Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Google’s Motorola Deal Will Spur Antitrust Regulators to Action

To say that Google is going to face some opposition to its proposed $12.5 billion acquisition of Motorola Mobility is what you might call a bit of an understatement.

First of all, the deal will give a lot of fresh meat to the U.S. Federal Trade Commission, which is already investigating several aspects of Google’s business, including its Android mobile operating system business. As The Wall Street Journal reported last week, investigators from the FTC and from the offices of several state attorneys general have been exploring whether or not Google prevents phone manufacturers who become Android partners from using the smartphone operating systems of other companies.

If such were the case, the party most likely to suffer would be Microsoft, whose Windows Mobile operating system is, like Android, widely offered to smartphone manufacturers. The other one that comes to mind is Hewlett-Packard, which is in talks with several companies about licensing its webOS software, which came from Palm, the handheld-making company it acquired last year.

The FTC’s investigation, said to have begun in June, is still in its early stages and may not result in a lawsuit. But you can bet that this proposed acquisition will only quicken the FTC’s pace.

The offices of several state attorneys general will also want to weigh in. The AGs in New York, California, Ohio and Texas have all ramped up inquiries into Google’s dominance of the search business.

Also in the mix is the European Commission. Earlier this month, Reuters reported that Google faces no fewer than nine separate antitrust complaints in Europe. Most of those complaints have to do with Google’s search business, but at least one of them came from Microsoft, which complained in March that Google blocks competition in the Web search business.

Google is clearly sharpening its arguments for the coming fight. In the company’s official blog post announcing the deal, CEO Larry Page said Google will continue to work with other hardware companies on Android. The company says it works with 39 different manufacturers that build Android devices. But he also renewed a recent Google complaint that other companies are banding together to hurt Android by accumulating a pool of patents owned by Novell. That complaint touched off a war of words between Google and Microsoft.

In the blog post, Page insists that owning Motorola will not only give Android a kick, but will “enhance competition” and offer consumers “greater choice.” It will, of course, be interesting to see how that argument shapes up. The biggest question will focus on whether or not a Google-owned Motorola will get preferential access to new versions of Android before other manufacturers. Whatever happens, it’s going to take Google some time to get this deal done, and if it does get approved, you can expect some significant regulatory concessions.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik