This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Apple Forcing Google to Favor Motorola IP Over Android Profits


A key question will be whether buying Motorola Mobility will put Android at risk. Google unequivocally allayed the concern when announcing the deal. "We built Android as an open source platform and it will stay that way," said Page in August. Google has pledged it would continue licensing Android to Motorola as if it were any other customer, without exclusivity after the merger.

In offering Android for free, while competitors Apple and Microsoft keep theirs systems exclusive or charge for licenses, Google is driving Android growth charitably and without veering far from its search business. Google's open sourcing looks very much like the spawn of a "don't be evil" -driven company that's kept consumers loyal and regulators at bay as it's become the most dominant force on the Web.

With a growing number of smartphones on Android conducting Web browsing using its cornerstone search business, Google can generate revenue in adjacent businesses even as it open sources Android. Google reported annualized mobile search revenue from Android of $2.5 billion in the third quarter. Android-bolstered mobile searches may roughly double every year through 2014, according to Goldman Sachs estimates.

Still, Google is wise to protect Android, challenged by Apple via a 2010 suit against HTC and another by Microsoft in 2011. If patent concerns were to accelerate, it could push users off of Android - as recent announcements may indicate. About the impact of potential legal disputes on Android's handset prevalence, "we believe other handset manufacturers are likely to hedge their bets and start to increase the portion of units running on Windows Phone," wrote Goldman analysts in a September note.

It's why Google has made efforts like guaranteeing Android non-exclusivity to boost its Motorola Mobility deal odds.

Nevertheless, late on Monday, the European Commission said it would pause a review of Google's acquisition to wait for further documents from the Web giant. The news follows a September announcement from the Department of Justice that it will also scrutinize the merger. In response, Google wrote in a blog post at the time, "while this means we won't be closing right away, we're confident that the DOJ will conclude that the rapidly growing mobile ecosystem will remain highly competitive."

Legal scholars, analysts and investors who haven't sold shares in spite of regulatory deal scrutiny agree. "I see no valid antitrust argument against the acquisition," says Roger Noll of Stanford Law School.

If one were to grant Google its Motorola Mobility acquisition, it's still unclear that committing Android as an open platform is the best option. Apple faces stiff competition from Android and handset makers who carry it, but iOS exclusivity for iPhone handsets has helped the company eclipse ExxonMobil's (XOM) market cap at times in 2011.

2 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs