Google Marries Into Patent Royalty With Motorola Mobility

NEW YORK, ( TheStreet) -- Look who is the mobile patent king now.

Google's ( GOOG) $12.5 billion deal -- a 60% premium over Friday's closing price -- for Motorola Mobility ( MMI) gets Google not only a leading player in the smartphone industry, but a trove of 17,000 technology patents related mostly to the wireless industry.

The deal comes six weeks after Apple ( AAPL) and several industry rivals, including Microsoft ( MSFT) and Ericsson ( ERIC) jointly purchased Nortel's intellectual property for $4.5 billion.

Google's acquisition of its Android device-making partner effectively puts Google toe-to-toe with Apple and its iOS products, the iPhone and iPad.

The move is part of a sweeping consolidation in mobile as Apple and Google Android have risen to the top of the smartphone market. An old-line rival like Nokia ( NOK), undone by the popularity of iPhones and Androids, was forced to drop its Symbian software and join forces with Microsoft on the Windows Phone 7 platform.

The hotly contested mobile computing market has been a showcase of patent battles as upcoming leaders like Google and Apple vie against the established players, which hold most of the original wireless patents.

Patent battles have become a crucial issue for tech.

"We believe this is the singular most important issue for the smartphone industry at the moment," JPMorgan analyst Rod Hall wrote in a research note last month.

With its own phone-making business, it's not clear how Google will continue to keep other partners like Samsung and HTC in the Android camp.

Google chief Larry Page said the deal is good for all Android players.

"Motorola Mobility's total commitment to Android has created a natural fit for our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem," Page said in a press release Monday.

Google says it expects to close the deal by the end of the year. Google shares were down 3% to $548.05 in premarket trading Monday.

--Written by Scott Moritz in New York.

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