WSJ: Google may settle mobile FRAND patent antitrust claim

How much could this possibly cost Google/Moto?

Is the Moto acquisition beginning to unravel?

The whole point to FRAND is that it is meant to (1) prevent technologies employed by a particular industry such as telecommunications from being fragmented and in doing so permit standards to be developed and (2) reward those companies whose IP becomes part of the standard.  Google would have fully realized this and finally, that realisation has hit home.

Oooh, boy.

 

If Google settles then what will all the haters have to say? They seem to think it's OK to abuse SEP's or ask for royalty rates based on the final selling price of a device simply because big, bad Microsoft or evil Apple are on the receiving end.

 

How would they be able to spin this so they could keep believing MS and Apple are the bad guys? Maybe imply that they paid off the judges? Bribed FTC officials? Spent millions on lobbying? Paid for college educations for their kids?

The Moto $12B purchase will have to be written on. The FRAND patents are not worth that kind of money and manufacturing is a money loosing bottomless pit. There is no way that Moto can compete with the likes of Samsung that are vertically integrated or cut rate Chinese Android phone makes like Lenovo or Huwei.

Did the management of Google due their due diligence? Everybody and their mutt in this board knows about FRAND patents.

12.5 billion down the drain.

Haters are not in it to makes sense, they are in it to Hate! So they will continue to hate, without reason...

Perhaps Google should look to its core business and reinvent itself there... http://au.finance.yahoo.com/news/why-google-could-disappear-5-172220950.html (Not an endorsement, for edification...)

Edited by IQatEdo - 10/19/12 at 9:08pm

Companies usually settle for one of two reasons. One is that they don't believe they will win.Two is that they think that even if they do win, the costs will exceed the gains.

In this case, they are being told by the Feds, and the EU that they will be taken to court over anti trust and other violations over their practices. Google may be trying to prevent that by giving up several lawsuits that they are being told are in violation.

But if you want to apin it another way, that's ok.

 

MotoMo just announced a half-billion dollar loss, so added up it's been a $13 billion dollar blunder...if not more.

 

These kinds of losses and poor acquisitions come right out of the cookie jar. Think about it, how much did Google have to earn in order to have this much flushed away? Normally it would be around 1:20 ratio.

 

Google's preoccupation with the smartphone business will be their undoing in the end. Besides costing them billions of real dollars, it has distracted upper management from the company's core business. If those two things were not enough, the whole smartphone focus has alienated the support of two major bases of positive synthesis -- Microsoft and Apple. 

 

The loss of Apple's goodwill has especially bad long-term consequences. Apple about two steps away from isolating Google from Apple's customers, and that never needed to have happened. When I can ask Siri for information and I get the answer to most of my questions without Google even being part of the process, then Google loses about 45% to 70% of the input needed to fuel its search engine's loop.

 

While Bing by Microsoft is considered a lightweight by Google's standards, it really can do a reasonably comparable search. Compare the two search engines side-by-side here: http://www.bingiton.com

 

Five years out and Google could be a marginalized company unless they get back to their knitting quickly and quit playing hardball with companies whose friendship they need.

 

I just wonder about the role of Eric Schmidt in all of this.  I think that Larry Page would not have crossed Apple (Steve Jobs) without the influence of the company's then CEO.  What good is Schmidt to Google now?  Might be time to march.

 

Should the semantic web gain traction (http://en.wikipedia.org/wiki/Semantic_Web), Google will be further diminished.  Machines (via Siri) talking to machines (via Wolfram Alpha) - interesting times!

"Beginning to".....?  

An insanely insightful post.

I don't know. I just think it's the opposite. Despite all the appearances, I think it's Page who want to rule the world.

 

Well, Schmidt seems to have no delusions of grandeur, that's for sure...

 

 

I think Google saw that the future of computing was mobile and decided they needed to be in on the action. They offered a free O/S which is a loss leader (a little like the Kindle) to entice manufacturers and customers to use ths product. After all their main business is search and advertising. If they control the O/S then they control the whole process and no one can shut them out.

In the process they alienated key partners and got scorched either directly or indrectly. It seems sad that they were forced to buy a manufacturer to protect themselves from parent attacks, except this particular manufacturer doesnt have the strongest patent portfolio. So all they could field seems to be mostly FRAND patents, which they obviously knew wouldn't fly for very long.

