China Says Yes to Google/Motorola Deal: Now What?

by Ostatic Staff - May. 21, 2012

Quick, when did Google announce its plans to acquire Motorola Mobility for $12.5 billion--its biggest acquisition ever? The answer is that the announcement came all the way back in August 2011. Since then, U.S. antitrust regulators and regulators in Europe have approved the deal, but China was the big sticking point. Now, though, China has approved the acquisition and there are reports circulating that the deal should close this week. It's easy to forget after all this time that this acquisition marks a huge shift in Google's business and strategy.

Motorola officials have said that they expect that the Google acquisition will close before the end of this week now that all regulatory bodies have given their blessings. This will put Google firmly in the smartphone business and make its Android business a huge priority at the company.

Android smartphones are dominating the overall smartphone market. Researchers from Gartner report that Android phones represented 56 percent of the global smartphone market in the first quarter of this year, while Apple's iPhone was next in line with only 22.9 percent of the market.  But Google hasn't always made money from its Android business. As we noted here, reports came out about losses for the Android business in 2010.

As Google becomes a big player in the smartphone market will it keep new versions of Android under wraps, giving itself a pronounced advantage over other hardware manufacturers? According to a Wall Street Journal report, Google's long-term strategy may be to favor a cadre of hardware makers with the latest versions, and to sell direct to consumers. However, company officials have been very firm about the fact that new versions of Android will go to multiple hardware players as they arrive. 

The smartest thing for Google to do is play on a level playing field with other smartphone players, at least in the short run. Among other issues, Google is going to become more firmly entrenched in supporting hardware than it ever has been before. The company will need to focus on smoothly integrating the Motorola business, and Chinese regulators already imposed some rules on Google designed to ensure far business practices. Some early reports about the Chinese approval note that Chinese officials are demanding that Android remain free and available to other device makers for at least five years going forward.

In any case, it's remarkable how far Google has come with Andoid in such a smart time. In early 2009, many observers pronounced Android a complete bust. Now look where it's headed.