Google to acquire Motorola Mobility for $12.5 billion

The Google Nexus One smartphone with provider service from T-Mobile and the Apple iPhone with provider service from AT&T.

Google Inc. announced today it will acquire mobile phone and device maker Motorola Mobility for $12.5 billion, the biggest acquisition the tech giant has ever made.

The deal gives Google access to a huge patent portfolio, which the company said would help protect it against rivals Apple and Microsoft and allow it to develop new features for phones and devices.

Already, 39 different handset makers have adopted Google's Android operating system. Google CEO Larry Page told analysts on an early morning conference call today that those would-be rivals actually support the merger, noting the deal will "supercharge the Android ecosystem."

"Having spoken to some of the key partners of the Android ecosystem, they share our enthusiasm for this combination," Page said.


TRANSCRIPT OF FULL INTERVIEW

STEVE CHIOTAKIS: Just like the people who use its products, Google's been doing a search of its own -- looking for a way to expand its reach in the cell phone world. Today, it announced the answer: Google is buying handset maker Motorola Mobility for $12.5 billion.

Marketplace Senior Business correspondent Bob Moon is with us live in our Los Angeles studio with the latest on that story. Good morning, Bob.

BOB MOON: Hey, Steve.

CHIOTAKIS: So Google already has the biggest share of the cell phone market with its Android operating system. Why buy Motorola's cell phone business?

MOON: Well, you know, this is nothing short of a bombshell in the mobile phone business, because it will put Google in direct competition with Apple's iPhone now. Now Google is going to make phones, just like Apple does. Before it had to rely on phone makers to build new features into their phones. Now it can fully integrate its software and hardware the way it sees fit to match Apple's iPhone. And it'll be taking on Apple directly as well as the 39 different hand-set makers who sell android phones. Google's CEO Larry Page calls this a way to supercharge the android ecosystem.

LARRY PAGE: The combination with Motorola is an extremely important event in Google's continuing evolution. It will drive a lot of improvements in our ability to deliver great user experiences.

CHIOTAKIS: So Bob, what does this do to affect the choices I'll have in the future when I buy a cell phone?

MOON: Well, you know, right now you can get the android system on all kinds of different handsets, sold by 39 different cell phone makers. So, we're going to have to see how all those android phone makers who will suddenly find themselves competing with Google, respond to this move. But Google says this acquisition won't change its commitment to run the android system as an open-platform, which means outside software developers will be able to essentially patch into the software to come up with their own innovations.

CHIOTAKIS: Now I know, Bob, Google is a huge company. What does this say about the economy, in general?

MOON: You know, Wall Street is no doubt going to get some much needed encouragement from this. It's a huge acquisition, coming at just around the time a lot of other companies have put off these kinds of deals. Signals that Google is confident enough in the economic future to shovel out more than $12 billion of its cash for. So this rising tide might indeed lift some boats today.

CHIOTAKIS: Bob Moon in the studio with us. Bob, thanks.

MOON: Thank you.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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