story broke, the AP as well as the Wall Street Journal have both reported that Chinese regulators attached a major stipulation to their approval: Google must keep Android available for free to anyone who wants to use it for at least the next five years. Presumably, this is to keep Google from closing off Android to run on only Motorola devices.

According to Chicago Business, Google is looking for more than 500,000 square feet of office space in downtown Chicago to house Motorola Mobility — currently based in suburban Libertyville — which could hold about an estimated 3,000 employees. It's a curious move considering that the companies could benefit from cozying up together in the San Francisco Bay area, but then, there are plenty of other telecoms in the Windy City: Tellabs, Motorola Solutions, and Alcatel-Lucent, just to name a few. It's also no guarantee that Google will hold onto the company in the long run, but it's nonetheless an interesting decision to look at real-estate in the midst of the ongoing acquisition.

Here's a strange one: Wall Street Journal columnist Dennis Berman says that rumors are swirling in Asia that Google has already offered to sell Motorola's handset business to Huawei for a "high price." That's the first we've heard of any such plans, but they would line up well with previous rumors that Google also wants to sell Motorola's cable box division — as well as underline the patent-centric nature of the acquisition. After all, Andy Rubin told us flat-out that Google would build a "firewall" between Android group and Motorola after the deal closed, and Google's already replaced Motorola CEO Sanjay Jha with former ad sales exec Dennis Woodside — not necessarily the moves one would make in preparation to dig in and revive Moto's unprofitable handset business.

Of course, none of these rumors are confirmed, and it's possible Google has a grand plan to bring Motorola back to glory — but until we actually hear what that plan might be, we're going to keep our ears to the ground. We've reached out to Google for comment, we'll let you know if and when we hear back.

Google's planned purchase of Motorola Mobility has gotten approval from the US government, the Europe Commission, and all other required regions except China. Unfortunately for Google, China isn't any closer to approving the deal — according to an SEC filing, China's Anti-Monopoly Bureau has just extended the second phase of its investigation into the proposed purchase. The filing indicates that Google is working closely with the Anti-Monopoly Bureau and that it still expects the deal to close in the first half of 2012.

A Tokyo-based spokesperson for Google echoed these sentiments in a statement to Bloomberg, which said that Google is continuing to "work closely with regulators in China on their review of our planned acquisition, which will enhance competition, bringing consumers faster innovation and more choice." That all sounds great for consumers, but don't forget that a big part of Google's motivation getting its hands on Motorola's patent portfolio to help defend Android against lawsuits from Apple. While Google certainly would like this approval to happen sooner than later, it's worth noting that the European Commission paused its investigation to conduct further research before making a decision. It looks like these types of delays are not necessarily a sign that the deal is in danger.

Google's never said much about what it plans to do with Motorola Mobility's struggling cable box division after it completes its acquisition of the company, and now we may know why: the New York Post reports this morning that Google's preparing to sell the unit. According to the Post, Google's retained Qatalyst Partners and Barclays Capital to prepare for a sale, and there are glimmers of interest from investors who may want to buy both Motorola's cable box division and Scientific Atlanta, which Cisco is also reportedly shopping.

What's curious is that Google's made a lot of noise about moving further into the home lately: Andy Rubin told us he's working on cloud-based home automation, we've heard a lot about Google-branded consumer devices, and the company just launched its new Google Play unified content stores. Having an established presence in the living room would appear to be a huge advantage as Apple and Microsoft bulk up their own entertainment offerings, but Google isn't exactly well-liked in the content industry, and the Post says that cable operators have "shunned" Motorola boxes in the lead-up to Google's buyout.

Google's Andy Rubin led the charge to acquire Motorola, but the Android boss won't have anything to do with the company once the deal closes — he told reporters at Mobile World Congress today that he "sponsored" the acquisition but now has "nothing to do with it.... I don't even know who's running it." Questions about Motorola's future are starting to heat up now that the EU and US have approved the deal, which is expected to close soon, and Google's move to replace Motorola CEO Sanjay Jha with its head of ad sales Dennis Woodside has raised a few eyebrows. Rubin said he was "painfully aware" of concerns, but stressed that Google has "literally built a firewall" between the Android team and Motorola. "I don't even know anything about their products, I haven't seen anything," he said. "They're going to continue building Motorola branded devices and it's going to be the same team doing it."