And finally, for me the saddest part. Whilst they were very innovative in seach they seemed to have borrowed stuff to make a mobile platform. They originally borrowed Blackberry O/S, switched to using iOS features, and even some WebOS bits I think. And then they stuck extra bits on to try and differentiate it. They even borrowed a Java-like VM LOL. Whereas, love it or hate it (and I'm not keen myself) at least Microsoft tried to bring an original mobile OS to market. Yes it uses touchscreen, like everybody else, and not some amazing holographic voice and expression activated system, but its a little different, like WebOS was. So good for Microsoft.

I think Google needs to reasses its priorities. Look at what is really good at and get back to basics. Everyone would probably admire them for the ability to change their act once again.

I once thought buying Motorola was a great idea. Still do. But google is botching the integration. In fact, they don't seem to be trying.

 

 

Maybe they do, maybe not. Reality is that sometimes, those with big ambitions achieve big things.

Machines do not talk to machines via Siri. People talk to machines (like Wolfram Alpha) via Siri. You would have been closer to the mark by saying that Siri the machine talks to Wolfram alpha the machine. But Siri is most certainly not a conduit between two machines.

 

What I meant was that we (can) get into the conversation via Siri, which agrees with your statement.  Ambiguous I guess, my assumption was that we created the query being transacted.  The context was that our machine representative doesn't care about advertising presented along with the results of our query.

 

All the best.

 

Exactly. And reading this story leads me to think also of Facebook and how they might be in the same boat as Google. Facebook would not have been so late to mobile: 

 

http://allthingsd.com/20121019/facebook-we-werent-moving-fast-enough-in-mobile/

 

if they had not tried to arm wrestle Apple several years ago. They might have gotten on iPhones and iPads in a big way more quickly, polish the app, and leverage an Apple partnership much more to their advantage. 

 

Facebook playing hardball with Steve seems somewhat similar to Google trying to play hardball (and betraying) Steve. In both cases, these guys thought they could run a company the way Steve did and they tried to use some key Jobsian business skills (minus the basic integrity) against him. Jobs was known as a great business competitor and his business acumen was respected. He helped build industries and create wealth for very many people when those upstarts were still sucking on pacifiers. Speaking of goodwill, despite public perception, Steve had tons of it.

 

Those upstarts just didn't get it. Steve offered Larry and Sergy and also Mark wisdom, advice and partnerships. Google intruded on Steve's space, but Apple wasn't stupid enough to go all-in on advertising, search, and social. iAds still struggles, but it's peripheral, not core to Apple. IIRC, Steve stated that propping up iAds was a way for Apple to help developers monetize their efforts. 

 

Yes, they are interested in search, but understanding mobile better, they continue to improve search via Siri (having the added benefit of locking out Google).  As you mentioned, Macky, Google's future in search may be in peril. 

 

Ping flailed and was shuttered, but is was a reaction, I think, to Facebook locking Apple out of their social network, or requiring Apple cede user data. Apple, at one point, seemed to all but beg Facebook to develop a good native app for iOS. Zuckerberg didn't like the terms (he needed user data) and declined. I don't think Apple really was interested in developing its own social network. Apple wanted a good native Facebook app because Apple's customers wanted Facebook on their mobile devices. 

 

In none of those instances did Apple pour billions into their efforts or simply fail to move on a core aspect of their business. They saw the big picture and stuck to playing the long game. Facebook's and Google's business models may be broken insofar as they rely far too heavily on delivering eyeballs, as opposed to finding what their customers want and delivering it. Arguably, their customers are advertisers, not end users. I don't think I'm a typical case, but I got off Facebook and dropped Chrome because of degradations in privacy protection (Facebook and Google) and user experience. 

I think that was the thinking. And by doing so, now Apple is shutting them out. Isn't life weird?

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Edited by MacRulez - 1/22/13 at 7:02am

There. You think the entire patent system is broken?
Well the FTC just helped fix it. No more frivolous FRAND-abusing suits.

I owned MOT for a number of years, but saw it's design and innovation in the phone area and chip area lackluster. It wasn't just that the stock was going nowhere (I invest for the long term), it didn't see MOT having any future but some aging IP. The $12.5B Google put out to purchase MOT was too high but I expected GOOG to revive MOT to recoup their purchase price. Not what happened.

 

If you recall, MOT was the designer and supplier of the G3/G4 and promised G5 Apple was expecting. Apple gave up and went Intel, and now ARM for their mobile devices. 

 

I never understood the rationale for Google buying MOT. If Google was attempting to broaden their core, then they seemed to have forgotten to invest in MOT's core strengths, and pushed them to innovate again. But, alas, they used MOT solely as a pawn in its IP battles, and left MOT to die. 

