Google Dumps Motorola, Keeps The Patents

from the but-of-course dept

Back when Google first bought Motorola Mobility it was obvious that it was entirely about the patents. While there are still plenty of questions as to whether or not those patents are any good, Google needed to get its hands on a big bunch of patents for defensive reasons pretty quickly, and after losing out on Nortel’s patents, picking up Motorola was apparently the quickest way. In fact, quite a few people expected Google to just dump Motorola’s handset business quickly, in part to avoid competing with a variety of other Android partners, like Samsung and HTC. We even predicted that Google would likely sell off the handset business and keep the patents. However, Google insisted for a while that it was really going to make a go of being in the handset business itself.

Well, that little pipedream is now over, with Google selling off the handset business to Lenovo for $2.91 billion. Some are pointing out the rather massive difference between this and the initial purchase price of $12.4 billion, but that leaves out a lot: mainly, Google is keeping the patents and just licensing them back to the company. In 2012, Google claimed that it valued the patents at $5.5 billion. Also, it got $2.9 billion in cash from Motorola, and I’d imagine that’s not going to Lenovo too… Instead, at the time of the acquisition, Google said it valued Motorola’s customer relationships at $730 million and “other net assets” at $670 million — and then had another $2.6 billion in goodwill (more or less the premium Google had to pay to get Motorola to sell). Given that, the sale isn’t a huge “loss”, though it does make Google look kind of silly for pretending it was really in the hardware business for a bit.

In the end, just as we predicted at the beginning, this is a story of the silly things a tech company is forced to do these days because of our stupid patent laws. The end result here pretty much confirms it all. Google shelled out $12.4 billion for a bunch of patents and hung onto a hardware business it never really wanted, and which it has now discarded. Without the pointless patent battles, it’s unlikely Google ever would have bothered. So: would we be better off in a world where Google had actually been able to invest that money into making better offerings? Or where Motorola’s investors got it?

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Companies: google, lenovo, motorola mobility

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Comments on “Google Dumps Motorola, Keeps The Patents”

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jameshogg says:

Re: Re: Re:

Here’s one of many, strongly suggesting this is the case:

I thought the point made here was fucking incredible:

“If Google is proven wrong, pretty much that entire software stack — and also many popular third-party closed-source components such as the Angry Birds game and the Adobe Flash Player — would actually have to be published under the GPL,” he writes.”

In other words you can’t actually know if certain licenses are going to be legit… to the point where you cannot even copyright your works safely. So much irony! So much utopianism! So much nonsense!

But yeah, I’d be happy to learn if I am mistaken about this. The probability of a corporation becoming corrupt, however, is always high. So I have good cause to be suspect.

ottermaton (profile) says:

Re: Re:

I hear Google also take a lot of open-source software for Android and expand on it without releasing the source code for the expansions, when the GNU license explicitly says not to.

Got a citation for that? Not that I’m disputing what you’re saying, I’d just like to read more about it.

I do know that they have written a lot of proprietary code that runs on top of Free software, thereby fairly effectively turning the whole platform proprietary (which I think is shitty enough in itself) but I haven’t heard of them directly building on GPL code and not releasing it.

steell (profile) says:

Re: Re: Re: Re:

Linus Torvalds says you’re wrong

Eben Moglen says you’re wrong

If the article references Florian Mueller, then it’s a safe bet it’s wrong.

Wally (profile) says:

Re: Re: Re:2 Re:

Android is a Unix-based operating system…Kernal stays the same while the shell is custom by distributor….

One of the differences between Unix and Linux is that Linux is merely a kernel that you build your own operating system on…while Unix is a a whole kernal and operating system where you make the shell…

Unix isn’t covered under GNU licensing because even if it’s free, but you’re paying for support….which is why Linus Torvalds created Linux…Linux allows for a community support and is liscensed under GNU…

John Fenderson (profile) says:

Re: Re:

This accusation has been flying since the very beginning. Is it true? Who knows? But the details provided to support it are not a slam-dunk by a longshot.

However, there is one thing that is often misunderstood: the issue isn’t around Android itself — everyone agrees the OS is being handled properly, and Google has released the full, buildable source code and properly contributed back into the Linux ecosystem.

The accusation is about Google Apps — entirely different and independent software from the OS. If Google Apps were to disappear, Android would be unscathed.

out_of_the_blue says:

"it does make Google look kind of silly for pretending"

It’s pretending to be your “friend” and not evil, too. — Google has so much money that a billion here and there is irrelevant. It’s written off hundreds of millions on loony projects like the fuel cells to run its servers. — And it has tens of bilions FREE! UNTAXED money sitting offshore.

Google wants you to know you’re under our ever improving state-of-the-art personalized surveillance! We learn your interests, habits, and associations! All “free”, courtesy of other corporations! (105 of 192)


Just Sayin' says:

Re: Set Top Boxes

Yeah, the whole story isn’t in handsets alone.

Google move here is pretty smooth, actually, they get licensing income from Lenovo going forward, and unmentioned in this story is that Lenovo becomes a very likely source for future Google phones as well. This is important because Lenovo is very well respected in the Asian market place, where Motorola wasn’t as strong in some ways.

In the end, it shows Google actually being smart enough to realize that they are NOT a hardward company in the classic sense, and they are much better off as a software and IP company, able to be a king maker when it comes to making their branded handsets.