Asked if other OEMs would be disfavored once Motorola's team comes in-house, Rubin also said that the open source nature of the platform makes it "physically difficult for me to advantage somebody," although manufacturers selected to build Google's Nexus devices do receive early access to future versions of Android. Rubin also demurred when asked if Motorola would still ship phones with custom skins and older versions of Android, saying it was up to Motorola's team. "They're separate from me, and I'm going to continue to do my thing."

Bloomberg is reporting that Google's Dennis Woodside — who replaced Tim Armstrong following his departure to run AOL — has been selected by the company to succeed Sanjay Jha as Motorola Mobility's CEO, according to "three people familiar with the matter." Woodside is already a senior vice president at Google, so the move isn't much of a promotion; in fact, he'd already been leading the integration effort, so it's a logical fit. It might come as a surprise that current CEO Jha is apparently being shown the door so quickly, though, following the impending close of the acquisition. Neither Google nor Motorola would comment on the matter.

For what it's worth, Jha has been extraordinarily successful financially in his tenure — he is receiving a $66 million package as part of the acquisition — and it would appear likely that this announcement won't be coming as a surprise to him. Woodside's selection from within Google's own ranks seems to suggest that Google is on a path to consolidating power between the two organizations, so the question is: just how independent will Motorola ultimately be?

Microsoft announced this morning that it's filed a formal competition complaint against Motorola and Google with the European Commission, arguing that Motorola is abusing its patents committed to Wi-Fi and H.264 video by demanding excessive royalties and trying to block sales of products that include the standards. The move follows a similar complaint filed by Apple with the EU last week and an official investigation into Samsung's patent licensing practices, and serves to highlight growing international concern over the use of patents on industry-standard technologies in high-stakes smartphone litigation. Microsoft's also taking its plea to the web at large with a blog post titled "Google: Please don't kill video on the web," arguing that Google should do more to reign in Motorola's behavior after it acquires the company later this year.

At the core of the issue is whether Motorola's breaking a promise to license patents on industry-standard technologies in a fair, reasonable, and non-discriminatory way: as part of its smartphone litigation against Microsoft, Motorola is currently demanding Microsoft pay a 2.25 percent royalty against the final price of any product that includes H.264 video, or $22.50 for a $1,000 laptop. That compares to the maximum rate of 20 cents per product to license the other 2,300 patents in the H.264 standard and the 2 cents per copy of Windows paid by Microsoft under a volume discount plan. Microsoft further notes that Motorola's proposed royalty doubles to $45 for a $2,000 laptop, even though the increase in the final price has to do with better components, not H.264.

Onstage at HP's global partner summit in Las Vegas, while re-iterating the company's commitment to an open webOS, CEO Meg Whitman told the crowd she believes that there is still room in the market, stating:

While Whitman may be on to something that the Google Motorola merger has the potential to fundamentally change the nature of Android, it seems like quite a stretch to suggest it could lead to a closed OS. Also, while the enthusiast community has been having a great time with open webOS for the past couple of months, it's now just another open source platform competing for attention with a long list of competitors. Symbian's still around; there's Nokia's MeeGo, which the couldn't make a success of despite releasing a stellar device with the N9; and let's not forget runners-up Bada and Tizen, although the former may get folded into the latter. We'd love to see some newer webOS devices, but the market for mobile platforms is far from the three horse race Whitman evokes.

The US Department of Justice has just approved Google's buyout of Motorola, shortly after the European Commission cleared the deal earlier today. Google still needs the consent of China, Israel, and Taiwan to complete the deal, but if successful, it will reap a rich harvest of mobile patents from Motorola.

