I simply can’t take it anymore, I have to weigh in. But first, a caveat- I like Google. I use their products all the time, but they’re starting to rub me, and others, the wrong way. So what has my panties in a knot? It has to do with Google’s public complaining about patents and anticompetitiveness. It’s a hypocritical stance.
This whole thing has been bubbling under the surface for some time, but I’ll pick a very specific event that happened only weeks ago- the Nortel patent acquisition. Nortel, a wireless technology company was selling their patent portfolio as a part of their debt-restructuring agreement. These patents involve new technologies such as high speed data transfer protocols and other technologies that a company in the business of making cellular phones would kill for. So, a number of major of tech companies such as Microsoft, Apple, and Google bid on the patents. Google thought it would be cute to bid numbers such as Pi, to no one’s amusement. Ultimately they lost, and other companies walked away with their share of the patent portfolio.
Some claim Google only threw their hat into the ring, to artificially raise the price of the patents for their competitors. This makes sense if the story ended there, but it doesn’t. All of these other companies, specifically Apple, are in a stronger position to manufacture phones, or the software they run, than Google. This is why they ended up buying Motorola Mobility.
Google announced earlier this week that they are purchasing Motorola Mobility for $12.5 billion, mostly to acquire their patent portfolio, which is 17,000 patents strong. This now gives Google some sort of leverage for when the inevitable lawsuits come pouring in. Up to this point, this is only marginally interesting. What is far more intriguing is the way Google has behaved toward the public, and competitors such as Apple.
The second that Google lost the Nortel bid, they began to bitch. Loudly. They claimed that this was anti-competitive behavior on behalf of Apple and Microsoft and the others in the consortium. This is where things fall apart quickly.
First off, if Google were to have won on these Nortel patents, suddenly it wouldn’t have been anticompetitive? The second they lose the bid it suddenly becomes an anticompetitive attack on the company by the mean ol’ world at large? Sure.
Secondly, let’s just look at Google’s business model for the Android software stack. Google spends billions propping up the project, years developing it, and then hands it out for free to handset manufacturers. From this point of view who’s being anticompetitive now? Microsoft and Apple are just trying to sell a product. Google is trying to drown them out with a free alternative.
I think Apple and the other companies playing this game knew that if Google were to get their hands on those patents, they would have gain a lot of leverage. Apple, Microsoft and the others grabbed up what they could, just so they could have something, anything to hold over Google’s head, when the inevitable lawsuit reared its head. Google dug themselves into this whole, and now they’re trying to dig themselves out. That leads me to the Motorola acquisition.
It is being reported that the second that Google was shut out of the Nortel patent acquisition five weeks ago, they began negotiations with Motorola Mobility, who have been struggling in this market. Of course, Google was after their patent portfolio, but that’s not that interesting. What is, is the fact that both companies toyed around with each other for five weeks and came to a selling price of $12.5 billion- far above what Google was willing to pay for the Nortel patents.
Earlier this month Motorola began to threaten patent suits against other Android handset makers while also suggesting that the company was looking into adopting Windows Phone 7. Then out of the blue, Google buys them. This is coincidence? Motorola had to know that Google needed their patents, so they showed their ass until they got their way, and were fully acquired, at a price far above their worth. This explains the lack of licensing agreements, and Motorola’s odd behavior, and the high selling price.
So Google has been acting like a baby when they didn’t get their way, pretending to be the good guys in a fight, where they’re actually the one’s being anticompetitive flooding the market with free products. To remedy their weak patent position, they buy a dying handset manufacturer who happened to have a lot of patents- patents needed to prop up Google’s Android platform. Not to mention that this acquisition puts Google at odds with other Android handset manufacturers.
So how does this affect Apple, and the market at large? Well, from where I’m standing, this scheme seemed to backfire for Google. They’re releasing an OS for free in an attempt to dominate a market, which arguably they are. But others, specifically Apple, aren’t losing money on the endeavor, in fact Apple is doing the opposite, and is growing at an astounding rate.
Apple and others got off to a good start, and found themselves in a better legal position than Google did. Google then tries to sling money around to force other companies into awkward legal positions with patents. Patents that Google did not win. So, there the company sat with two options: hold onto a software platform in a weak strategic position, or pay to acquire a cut-rate mobile phone manufacturer to bail you out of legal trouble. Google spent a lot of money getting themselves out of trouble that they themselves caused. I’m sure Apple and Microsoft couldn’t be happier.
In short, Google made a boo boo and had to buy their way out. Apple, Microsoft, and others are getting off cheap in comparison. The mobile phone market itself probably won’t suffer either. The only loser here is Google, and no one had to lift a finger for it to happen.
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TAGS: Google, motorola, patent fight
