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8/2/2019 Final Assignment Gregor Hohls Group 2
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Google,Inc.&MotorolaMobilityHoldings,Inc.
ANon-HorizontalMerger&AcquisitionCase
MaastrichtUniversity
SchoolofBusinessandEconomics
Maastricht,04April2012Name:GregorHohls
ID:i6001867
Study:InternationalBusinessEconomics
Course:InternationalCompetitionPolicy
CourseCode:EBC2093
GroupNumber:02
TutorName:G.Valletta
WritingAssignment:FinalCaseStudy
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TableofContents
1.Introduction...................................................................................................................1
2.TheCase........................................................................................................................1
2.1Google,Inc...........................................................................................................................2
2.2MotorolaMobilityHoldings,Inc...........................................................................................2
2.3ReasonsforaMerger...........................................................................................................2
2.4TheEUDecision....................................................................................................................3
2.5TheUSDecision....................................................................................................................4
2.6IntermediateSummary........................................................................................................5
3.EconomicAnalysis..........................................................................................................53.1AntitrustGuideline...............................................................................................................5
3.1.1ProductMarketDefinition...................................................................................................6
3.1.2ForeclosureorHarmonConsumers....................................................................................9
3.1.3EfficiencyGains..................................................................................................................10
3.1.4Results................................................................................................................................11
3.2OutlookandOtherIssues...................................................................................................11
4.Conclusions..................................................................................................................12
Bibliography....................................................................................................................13
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1.Introduction
OnAugust15th in2011,Google, Inc.announcesthatit hasagreedonacquiringMotorola
Mobility, Inc.bymeansofsharepurchase.This$12.5billiondealisGooglesfirststep intothemobiledevicehardwaremarketandcanthereforebeseenasanon-horizontalorvertical
merger, asGoogle has beenactive in themarket at adifferent stageof the supply chain
through the development of one of the major mobile device operating systems (OSs):
AndroidOS.Thismergerwill strengthenGooglesstancein themarket formobiledevices
andwillmainlyboostGooglespatentportfolio.Nearlyonethirdofallmobiledevicesalesin
2011 were smartphones with a growth rate of 58 percent from 2010. In this rapidly
developingmarketwith suchahighnumber ofconsumers, it isofgreat importance that
thereis highcompetition inorder tokeep theprices lowand todrive innovation.Asthis
marketisalsoveryglobal,antitrustorganisationsallovertheworld,forexampletheUnited
StatesDepartmentofJusticeortheEuropeanCommissionneedtocheck,whetheramerger
liketheonethatispresentedin thefollowingcouldharmcompetitionorincreasea firms
marketpowerinamarketaboveanacceptablelevel.Additionally,thispaperwillfacethequestion,whetherthesinergiesofthismergerarebigenoughtoinfluencethecompetition
commissionsdecisions.
Inordertoanswerthesequestions,thispaperwillfirstlypresentthecaseandthedecisionsfromboththeEuropeanandtheUSpointofview.Secondly,itwillshowananalysisofthe
economicbackgroundofthecasetotracethestepsofthetwoantitrustcommissionsandthen,thirdlyit will concludewitha competitionanalysisandasearchforefficiencygains
thatjustifythecommissionsdecisions,followedbyashortoutlook.
2.TheCase
Asanintroductoryparttothispaper,Iwillgivesomegeneralinformationaboutthefirms,
theiroperationspriortothemergerandaprojection oftheir combinedfuture.Iwillalsopresent the notifying partys (i.e. Googles) reasons for why they would like to acquireMotorola. Following this are the EU and U.S. decisions and a short abstract on the
differencesintheirapproaches.
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2.1Google,Inc.
