Google-Motorola Deal Wins EU Approval, But Patent Concerns Persist

European regulators decided Google's $12.5 billion buyout of Motorola Mobility, in itself, does not raise antitrust issues. On the other hand, Google gains an arsenal of approximately 17,000 patents with the deal, which represent an ongoing concern for the EU.

Google will be under the watchful eye of the EU to ensure it licenses the patents in accordance with fair use standards and does not use them to gain unfair advantage over rivals.

Google appears aware of the EU's concerns, evidenced by the letter it sent to European standards organizations last week promising to license Motorola patents in accordance with fair and reasonable use, or FRAND, standards.

By making its fair-use intentions known while regulators were still deliberating, Google revealed its awareness of the potential power of the patents it stands to gain, and also its eagerness to preserve the status quo in fair use regulations so it can make money off licensing deals and defend itself from future legal action.

Google could also decide to use the patents both offensively and defensively in future courtroom intellectual property battles.

The EU states it will pay particular attention to the standards-essential patents Google will gain in the purchase. Standards-essential patents are those deemed necessary to mobile technologies used in nearly all devices, such as 3G and Wi-Fi. Companies that hold these patents must agree to license them under FRAND regulations.

FRAND stipulates standard patents can't be used against a rival to keep competing devices from reaching the market and can't be licensed with stratospheric royalty payments to deter rivals from using the technologies.

Still, under current terms, Google revealed last week it plans to make a 2.5 percent royalty on every iPhone sold after completing its Motorola acquisition, potentially earning billions of dollars and pushing the limits of FRAND.

Critics of FRAND, including Apple, are lobbying for a change in the standards to keep companies from making exorbitant fees by charging royalties based on the selling price of the final device, rather than basing them on individual components and technologies.

EU competition commissioner Joaquin Almunia told the Wall Street Journal he's worried about possible abuse of patents by Google and other firms as legal disputes over intellectual property rights escalate.

The European commission is investigating whether Samsung's use of patents to sue Apple in several pending lawsuits breaks antitrust rules. The findings in that case could set a precedent for what companies can get away with in Europe in the future, and could affect how Google can use its Motorola patents in court.

Google stands to make plenty of money under FRAND licensing as it stands now. The company also could look to its newly enhanced patent library more to fend off future lawsuits by Apple against its Android operating system, rather than going on the offensive against other companies.

Whichever path it takes, Google will need to tread carefully to keep European regulators on its side.

"Today's decision does not mean the merger clearance blesses all actions by Motorola in the past or all future action by Google with regard to the use of standard essential patents", Almunia said.

Google's bid to buy Motorola still has a few hurdles to jump. The U.S. Department of Justice expects to approve the acquisition this week, Reuters reports, and regulators in Israel and Taiwan have yet to sign off on the deal.