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Google's Bid to Acquire Motorola Faces DOJ Scrutiny

By - Source: Eeweek.com | B 14 comments

Is the DOJ's second request for more information about the proposed acquisition routine, or a roadblock?

In brazen defiance of modern tradition, the U.S. Justice Department appears to attempting to enforce U.S. laws as though they have the authority to do so granted to them by the U.S. Constitution. Less than a month ago, they surprised everyone by actually noticing that AT&T's attempt to purchase T-Mobile probably runs afoul of U.S. Anti-Trust law, and issued a motion to block the acquisition. And it appears that they're treating Google's proposed purchase of Motorola Mobility with similar skepticism. Today, news emerged that the DOJ has made a second request for information about the buyout. (The full document is available online).

Naturally the Google/Motorola Mobility deal isn't saddled by the same issues as the proposed AT&T/T-Mobile combo. AT&T and T-Mobile offer competing products; a merger would necessarily reduce market competition and give AT&T an unfair edge. Google and Motorola Mobility do not actually compete with one another directly and it's therefore likely the deal will ultimately be approved. However, Google business practices have come under increased scrutiny as of late, culminating in recent congressional hearings investigating whether the company behaves in a monopolistic fashion. It's therefore refreshing to see the DOJ continuing that scrutiny after a decade dominated by a less strict approach to business law enforcement.

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  • 5 Hide
    Jerky_san , September 30, 2011 1:13 AM
    GO GOOGLE O_O Then hopefully they buy sprint and take AT&T head on!
  • 0 Hide
    a sandwhich , September 30, 2011 1:28 AM
    I don't honestly think google should acquire sprint. Would be a bit of setback in quality in opinion. Live right next to the sprint campus and recently took a tour. Wasn't the best run, and they haven't been that stable in terms of layoffs.
  • 5 Hide
    palladin9479 , September 30, 2011 1:28 AM
    And ... what are they doing about Apple?

    That company is the text-book definition of what you shouldn't be allowed to do.
  • -7 Hide
    bobusboy , September 30, 2011 1:54 AM
    Jerky_sanGO GOOGLE O_O Then hopefully they buy sprint and take AT&T head on!


    I am against monopolies where ever they spring up. I don't believe that google should be allowed to buy motorola.
  • -6 Hide
    xerroz , September 30, 2011 1:59 AM
    I hope the acquisition is blocked
  • 2 Hide
    southernshark , September 30, 2011 2:38 AM
    The issue here though is that Moto is probably not a sustainable company on its own two feet. It has to be either acquired or liquidated so that puts the DOJ on different footing than the ATT deal, where each company was viable and self sustaining. Also we should keep in mind that vertical monopolies are not illegal under US law, only horizontal monopolies are illegal. Google might be a horizontal monopoly in the search engine space, but it is obviously not a monopoly in the smart phone/ tablet arena.
  • 1 Hide
    Anonymous , September 30, 2011 2:48 AM
    why can't google acquire motorola. if they don't implement any competition, expect the iphone to sell for $500 with contract. Google is just trying to give people a chance to afford things. Look what the give away. Free phone and tables every time they have a conference or google io. Apple gives nothing. Google gives you, free gmail,picassa,googlevoice,free telephone number for life,free blog website,free music storage, and upcoming free internet too. Apple gives nothing. Microsoft and Apple want to charge for everything, Having their premium customers and users enjoy exclusivity and the peasants can't afford none of that. and now they want to stop android, so microsoft can sell a HTC phone for $499 with contract when android is giving it for $199 with contract. and then people say economy is bad.
  • 0 Hide
    face-plants , September 30, 2011 2:52 AM
    Ross, the typo(s) at the very beginning of this article confuse the entire basis for the rest of the story.

    "...the U.S. Justice Department appears to attempting to enforce U.S. laws as though they have the authority to do so granted to them by the U.S. Constitution."

    Is it the Dept. of Justice's job or not? If it is their responsibility to enforce anti-trust laws then more power to them. I hardly consider the DOJ asking for information TWO separate times to be a roadblock when it comes to multi-billion dollar business takeovers.
  • 0 Hide
    Anonymous , September 30, 2011 2:53 AM
    why can't google acquire motorola. if they don't implement any competition, expect the iphone to sell for $500 with contract. Google is just trying to give people a chance to afford things. Look what the give away. Free phone and tables every time they have a conference or google io. Apple gives nothing. Google gives you, free gmail,picassa,googlevoice,free telephone number for life,free blog website,free music storage, and upcoming free internet too. Apple gives nothing. Microsoft and Apple want to charge for everything, Having their premium customers and users enjoy exclusivity and the peasants can't afford none of that. and now they want to stop android, so microsoft can sell a HTC phone for $499 with contract when android is giving it for $199 with contract. and then people say economy is bad.
  • 0 Hide
    face-plants , September 30, 2011 2:58 AM
    Southernshark, are you saying that Motorola's Mobility division isn't sustainable on its own.... or that everything else that's left after selling off Moto Mobility won't be sustainable?
    I can see how selling only the profitable bits to Google while leaving the rest of Motorola to wither could be cause for concern
  • 2 Hide
    Camikazi , September 30, 2011 3:48 AM
    bobusboyI am against monopolies where ever they spring up. I don't believe that google should be allowed to buy motorola.

    So what do you think should be done about Apple then? Google buying Motor would let them control the hardware and software on a phone, does that remind you of a certain fruity company? If this can be a monopoly then Apple already is and should be stopped. Following your logic that is.
  • 0 Hide
    agnickolov , September 30, 2011 5:43 AM
    Quote:
    Naturally the Google/Motorola Mobility deal isn't saddled by the same issues as the proposed AT&T/T-Mobile combo. AT&T and T-Mobile offer competing products; a merger would necessarily reduce market competition and give AT&T an unfair edge. Google and Motorola Mobility do not actually compete with one another directly and it's therefore likely the deal will ultimately be approved.

    The antitrust laws cover not only practices against direct competitors but also to towards business affiliates and adjacent markets (Intel rebates anyone?). Time to freshen up on Antitrust laws. Therefore this scrutiny is perfectly appropriate. The reason antitrust laws probably won't apply here is the other argument - that neither company is in a monopoly position in either of the markets, but even that is not clear cut. Android already integrates Google Search the way Microsoft Windows used to integrate Internet Explorer, so the search monopoly is still very relevant. Again, since Android is not in a monopoly position in the cell phone OS market this would probably mean Antitrust laws wouldn't apply (for now, but now is what matters).
  • 0 Hide
    eddieroolz , September 30, 2011 10:54 AM
    Another good move by the DOJ. Google has grown way too big for its own good.

    I'm rather surprised Google has managed to keep antitrust litigation at bay until now. Maybe they have insider connections and big money flowing that way.
  • 1 Hide
    someoneelse , September 30, 2011 8:41 PM
    how soon before legal expenses by tech companies exceeds product development spending.