Googleismainlyknownasaproviderofitsinternetsearchplatformandonlineadvertising
services. Foundedby Larry Page and Sergey Brin in 1998, it became a publically traded
company in2004 and since then ithas become one of the biggestplayers inweb-basedenterprisesaroundtheworld.Itsbroadrangeofproductsgoesfromwebsearchtools,via
advertising services like AdSense or AdWords, communication and publishing services,
developmentresources,map -relatedproducts,statisticaltoolsanddesktopapplicationsto
mobileapplicationsand theoperatingsystemsAndroidformobiledevicesandChromeOS
forpersonalcomputers.(Google,Inc.,2012 a)
2.2MotorolaMobilityHoldings,Inc.MMI, formerly the mobile devices division of Motorola Inc., became its own publically
traded company in January2011. In the 1990s itwas the pioneerof the flipphone, the
StarTac.Withthisandthroughitsfocusonthismarketsegmentitwasabletodevelopitshitproduct,thesuper-thinflipphone:MotorolaRAZR.Whiletheseboosteditspositioninthe
analoguemobilephonemarketforawhile,MMIsslowadaptiontodigitaltechnologymade
itlosetheracetoitsrivals,e.g.SonyEricssonorNokia,inthebeginningofthe21stcentury
(MotorolaMobilityHoldings,Inc.,2010).Itsmarketsharebegantodropwitharecord$1.2
billion loss in2007 and continued todrop inthe years thereaftertowards2.7 percentin
2010.This,amongstotherissues,hasledsomepeopletobelievethatMotorolawasnearing
bankruptcy.(Gartner,Inc.,2011)
2.3ReasonsforaMerger
Initsownpressrelease,GoogleInc.(2012)statesthemainbenefitsofthedealtobe:
1. An acceleration of innovation and choice in mobile computing through whichconsumerswillgetbetterphonesatlowerpri cesand
2. Aprotectionof theAndroidEcosystemthroughMotorolaspatentportfolio,whichguaranteesAndroidtostayopen-sourcesoftware,whichisvitaltocompletioninthemobile device space, as it is ensuring hardware manufacturers, applicationdevelopers,mobilephonecarriersandconsumersalltohavechoice.
Since 2008 Motorola has fully implemented the Android operating system for their
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smartphones, which creates a natural fit between [the two] companies (Google, Inc.,
2012b,p.1).This,aswellasMotorolabeingamemberoftheOpenHandsetAlliance(OHA),
aconsortiumtocreateopenstandardsformobiledevices,whichnowincludes84firmsfrom
every part of the supply chain, will enable faster innovation.Another point that Google
stresses in their facts about the acquisition is the long history of innovation in
communications technology at Motorola Mobility and additionally the development of
intellectualproperty.ThelatterisveryimportanttoGoogleasitwillsupporttheirown,so
farverysmall,patentportfoliotodefendAndroidOSagainstthestrongcompetitionfromAppleandMicrosoft,whichiswellexplainedinanextraparagraphintheirpressrelease.Itis
very important to Google to support the constant competition it has injected into the
smartphonemarket since the introduction of the first Android phone in 2008. They are
trying to give consumers, application developers, and mobile carriers high-qualityalternatives toproducts likeApples iPhoneand iPadandRIMsBlackBerry(Google, Inc.,
2012b,p.2).Googleespeciallyhighlightswhattheywillnotbetryingtodowiththemerger,
inordertokeepcompetitorsandconsumerscalm.TheydonotwanttoclosetheAndroid
ecosystemandfavourMotorolaoverotherhardwaremanufactur es.TheAndroidOSwillstay
availabletoeveryoneonanopensourcebasis.Googlewillalsonotforcetheirpartnersto
useGooglesearch(inordertoboosttheirownadvertisingrevenues).
2.4TheEUDecisionTheEuropeanCommission(EC)wasnotifiedoftheproposedmergerinlateNovember2011.