Only on Techdirt could this deal be considered a big loss, Google will profit grandly from this deal over time, they have just about broken even on the deal already and they have future licensing income to enjoy.

Donglebert the Needlessly Obtuse says:

Re: Re: Set Top Boxes


$12.4 billion paid.
– Received $2.9 billion cash on top, so effectively paid $9.5 billion.
– Sold set top box div for $2.35 billion – balance of $7.15 billion.
– Sells to Lenovo for $2.91 billion – balance of $4.24 billion.

So if the patents are worth $5.5 billion, they’re quids in, especially when you consider Moto is still making a loss so it’s better to get out earlier than later.

Even if the patents weren’t really worth that, they probably saved a strong mobile brand for Android, added competition to the market, gained better knowledge of the market, and, it appears, gained some leverage over Samsung.

Also, the Moto X looks to be a lovely device. More importantly, the Moto G was a massively important device that set a high bar at the budget end of the market that Android was losing to MS Nokia.

Would they have made the Moto G without Google? I think not. Certainly in Europe, the Moto G and Moto X are the only Android devices by Motorola marketed.

At the start of 2012, Android looked to be all Samsung. At the start of 2014, Android is Samsung, HTC, LG,…and Motorola.

DannyB (profile) says:

Re: Re: Set Top Boxes

Even if this is a $9-billion loss, Google may have accomplished an important business purpose by simply having Motorola’s patents, and demonstrating that they were quite serious about acquiring enough patents to do battle with patent trolls that have rounded corners.

It may not be a bad use of capital after all.

Wally (profile) says:

Re: Re: Re: Set Top Boxes

Actually…that whole rounded corners thing was reported by a very pro-Android website…Apple countersued Samsung because Samsung was asking for a 3,000% markup on a piece of embedded software code on the INFINEON Antenna chips used in the iPhone 4….which Infineon licensed to Apple via Wholesale…Samsung’s embedded SOFTWARE code in Infineon’s Antena Patent contributed to less than a thousandth of a percent of said patent…
So which is worse? A patent on ergonomics and astehtics…or software patent that was already sold as wholesale to Infineon to sell to Apple? Isn’t the latter double dipping into a patent?

Mason Wheeler (profile) says:

Re: Re:

Limited corporate liability is specifically designed to prevent that scenario, because “the investors” might well be you if your IRA manager decided that the stock of the corporation in question would be good for your portfolio.

Much better idea: Order the mansions of the executives and the board of directors handed over. Put liability where it belongs: on the actual decision-makers.

Geno0wl (profile) says:

Re: Re:

I am not really sure what the word “liberal” really has to do with a news organization getting the details of a story wrong in that manner.
Unless you are stating it is their agenda to skew said details, which you would be hard pressed to prove in this instance.

Not to mention you straight up can’t read.

third paragraph
Google paid $12.5 billion for Motorola in 2012. Under this deal the search giant will keep the majority of Motorola’s mobile patents, considered its prize assets.

Maybe your conservative eyes need better conservative glasses. That or your conservative glasses are working just fine making enemies where there aren’t any.

OldMugwump (profile) says:

Google in the hardware business

“though it does make Google look kind of silly for pretending it was really in the hardware business for a bit”

Google is still in the hardware business – they offer the Chromebook Pixel and the Chromecast, and will soon be selling Glass.

What Google got out of is the low margin handset business where their ownership of Motorola was a problem for Android (because nobody wants to have a competitor as a key supplier).

Buying – and selling – Motorola was all about Android. Now Google is no longer competing with Samsung, HTC, etc., which removes most of the motivation those companies had to drop Android. And during their tenure running Motorola, the got the Moto G out the door, which pushed Android into low-end handsets (displacing the small foothold Microsoft had there).

Yet they kept the patents, so they can still use them to defend (or, at least try to defend) Android against Microsoft and Apple’s patent attacks.

It’s a shame all this effort and attention goes on playing patent games instead of product development, but that’s what they have to do to survive in today’s legal environment.

Violynne (profile) says:

“In the end, just as we predicted at the beginning, this is a story of the silly things a tech company is forced to do these days because of our stupid patent laws.”

I don’t agree with this position. Google isn’t being forced to do anything of the sort. It’s just cheaper for them to do, rather than start working on their own lobbying group(s) to spend, er buy off politicians who pass the laws to begin with.

What’s sad in all this: when Google starts to become a has-been, they’ll start using these patents in the form of offensive, not defensive.

It may not happen for a for years, but if history shows anything, it’s proof this will be inevitable.

Anonymous Coward says:

If not in Motorola, not in R&D either...

The original post asks the question:

So: would we be better off in a world where Google had actually been able to invest that money into making better offerings?

The answer is relatively easy. Google invests about 14% of its annual revenue in R&D. Fundamentally, this percentage is an approximate target for Google. Google has held to this number recently, rain or shine, Motorola purchase or sale. Note that the percentage is based on revenue, not on purchases of outside companies, purchases of patents, etc.

So, the answer seems to be that if Google had not purchased Motorola, not one dime more would have gone into R&D. However, that money might well have gone to Google executives as bigger bonuses. So: would we be better off in a world where Google had actually been able to pay their executives bigger bonuses instead of investing Motorola? Frankly, I do not think anyone cares.

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