GOOGLE yesterday made its biggest-ever acquisition by spending $12.5bn (£7.6bn) on Motorola Mobility.
The purchase of the phone and tablet-maker, which will be run as a separate business, marks a surprise move into mobile hardware for Google, which has recently seen its Android software become the most popular smartphone platform.
However, analysts say the motivation for the acquisition is based on Motorola’s portfolio of 17,000 patents, which Google will be able to license to other Android users like HTC and Sony.
Google chief executive Larry Page said: “Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.”
Patent battles have become increasingly fierce in recent months, with court action being fought between almost every player in the mobile market. Apple has blocked the distribution of the new Samsung Galaxy Tab in Europe and Australia after accusing it of “slavishly following” its iPad. Samsung is counter-suing.
In June Apple settled a patent row with Nokia, which analysts say could see Steve Jobs’ firm part with up to two per cent of the price of every iPhone it sells. A $4.5bn auction of Nortel patents earlier this year was won by Apple, Microsoft, and BlackBerry-maker RIM, with Google trailing in the race to snap them up.
Rival handset-makers HTC, Sony Ericsson and LG, which all rely heavily on Android, yesterday welcomed the news, saying it shows Google’s commitment to the platform.
Shares in struggling handset makers RIM and Nokia also traded higher as investors hoped they too owned a cache of valuable patents.
Motorola investor Carl Icahn, who stands to net $1.34bn on his 11 per cent stake, is one of the biggest winners from the deal.
Lazard advised Google, while Motorola used Centerview and dotcom godfather Frank Quattrone’s Qatalyst Partners.
Google closed down 1.2 per cent at $557.23 after announcing the $40 per share cash deal for the mobile phone giant.