The DOJ echoed statements made earlier today by the EU: it maintains that while this acquisition isn't likely to harm the mobile market, it's still on guard against improper use of essential patents in the wireless device industry, and "will not hesitate to take appropriate enforcement action" against violators. It also says that Motorola Mobility has "had a long and aggressive history of seeking to capitalize on its intellectual property," but that Google's acquisition of Motorola is unlikely to change that policy. Seeing as the DOJ says that Google's commitments regarding its essential patent licensing policies are "ambiguous," there's likely plenty of legal action around Motorola's essential patents still to come.

The European Commission has just cleared Google's $12.5 billion buyout of Motorola Mobility. With a likely approval of the same merger on the way from the US Justice Department, Google now needs the consent of China, Israel, and Taiwan to close the deal.

EU Commission Vice President Joaquín Almunia says that "this transaction does not itself raise competition issues," but that the Commission is keeping a close eye on the behavior of players in the mobile market, "particularly the increasingly strategic use of patents." If the transaction gains final approval from all parties, Google will acquire a substantial catalog of mobile patents — patents that are the focus of scrutiny in Motorola's various FRAND-related lawsuits. Google has already tried to get ahead of licensing concerns by promising to license Motorola's patents after the acquisition is completed (as is already required under FRAND), but it says it still reserves the right to file for injunctions against companies that don't accept Google's terms.

We heard yesterday that the US Justice Department was likely to approve Google's purchase of Motorola, and now Reuters is reporting that the European Union is just about ready to do the same. The verdict should come down on Monday, when the European Commission is scheduled to meet and discuss whether or not to clear the deal, and two independent sources both confirmed to Reuters this should come to pass without incident Google still needs clearance from China (which has until March 20th), Israel, and Taiwan to close the deal, but two of the biggest challenges to the Android maker's acquisition of Motorola's precious patents could be cleared by next week.

A mere few days before the European Commission's February 13th deadline for deciding on the legality of Google's takeover of Motorola, The Wall Street Journal is reporting that the US Justice Department has made up its mind and will approve the merger. The time since Google announced its intention to acquire Motorola for somewhere around $12 billion has been filled with antitrust regulators on both sides of the Atlantic sweating the details of how Google will wield the powers contained in Motorola's rich patent portfolio. This prompted the Mountain View company to send out letters to a number of standards organizations this week, to reassure them that it'll maintain Motorola's commitment to licensing patents considered essential to industry standards under fair, reasonable, and non-discriminatory (FRAND) terms. Whether that was enough to sway the Justice Department is unknown, but at least one of the big hurdles for Google's acquisition of Motorola seems to have been overcome.

Google just sent letters out to various standards organizations, including the IEEE, promising to license Motorola's patents related to standards like 3G and H.264 after it completes its planned acquisition of the company. The move doesn't signal any change in policy, but is rather a bit of well-timed showmanship by Google: Motorola already has obligations to license "essential" patents to various standards under fair, reasonable, and non-discriminatory (FRAND) terms, but the deal is being closely scrutinized by European regulators as Motorola fights various FRAND-related lawsuits in courts around the world. A particular issue is whether Motorola has been too aggressive in seeking injunctions against products that infringe its FRAND patents instead of negotiating appropriate royalties as required; Apple recently had to pull the iPhone and iPad 3G from its online store in Germany for a short while due to Motorola's enforcement of a patent essential to GPRS data transmission. Similar issues have prompted an EU investigation of Samsung's licensing practices — exactly the sort of heat Google is trying to avoid.

In its letter to the IEEE, Google expressly states that it understands "MMI is prepared to grant licenses for Essential Patent Claims with a maximum per-unit royalty of 2.25%" and that Google "will continue to honor MMI's past practice with regard to MMI's maximum go-forward per-unit royalty rate." On the controversial issue of using these standards patents to seek injunctions against competitors, Google's position is that it will not first resort to an injunction, but it reserves the right to do so if its licensing offer is not accepted:

Reuters reported today that the European Commission has set a February 13th deadline to decide whether or not to approve Google's buyout of Motorola Mobility. The commission put the acquisition on hold back in December to get more information. Google said in December that the request for more information was "routine" and still expected the acquisition to close in 2012, and it looks like it's on track to do just that. Motorola shareholders have already given their approval, and we're still waiting to see precisely what Google wants out of the deal.