Google’s Motorola Buy Protects Android in Growing Patent War

Companies agree to $12.5B deal

Amid an intensifying patent war in the mobile technology space, Google announced Monday morning that it plans to acquire handset manufacturer Motorola Mobility for about $12.5 billion.

The deal, which is the Mountain View, Calif., company’s biggest acquisition so far, would give the company’s smartphone business a competitive boost and “supercharge” the Android ecosystem, Google said.

“It’s no secret that Web usage is increasingly shifting to mobile devices, a trend I expect to continue,” Google CEO Larry Page said on a Monday morning call with analysts. “With Mobility continuing to take center stage in the computing revolution, a combination with Motorola is an extremely important event in Google’s continuing evolution that will drive a lot of improvements in our ability to provide great user experiences.”

But facing an escalating patent battle pitting Google against Microsoft, Apple, and other companies, Page also said the merger gives Android an extra bit of armor.

“Microsoft also has a strong patent portfolio, which will help protect Android from anti-competitive threats from Microsoft, Apple, and other companies,” he said.

Earlier this month, lawyers from Google and Microsoft engaged in an online war of words after Google’s top legal officer posted a blog post on the company’s site titled “When patents attack Android.” In the post,  the company’s senior vice president and chief legal officer David Drummond said the success of the company’s mobile platform has yielded “a hostile, organized campaign against Android by Microsoft, Oracle, Apple, and other companies, waged through bogus patents.”

As Google continues to grab a growing share of the smartphone market, eMarketer principal analyst Noah Elkin said the Motorola acquisition could help shield Android from patent threats. 

"The growing patent war in the mobile technology space and a desire to protect the Android ecosystem from competitors Apple and Microsoft were driving forces behind Google's decision to acquire Motorola's handset business," he said.

After news of the merger, Google’s share price slipped slightly in morning trading, falling about 1.7 percent to $554.34. Shares in Motorola soared about 56 percent to $38.22 (just below Google’s offer price of $40 a share).

On the call with analysts, Page said that since Android’s launch in November 2007, about 150 million Android devices have been activated worldwide thanks to an ecosystem that includes 39 manufacturers and 231 carriers in 123 countries.