SinceGoogle andMotorolaMobility havea combinedworld-wideturnoverexceeding 5
billionandeachhaveanEU-wideturnoverofmorethan250million,aswellasneitherone
company isachievingmore than two-thirdsof itsEU-wideturnoverwithin oneEuropean
country,themergerhasanEUdimensionandhasthereforetobeallowedbytheEC.Intheir
analysisofwhetherthemergerwouldbringaboutcompetitionissues,theECconcludedto
focus on the vertical relationships between Google as the supplier of the open source
AndroidOSand online serviceson the one handandMotorolaMobility asa supplier of
mobiledevicesandholderofimportantIntellectualPropertyRightsformobiledeviceson
theotherhand(EuropeanCommission,2012,p.4).TheECsplitsitsinitialmarketanalysis
intothreeparts:Firstlyitfocussesonthemarketforoperatingsystems,secondlyitanalyses
themarketformobiledevicesandthirdlyitdiscussestheStandardEssentialPatents (SEPs)
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GoogleacquiresfromMMI.Withtheirmarketanalysistheyconductacompetitionanalysis
andconcludeinallareasthatthemergerdoesnotraiseanycompetitionissues,whichcan
alsobeseenintheeconomicanalysisthatfollowslater.Theirdecisionthereforeistodrop
theinvestigationandallowthedealtogothroughwithoutanyremediesorchangestobe
made.
2.5TheUSDecision
The United States Department of Justice (DOJ) has approached the case in a similar,
however, slightly different way. It combined the investigations of the merger case withacquisitionsofcertainpatentsbyAppleInc.,MicrosoftCorporationandResearchInMotion
Ltd.,asallofthesewerelinkedtoeachother.Intheiranalysis,theDOJfollowedasimilar
approachtotheEU,checking,whether theproposedacquisitionswould create incentives
and abilities for the acquiring firms to exploit ambiguities in the SSOs F/RAND [fair/reasonable and non-discriminatory terms] licensing commitments to hold up rivals, this
preventingorinhibiting innovationandcompetition (U.S.DepartmentofJustice,2012,p.
2). In terms ofMicrosoft Corp.s and Apples acquisition ofNortel patents, the divisions
concernswerelessenedbytheclearcommitmentsbyAppleAndMicrosofttolicenseSEPs
(U.S.DepartmentofJustice,2012,p.1)onFRANDterms,aswellastheircommitmentsnot
toseekinjunctionsindisputesinvolvingSEPs.However,theDepartmentofJusticeidentifies
Googlescommitmentstobelessclear.TheDepartmentreferstoGooglesopenlettertoall
StandardSettingOrganizations(SSOs)andarguesthatGooglesstatementdoesnotdirectly
providethesameassurance,asforexampletheothercompaniesmentionedbefore.Google
forexamplementionsintheirletterthatitw illnotseekinjunctionsfortheinfringementof
SEPsagainstacompetitor,howeveronlyfordisputesinvolvingfuturelicenserevenues,and
only if the counterparty forgoes certain defensessuch aschallengingthe validity of the
patent;paysthefulldisputedamountintoescrow;andagreestoareciprocalassuranceas
the other companies statements concerning the exercise of its newly acquired patent
rights(Lo,2012,p.3).Theseare,however,onlyreasonsfortheDepartmenttodecideon
further monitoring of how competitors are exercising their patents, in order to identify
potentialmisusesoftheSEPsandnottoprohibitthemerger.Itthereforeconcludestoallow
all three transactions and highlights that each of them incurs a complex intersection ofintellectualpropertyrightansantitrustlaw(U.S.DepartmentofJustice,2012,p.5),which
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needtobebalancedoutcorrectly.
2.6IntermediateSummaryAfterintroducingthecompaniesandtheirpersonalreasonsforamerger,Ihavepresentedtheantitrustcommissionsdecisionsandtheirgeneralviewoftheproposedtransaction.I
didthisinordertogiveabasicoverviewofthecasesurroundingsforabetterunderstanding
ofthenowfollowingeconomicanalysisofthecase,whichwillbebasedonanownantitrust
guideline, supported by data from the companies themselves and the EU commissions
detailedanalysisofthemarkets.
3.EconomicAnalysisFollowingtheprecedingdescriptionof thecaseisadetailedanalysisofthemarketforthe
proposed transaction aswell asa competition analysis to identify and explainthe riskof
anti-competitive behaviour post-merger. I will also present the potential benefits for
consumersthatmayresultbecauseofthistransaction.Iwillbeginbyexplainingthemethod
ofanalysis:myantitrustguideline.
