Microsoft lodges complaint against Motorola Mobility

Microsoft has lodged a formal complaint with the European Union's competition regulator against Motorola Mobility and its soon-to-be owner Google, saying Motorola's aggressive enforcement of patent rights against rivals breaks competition rules.

The complaint follows a similar step by Apple against Motorola last week.

Motorola is in the process of being taken over by Google for $12.5 billion, the biggest acquisition in the Californian company's history. Microsoft fears that Google will continue Motorola's tight hold on key patents.

Apple Inc. and Microsoft Corp. have been hit by legal cases in Europe and the United States, with Motorola claiming that the companies' products are using key patents it owns without permission.

Apple and Microsoft, meanwhile, argue that Motorola is overcharging for the use of these patents, which cover technologies necessary to connect wirelessly to the Internet or stream video online.

"We have taken this step because Motorola is attempting to block sales of Windows PCs, our Xbox game console and other products," said Dave Heiner, Microsoft's deputy general counsel.

"Motorola is on a path to use standard essential patents to kill video on the Web, and Google as its new owner doesn't seem to be willing to change course," Heiner added.

The complaints are the latest development in increasingly acrimonious disputes between global technology giants over patents on standardized technologies.

Industrywide standards play an important role not only in the technology sector. They allow products from different companies to function seamlessly together - different mobile phones or tablet computers connecting to the Internet and each other via 3-G or Wi-Fi networks, for example. Under EU competition rules, holders of patents necessary for industry standards are required to let other companies use them for a fair price.

But regulators and companies complain that holders of standard-essential patents have tried to gain an edge in the market by suing rivals over the use of their patented technologies.

When the European Commission, the EU's competition watchdog, cleared Google's takeover of Motorola earlier this month, it indicated concern over Motorola's aggressive patent enforcement. The Justice Department in its clearance of the merger made similar comments.

Separately, the Commission has already launched a formal investigation into Samsung's similar approach to patent protection and has warned that other probes may follow.

Google to buy Motorola Mobility for $12.5 bn

Google shook up the mobile phone industry with the announcement it is buying US smartphone maker Motorola Mobility for $12.5 billion in cash in a bid to extend the reach of its Android platform.

The surprise move gives Google a strong patent portfolio to defend Android against lawsuits from rivals such as iPhone and iPad maker Apple and turns an Internet company known for its software into a hardware manufacturer.

Analysts said the acquisition also has major implications for handset makers such as Taiwan's HTC, South Korea's Samsung and others who are using Android to power their mobile devices.
Google and Motorola Mobility said the Internet titan will buy Motorola Mobility for $40.00 per share.

Google and Motorola Mobility said their boards of directors have unanimously approved the deal - Google's largest acquisition ever, dwarfing its $3.1 billion purchase of online advertising firm DoubleClick.

Under the agreement, Motorola Mobility will remain an Android licensee and Google will run the unit, which employs 19,000 people and reported a net loss of $56 million last quarter, as a separate business.

Besides smartphones, Motorola Mobility is a leading maker of TV set-top boxes and analysts said the acquisition could see Google make a renewed push for Google TV, which merges online content with traditional TV programming.

Motorola Mobility also makes an Android-powered tablet computer, the Xoom, and Gartner analyst Michael Gartenberg said Google has "shaken up the tablet market in a big way."
"Google no longer has to depend on third parties to deliver their vision to compete with the iPad," he said.

"Suddenly you have Google, already a serious platform player, becoming a serious integrated vendor from end-to-end for everything from phones to tablets to television sets," Gartenberg said.

Google chief executive Larry Page said Google and Motorola Mobility "will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers."

He said the deal will help protect Android against patent lawsuits targeting the open-source mobile operating system which Google provides to smartphone and tablet makers for free.

"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," he said.

Google bid earlier this year for 6,000 patents held by bankrupt Canadian firm Nortel but lost out to a consortium made up of Apple, EMC, Ericsson, Microsoft, Blackberry maker Research in Motion and Japan's Sony.

Motorola to release 4G Phones in 2011

Motorola in its new form, to be known as Motorola Mobility, will go the way of Acer, rather than Apple in releasing new tablets in 2011.

Apple founder Steve Jobs has jabbed at 7-inch screens, emphasizing the nearly 10 inches on iPad. Several others have said they are going with 7-inchers. But Taiwan-based Acer said last month it will offer both 10.1- and 7-inch touchscreen displays.

Motorola Mobility will follow Acer. Current co-CEO Sanjay Jha, who will lead Motorola Mobility, said, “We’re planning to participate quite fully in the tablet category. Motorola Mobility will specialize in mobile devices and set-top boxes.”

He said Moto’s research shows 10-inch tabs are for business and 7-inch tabs are “fun” devices more easily carried by consumers. According to Jha, Motorola is planning to release 4G phones in 2011.

Jha hinted a new “competitive dynamic” will disrupt Motorola's relationship with Verizon in the first quarter that will have a significant negative impact on Motorola. “Whether the comment is an indirect reference to Verizon Wireless getting an iPhone or an official 3G/4G-capable iPad that's compatible with the carrier's network out of the box is unclear. To combat the threat, Motorola will continue to focus on the mid- to high-tier smartphone market.”

Schaumburg, IL.-based Motorola, which pioneered the mobile phone and is now benefiting from its smartphone Droid with Google's Android OS, will spin-off Motorola Mobility on Jan. 4 as it creates two publicly traded companies. The rest of Motorola, which sells tech to government and corporations, will become Motorola Solutions and trade on the New York Stock Exchange as MSI.

Meanwhile, the new Motorola Mobility, which will trade on NYSE as MMI, said next year it will offer another new device with mobile capabilities. Reuters has reported that this new device will combine set-top boxes and cell phone technology. The device will be featured in January at the Consumer Electronics Show.

Daniel Moloney, president of Motorola Mobility, says the technology will allow consumers to view any content anywhere on different devices. "It's one consumer proposition that will come sooner rather than later," he told the Reuters Global Media Summit.

After being sold a separate gadget offered via service providers, the home streaming product will eventually be integrated into set-top boxes.

Moloney rejoined Motorola last summer, having served as president and chief executive officer of Technitrol, an electronic component manufacturer. He previously was executive vice president at Motorola Inc. and president of Motorola’s Home and Networks Mobility business, which evolved into Motorola Mobility. Moloney then worked with video and WiMax.