China Approves Google-Motorola Deal

By Beecher Tuttle May 21, 2012

Chinese regulators have signed off on Google's $12.5 billion acquisition of Motorola Mobility, but with one major stipulation: the Internet giant must keep its Android mobile operating system free and open to device makers for at least five years.

The move is a clear effort by China to benefit domestic handset vendors like as ZTE Corp. and Huawei Technologies Co., which rely on Android to power their own mobile devices. Google's leap into the hardware business has caused some apprehension among Android partners who now find themselves as de facto competitors of the search firm.

Google has agreed not to discriminate against device manufacturers and said it will offer each partner similar access and privileges to Motorola, according to the Wall Street Journal. However, China's Ministry of Commerce ruled that Google does retain the right to charge for auxiliary services that are not included in Android, such as cloud computing applications.

Even with the stipulation, the ruling represents a major victory for Google as it has now received approval from all jurisdictions. The U.S. Justice Department and the European Union signed off on the deal earlier in the year. Google told Bloomberg that it expects the transaction to close "imminently."

The deal accomplishes several goals for Google, which now finds itself with a strong foothold in the hardware business as well as a treasure chest of 17,000 patents and its 7,500 pending patent applications that can help the company protect against patent suits from competitors like Apple.

As a latecomer in the mobile space, Google – along with all manufacturers that rely on Android – has been a clear target for intellectual property litigation.

The EU granted unconditional regulatory approval of the deal back in February, but warned Google that it will closely monitor the situation to ensure that the company doesn't abuse the power that comes with the patent war chest. The EU approved the deal after finding that Google has no legitimate reason to close Android off to other mobile device manufacturers after acquiring its own hardware stake. "The Commission's investigation showed Android helps to drive the spread of Google's other services," the EU noted in a statement at the time. "Consequently, given that Google's core business model is to push its online and mobile services and software to the widest possible audience, it is unlikely that Google would restrict the use of Android solely to Motorola, a minor player."

After agreeing to China's one major condition, Google now has no choice but to keep Android open, at least for the next five years.

Edited by Brooke Neuman

TechZone360 Contributor

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