 

Given the ideas and products some folks GOOG are showing, GOOG seems less a for-profit organization, than non-profit NGO. They seem to be of two minds: madonna and whore; the battle is happening within GOOG.

Remember that MOT split into Motorola Mobility (MMI) and Motorola Solutions (MSI), before (in preparation for) the GOOG acquisition.

Some of the reasons we have heard for GOOG buying MMI are:
1. to prevent MMI from filing patent suits against other Android OEM's
2. to realize tax benefits from MMI loss carry forwards
3. to gain a patent portfolio for battling Apple
4. to gain expertise in making devices

For number 4, MMI was losing money before the acquisition and GOOG had no deep experience in creating devices, so I don't believe that was a strong motivation.
For number 3, it seems to be turning out that the useful patents were FRAND type, so that has not been too big a gain.
For number 2, I haven't tried to figure out GOOG's financial statements, but I assume it has been of benefit. Of course for GOOG investors, the tax benefit has been more than offset by the hit to earnings per share caused by consolidating MMI's losses.
For number 1, GOOG eliminated the threat, but the lack of success of leveraging MMI's patents after the merger may indicate that the threat was illusory in the first place.

In summary, I think MMI took GOOG to the cleaners.

I don't think so. I don't think Apple can realistically shut Google out, and Apple know it.
This shows Google's idiocy in their thinking. They don't need their own OS at all. Even Microsoft can't shut Google out if people want Google's services. But Google want to be dominant like Microsoft and now that they made the bed they must sleep in it.

 

 

that's pretty interesting. I don't use bing at all, apart from the occasional comparison., but i've noticed that they've switched their layout to one very similar to googles - ie minimal text and identical results layout. i wonder if they will try and switch bing for google and the facelift is to soften the blow. how many people would notice and only know google by name rather than the results. how many people would notice ? I would put money on apple telling microsoft to sort their search out ready for a shift. 

simple question...would you put all your eggs in one basket?

I don't think this is about spreading the risk at all. This is all about control and dominating market, now and future. They saw the void Microsoft didn't fill so they filled it. But while they're dominating mobile phone market just as they planned, they got more income from iOS than their own OS. This beg a question about their wisdom that they thought things through? Did they think things through when they bought Moto? Does having your own mobile OS worth being an enemy with your closest friend and main source of income? Does it worth being a hypocrite (open yet not open)? etc.

Edited by matrix07 - 10/20/12 at 7:51pm

Motorola is a sink hole and will continue to leak money.  $13 billion is just the start.

Motorola has been in big trouble for years, despite being put on the map by Verizon's original Droid Ads. As Verizon moved to label other companie's phones as Droids, that gain has been lost, and Motorola's sales have been dropping.

There's really little Google can do about it. Other Android ODMs are already not comfortable with this purchase as it pits Google against their "customers", something you learn in business 101 to not do.

The problem Google now has is that they can't give Motorola preferential treatment. That even means that phones developed by Motorola by themselves to be competitive and gain marketshare will be looked at askance by Google's partners. Google has put themselves in a pickle with this, and I don't see a way out other than selling off the hardware division. But then that spun off, or sold division would find itself without patents with which to defend itself.

A mess all around.

You're not getting some of the concept here. Antitrust isn't that simple. Even if a company has 90% marketshare, it isn't violating antitrust law. There is a difference between a natural monopoly and a built up monopoly, and an abuse of monopoly.

A natural monopoly develops if a company, through their product development and marketing manages to have a product that's so popular that it sells a very large percentage of all the products in the category, it could approach 100%. And that's ok. Nothi g wrong with that.

A built up monopoly develops if a company buys out competing companies in a product line until it controls a very large, usually 60%, though as you point out, it could be lower, share of the market. Around that point, the government will step in and prevent further monopoly inducing purchases.

Abuse of monopoly develops when a company that has a natural monopoly attempts to do whatever limits competition from building up their own sales. It could be lowering prices to the point that smaller companies can't afford to remain in business. That's like what Amazon has been trying to do with e-book sales. After the competition is vanquished, prices are raised to even higher levels than would have been the case with successful competition. They could also refuse to allow other companies to "plug" into their systems. Either with software or hardware. They are allowed to charge a reasonable fee to do so in the case of hardware.

But some of this is difficult to pursue. For example, is a company with a very large monopoly or two in different areas than one it is entering, allowed to use those enormous monopoly profits to (or attempt to) dominate another area by underselling, or giving away for free, something that will damage sales of other competitors?

Apparently yes. Both Microsoft and now Google are doing this.

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Edited by MacRulez - 1/23/13 at 6:04am