3.1AntitrustGuideline
Inaverticalmergercaseit is important tofollowcertainsteps inthe analysisto identify
whetheramergercouldbeharmfulforconsumersornot.Inhisbookaboutcompetition
policies, MassimoMotto (2004, p. 377) concludes his chapter on vertical restraints andverticalmergersbysaying:aperseprohibitionrule[forverticalmergers]wouldclearlybe
inappropriate,sinceitwouldforegoefficiencyeffectswhicharelikelytodominateinmost
cases.Theseefficiencygainsaretobefoundthroughtheanalysisbelow,inordertojustify
thecompetitionpolicymakersdecisions.ThefollowingFigure1showsthestepsofsuchan
analysis.Afirststepineveryantitrustinvestigationis thedefinitionoftherelevantmarket.Throughananalysisofthepre-andpost-transactionmarketsharestheanalystendsupwithaverdictondominance.Ifthemergedentitywillnotbedominant,nofurtherinvestigation
isnecessary,althoughthetransactionmightstillbequestionable.Ifdominanceresultsfromthetransaction,itneedstobeassessed,whetherthereisthepossibilityofforeclosureand
potential harm on consumers. If this is the case then we need to see, if the before-
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mentionedefficiencygainsoutweighthelossesonconsumerwelfareandforeclosureofthe
market.
Figure1:AntitrustGuideline
3.1.1ProductMarketDefinitionWithregards tothedefinitionoftherelevantproductmarkets, theEuropeanCommission
has split up the analysis three-fold. First, it analyses the relevant market for operatingsystems:themarketGoogle isactive in.Operating systemsare system software products
thataredesignedtosupportthefunctioningofthemobiledeviceandthecorresponding
applications(EuropeanCommission,2012,p.5).GooglesOS,Android,isfreetouse,edit,
andfurtherdevelopunderanopensourcelicence.GooglestatesthatMotorolaisnotactive
inthismarket,aswellasproposestoexpandthemarketformobilesoftwareplatformsfor
smartphonesto includemobile softwareplatformsfortablets,as theyarevery similar to
each other (arguingthat for exampleApples iOS is running onboth the iPhone and the
iPad).Additionally,GoogleseesAndroidasadirectsubstitutetoothersoftwareplatforms
suchasiOS(Apple)orBlackBerryOS(ResearchinMotion),whicharenotavailableforthird-
party Original Equipment Manufacturers (OEMs): From a demand side perspective [...]
userscansubstitutebetweendevicesusing licensableandnon-licensablemobilesoftwareplatforms(European Commission, 2012, p.5) and on the supply-side, OEMs can switch
betweenmobile operating systems or start producing their own. In the view of the EU
Product
MarketDefinion
Dominant
IsthereForeclosure?
WillithurtConsumers?
ArethereEfficiency
Gains?
Decision
NotDominant
NofurtherInvesgaon-
althoughquesonable
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Commission(2012),whichisinlinewithGooglesp roposal,itcanbeconcludedthat:
1. MobileOSsaredifferentfromPCOSs2. MobileOSsforsmartphonesaredifferentfrombasicmobilephones 3. MobileOSsforsmartphonesandtabletsarepartofthesamemarket.
Figure2showsthepercentageofeachoperatingsystemsmarketshareforeveryquarterin2010and2011.ThetrendlinesIhaveaddedclearlyshowtheconstantincreaseofAndroid
OSs usage in those two years, whereas the Symbian operating system faces a strong
decrease.Apples iOSmarketshare is increasingatamuch slower rate,whichisprobablyduetothefactthatAndroidisavailableforalotmoremobiledevices.
