John Guillemin/Bloomberg News
Inspecting a Motorola phone in a Warsaw store. Google says it will license Motorola's patents on fair and reasonable terms.
The deal, worth $12.5 billion, still needs a few more regional approvals but has cleared the biggest hurdles. It would bring Google 19,000 new employees, the lower margins of a manufacturing enterprise and the challenge of extending its very successful cellphone software business.
Google’s Android operating system is in more than four out of 10 new smartphones, but the dominant single company in the industry remains Apple and its iPhone. Google is likely to use Motorola to show other Android makers how it thinks phones should be built — by, for instance, more tightly integrating such Google-centric features as Google Wallet.
Approval of the deal had been widely expected. The only discordant note: Europe warned that Google should play fair in markets for smartphones and tablet computers. Google shares rose $6.29 Monday to close at $612.20.
The Justice Department separately announced that it was closing three investigations at the same time: Google’s purchase of Motorola; the purchase by Apple, Microsoft and Research in Motion of certain patents from the bankrupt Nortel Networks; and Apple’s purchase of certain Novell patents.
The purchases are “unlikely to substantially lessen competition,” the Justice Department said in a statement.
Barclays Capital, in a report on Google released on Monday, said that Motorola’s mobile devices business was probably losing market share, but that its extensive patent portfolio would allow Google to better protect Android. It also will give Google access to the living room through Motorola’s set-top box business. Google is already working on a home entertainment device.
The deal comes at a time of heightened scrutiny by regulators over ownership of intellectual property governing computers and mobile communications.
Joaquín Almunia, the European Union competition commissioner, indicated in a statement that he would be watching the sector. The decision “does not mean that the merger clearance blesses all actions by Motorola in the past or all future action by Google,” the statement said. He added that any action on “the question whether Motorola’s or Google’s conduct is compliant with E.U. antitrust law” would be taken separately.
The clearance in Europe will come as a relief for Google, which is still trying to fend off a separate investigation by the commission into whether the company has abused a dominant position in online search and advertising.
Mr. Almunia said that he cleared the deal partly because Google’s business model had been to share its Android mobile operating system with other device makers to gain the widest user base, making it less likely that the company would restrict the use of Android solely to Motorola, which is a relatively minor player in Europe.
But Mr. Almunia expressed strong concerns about the way powerful technology companies had participated in setting the standards for the proper functioning of mobile devices like smartphones.
Owners of such patents could “hold up competitors or even an entire industry to the detriment of consumers and innovation,” he said. “I can assure you that the commission will take further action if warranted to ensure the use of standard essential patents by all players in the sector.”
Phone makers including Apple, Motorola and Samsung — a South Korean company that relies heavily on Android for many of its products — are pursuing legal battles worldwide over the levels and fairness of fees that they impose on each other for using patented technologies.
The commission is already investigating Samsung for the way it used standard essential patents and for the way it sought injunctions against its competitors in national courts. “That review is ongoing and is being dealt with as a priority,” said Mr. Almunia, referring to the case against Samsung.
In one of the most recent cases, Apple filed a lawsuit in California last week claiming that the Galaxy Nexus, a Samsung smartphone, infringes on patents underlying the features customers expect from Apple products, like how the phone is unlocked and how it searches for information by voice command.
Last week, Google wrote to standard-setting organizations around the world pledging to license Motorola patents on fair and reasonable terms if the deal succeeded. Google promised to keep a cap on the fees it charges for licensing its technology at a top rate of 2.25 percent of the net selling price for each phone and sought to outline the conditions under which it would sue companies for patent infringement.
Google asked for permission to complete the deal in November, and the merger review lasted a month longer than expected because the commission asked Google for additional evidence in the case. But Google managed to fend off the much lengthier, in-depth review.
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