China Approves Google's Motorola Mobility Acquisition With a Catch: Android Stays Free

3 minute read
J. Angelo Racoma avatar

Google has passed the last regulatory hurdle in its announced acquisition of Motorola Mobility, Inc., Motorola's hardware-making arm, for US$ 12.5 billion. The Chinese antitrust authorities have approved the proposed acquisition deal, although with a condition that Google plays fair in the Android smartphone business.

Unfair Android Competition?

China's approval of the Motorola Mobility acquisition is the latest and last in a string of regulatory hurdles the search giant has had to undergo prior to closing the deal early next week. This is Google's biggest acquisition yet, and will result in Google entering the mobile phone hardware market, which will make it a direct competitor to both the Apple iPhone and the countless Android smartphone and tablet manufacturers like Samsung, HTC, Sony and even Amazon.

U.S. and European regulators gave their nod to the deal this February, and China had been the only potential roadblock to the acquisition. The U.S. Justice Department found no evidence that Google's ownership of Motorola Mobility would lead to unfair advantage over other smartphone rivals, noting that competitors could still resort to using other smartphone operating systems like Windows Phone, BlackBerry and webOS.

"Our stance since we agreed to acquire Motorola has not changed, and we look forward to closing the deal," said Google spokesperson Niki Fenwick, who confirmed the Chinese regulators' approval of the acquisition.

Legal Ammunition

The deal also comes with 17,000 patents and 7,500 patent applications currently owned by Motorola, which Google could use as legal ammunition in patent lawsuits being fired at Android smartphone makers by competitors like Microsoft and Apple.

Learning Opportunities

The deal, however, is not without conditions. The Chinese government is imposing a condition that Google's Android operating system would remain free and open source for the next five years. This would give other smartphone brands leeway to build on the platform and improve it according to their technical and marketing needs.

World's Top Smartphone Market

China is the world's biggest mobile phone market, with approximately 1 billion mobile phone subscribers. According to recent figures, most of these are feature-phones, with only approximately 152 million using 3G-enabled smartphones -- mostly Android and iPhone. Still, mobile access is important in the region, given that about 38 percent of Chinese access the Internet exclusively on mobile devices like smartphones, tablets and -- to some extent -- feature phones.

With Google's entering the smartphone and tablet hardware business, though, its management team will face challenges, given that the company has mostly concentrated on search, software, ad sales and online services to date.

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