Figure2:MobileOSMarketShares%2010and2011byquarter(Gartner,Inc.,2011)
The market for mobile devices, the Comissions second analysis part, is much easier to
identify, as decisions from earlier EU Antitrust cases can be adopted. The commission
decidesthatitseparatesthesmartphonemarketfromthemarketforothermobiledevices
(basic and feature phones) as the difference in functionalities and distribution channelsmajorlyaffectstheconsumerschoice.Figure3onthenextpageshowsthemarketsharesofthesmartphonemanufacturersforthefinalquartersof2010and2011.AppleandSamsung
arethetwobigwinnersintheyear2011,whereasNokiasmarketsharedropsbyalmostahalf.MotorolaMobilitysmarketshareisnegligiblea ndgetslostaspartofothers.
ThemarketforStandardEssentialPatentsisverycomplexandthereforehardtogeneralise.
Google,Inc.willacquireabout7000to8000patents,ofwhich60007000areUSand500
0,00
10,00
20,00
30,00
40,00
50,00
60,00
2010
Q1
2010
Q2
2010
Q3
2010
Q4
2011
Q1
2011
Q2
2011
Q3
2011
Q4
Android
iOS
Symbian
RIM
Microsoft
Bada
Other
Linear(Android)
Linear(iOS)
Linear(Symbian)
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Figure3:MarketSharesofSmartphoneManufacturers(Gartner,Inc.,2011)
1000 are EU patents. Motorola Mobilitys patent portfolio focuses mainly on wireless
communicationhardwareandtosomeextenthigh-definitiontelevision(HDTV)(European
Commission,2012,p.2).ThisquoteshowsthatthepatentsGooglewillacquirearepartof
manydifferentproductmarketsandthereforethecommissiondefinesthateachSEPcanbe
consideredasaseparatemarketinitselfasitisnecessarytocomplywithastandardand
thuscannotbedesignedaround(EuropeanCommission,2012,p.12),meaningthatthere
arenoperfectsubstitutesormanyalternativesforeachpatent.
In terms of geographical boundaries the markets are said to be at least covering the
EuropeanEconomicArea,iftheycannotevenbeconsideredworldwideandthereforevery
largeinsize.
Theproductmarketanalysisshowsfirstly,thatalthoughAndroidOSisbyfartheleaderin
themobileOSmarketitdoesnotchangeitspositionthroughtheacquisitionofMotorola
Mobility,Inc.,;thesuccessofAndroidisfullydependentonthesmartphonemanufacturers
decision tochoose itas theirOS. Therefore, secondly,wenotice thatMotorolasmarket
shareinthemarketformobiledevicesisnegligiblylowandwillnotcreateanydominant
positioninthatmarket.Thirdly,GooglestatesopenlythatitwillnotbefavouringMotorola
handsetsandwecanseethatifitwoulddoso,Androidsmarketshareandthereforealotof
advertisingrevenueswouldbelost.Lastly,becauseeverySEPisseenasaseparatemarket
0
5
10
15
20
25
30
2010Q4 2011Q4
Apple
Samsung
Nokia
ResearchinMotion
HTC
Others
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andGoogleiscommittingopenlytolicenseallacquiredpatentsunderFRANDterms,there
arenoconcernsforcompetitionraised hereaswell.3.1.2ForeclosureorHarmonConsumersAlthoughtheprecedinganalysishasshownthatthereisnodominantpositionpost-merger,
meaning that no further investigation is necessary, I will continue with a competition
analysistoseepossibleeffects of foreclosure orharmonconsumers.Thiswill leadusto
possibleefficiencygainsthatresultfromthemerger.Foreclosureisthebehaviourofafirm
toengage inmanydifferentpracticesaimedatdeterringentrants(Motta,2004,p.88).
These include, amongst others: investing in extra capacity, setting prices below cost,
flooding a market wth many different product specifications, [...], bundling, price
discriminating(Motta,2004,p.88).Theseactivitiescaneventuallyforcecompetitorsoutof
amarketandwillkeeppossiblecompetitorsfromentering.Asmentionedearlier,it isvery
important to keep the market for mobile devices highly competitive as it affects an
incredibleamountofconsumers.SubsequenttothemergerGooglewillhaveaccess toall
threekeyelementsthatareneededforamobiledevicetowork:(i)technologythatallows
thedevicetooperateovermobilenetworks;(ii)amobileOS;and(iii)theremainingdevice
hardware(EuropeanCommission,2012,p.12).Thefirstit willgetthroughtheacquisitionof patents, the second Google already posesses and the third comes from Motorola.
Thereforetherearetwoverticalrelationshipsthatarecreatedbetweenthosethreepoints:
the OS as a key ingredient into smartphones and the Standard Essential Patents as key
ingredients into the smartphone industry. Next to these, themerger also presents some
conglomeraterelationshipin theconnectionbetweensmartphonesontheonehand and
Googlesonlineservicesontheotherhand.Ananalysisoftheverticalrelationshipdelivers
thefollowingresults.AlthoughGooglestatesthatitdoesnotcontrolAndroidandtherefore
Androidsmarketshare[]shouldnotbeattributedtoGooglebuttoeachofthevarious
OEMs building Android based phones (European Cmmission, 2012, p.13), the
manufacturersstatesomethingdifferent.SinceGoogleisresponsibleforeachnewrelease
oftheAndroidOSandhastoapproveeachtabletorsmartphonethatwantstorunit,the
CommissionfindsthatallmarketshareshouldbeattributedtoGoogleontheOSlevel.With
this significant market share, Google would have enough power to exert some of the
practicesmentionedbefore.Throughchoosingaleadmanufacturerforeachnewversionof
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theAndroidOS,itcouldsignificantlyimpedecompetitionespeciallybyfavouringMotorola
irrespectiveofitsperformance.GooglecouldalsodowngradeversionsofAndroiditoffersto
other OEMs than Motorola and therefore make their own handsets more attractive.Although the possibilities are great for Google to use these methods to foreclose themarket,therevenuelossforGooglefromrestrictingaccesstoAndroidismorelikelytobe
far greater than the potential gain from Motorola Mobility smart mobile device sales
(EuropeanCommission,2012,p.16).Thisisthemainreasonwhyitwillbeverylikelythat
Googlewilltry toensurethatAndroidisdistributedaswidelyaspossibleamongstseveral
OEMsandthatitwillnotclosethemarket,tryingtoboostonlytheMotorolasmartphone
sales.
Thetopicofforeclosuredoesnotseemtobeanissueinthiscase.Thequestionremains,
whetherthetransactionwillhurtconsumersornot.ThoseusingMotorolasmartphonesup
until know will not be harmed by the transaction as Motorola Mobility is already using
Android as the exclusive operating system for its smartphones. Other consumers using
AndroidonothermanufacturersdevicesmightonlybenefitfromGooglehavingtheirown
in-househardwareproduction,becausethecreation ofnewAndroidversionsmightimprove
throughthecooperationofsoftwareandhardwaredevelopment.
3.1.3EfficiencyGainsThe large amount of patents Google buys from Motorola will bring some stronger
competition to the smartphone market. As a lot of the patents are essential to everyproducer of smartphones, theywill need to license them fromGoogle from now on.Ofcourse, theywill be facedwith the same terms and conditions asbeforewithMotorola,
however the power in Googles hands can bring about some difficulties for Apple or
Samsung for example. HTC Corp., the second-biggest Asian smartphone producer for
examplehasboughtnine patents fromGoogle thatwerepart of theMotoroladeal,with
whichit isnowabletodefenditselfagainstalawsuitby Apple.ApplewassuingHTCforcopyingcertainfeaturesoftheiPhone.GoogleknowsthatHTCisundertremendouslegal
pressurefromAppleandclearlyonthelosingtrack(Milford&Decker,2011,p.1).Byselling
thepatentstoHTC,GoogleisclearlysupportingoneofitsmajorOEMstobeabletostickup
againstoneofitsmajorcompetitors.BystrengtheningitsOEMs,Googlecanfurtherexpand
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itsAndroidecosystemandcreateapowerfulcounterparttoitscompetitors.AsDavidBalto,
senior fellow at the Center for American Progress and a former antitrust official at the
FederalTradeComissionsays:Ifanything,antitrustregulatorsmayseethedealasaboost
tocompetition.AndroidissuchacrucialcompetitortotheiPhoneinparticular,thatallowing
GoogletobuyMotorolaMobilitywilllikelyproduceevenmoreinnovationinsmartphones
andotherdevices (Tessler,2011,p.1).3.1.4ResultsTheeconomicanalysisofthismergerhasshownthatintermsofproductmarketdefinition
there are no issues of dominance.WhereasAndroidmight be seen as dominant in themarketforoperatingsystemstherewillbenointentionsforGoogletoforecloseanypartof
themarketfornewentrants.Googlewillalsonotbeabletoforceanycompetitorsoutofthe
market by favouring solely Motorola smartphones, because of its small market share.
Additionally,therearesomeefficiencygainsthroughtheacquistionofpatentsintermsof
creating strong competition against Apple. Yves Maitre, senior vice president of France
TelecomOrangegivesthedealhisblessingbysaying: Ibelieveitisalwaysgoodtohavevery
strong players and very integrated ones.We welcome strong competitors to Apple, and
MotorolaandGooglewillbethistypeofverystrongcompetitor(Fried,2011,p.2).3.2OutlookandOtherIssues
AninterestingissuetohaveashortlookatiswhereGooglewillgofromhere.Asmentioned
earlierithasalreadyusedthepurchasedpatentstosupportHTCinfightingoneofApple
Inc.slawsuits.ThroughthetransactionGooglegainsthepowertopulloffsomemoremoveslikethis.ThepatentportfolioalsooffersGoogletheopportunitytogetfurtherinvolvedin
themediamarketasitincludespatentsforhighdefinitiontelevision,asmentionedinthe
beginning.ThesewillprovidethebasisforthedevelopmentofTVset -topboxesandother
home entertainment devices; another sector in which there will be more competition
(Higginbotham&Fehrenbacher,2011).TimWorstall(2011),authorforTheRegister,claimsthatthereismuchmoretothedealthanpatentsandcompetitionissues.Heraisestheissue
thattogetherwiththecompany,itsequity,employees,etc.,Googlehasalsoboughtaseries
oftaxlosses,whichwillreducethecostofbuyingMotorolaMobiltyfr om$12.5billionto
$3.8billion.This isdue to the factthat MotorlaMobility hasbeen losing ashed-loadof
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cashinrecentyears.Ithaslotsof[]taxlosses,whichcannowbeoffsetagainstGoogles
futureprofits(Worstall,2011,p.2).Googlewillbetaxedoncumulativeprofitsoveralongerperiodoftimeandbringingin theselosseswill reducetheamountofmoneyGooglewill
havetopaytaxeson. Thetaxbenefitsofthedealmakewhatwa sagooddealintoagreat
deal (Browning&Byrnes,2011,p.1)saidRobertWillens,a NewYorkaccountingand taxexpert.
4.ConclusionsAgreatdealthatisthegeneralperceptionofthisacquisitioncase.Theprecedinganalysishasconfirmedthepublicviewofthismergerasithasfirstpresentedthetwocompaniesand
the reasons why Google would like to acquire Motorola. The short description of the
EuropeanCommssionsaswellasoftheUnitedStatesDepartmentofJusticesdecisionhave
presentedthelegalbackgroundtothecase.Thefollowingeconomicanalysisgaveanswerto
the questions stated in the introduction: The merged entity will not be able or more
preciselyitwillnotbewillingtoforecloseanyofthemarketsitisactivein.Thiswouldonly
harm its own operations and profits and it will have great influences on customer
satisfaction. The efficiency gains analysed afterwards show thatGoogle will create even
more competition subseding the transaction, rather than destroy it. Furthermore, the
acquired patents will stabilise Googles position as a competitor to Apple Inc. and other
companieswith great market shares. In conclusion, I can only agreewith the European
Commission andtheUSDepartmentof Justiceinsayingthat thisacquisitionofMotorola
Mobility, Inc. byGoogle, Inc. should notbeprohibited, as itwill create a strongmarket
playerthatisnotdominantandwillthereforeincreaseinnovationintheindustry.
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