Consumer group in last ditch bid to derail Google-Moto deal

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Consumer group in last ditch bid to derail Google-Moto deal

Consumer Watchdog calls on European Commission to block takeover of Motorola Mobility and mount antitrust probe

By CAROLINE GABRIEL

Published: 23 January, 2012

READ MORE: M&A | Europe | Google | Regulator | Android

The European Commission is expected to announce its delayed decision on Google's acquisition of Motorola Mobility on February 13, but while the search giant has reason to be optimistic, opponents are hoping to throw last ditch obstacles in its path. A US consumer advocacy group, Consumer Watchdog, has written to the EC's competition authority asking it to block the purchase and mount a probe into allegations of anti-competitive behaviour by Google.

The EC postponed its judgement on the $12.5bn Motorola takeover before the holiday, asking for more information but insisting that was a routine process and not a precursor of its decision. It has received the data it requested from Google, but John Simpson, privacy project director at Consumer Watchdog, hopes there is still time to influence the outcome.

He argues that the deal would be bad for consumers on both sides of the Atlantic. "Google's Android smartphone operating system dominates the mobile market with a 38% share and is growing," he wrote in his letter to EC competition commissioner Joaquin Almunia. "Google controls 95% of the mobile search market."

This combination, with a handset maker added to the mix too, would make Google a "virtually unstoppable juggernaut", he continued. "There is evidence it is pressuring handset manufacturers to favor Google applications when using the Android operating system. Allowing the Motorola Mobility deal would provide Google with unprecedented dominance in virtually all aspects of the mobile world - manufacturing, operating systems, search and advertising."

The main motivation to buy Motorola was presumably the hardware firm's 17,000-strong mountain of wireless patents, which will help Google bolster Android against IPR-related lawsuits and royalties claims from Apple, Microsoft and Oracle. But, whereas it was initially expected to offload the actual device business, it is now indicating that it will keep Motorola intact and chase an integrated hardware/software platform like Apple's. That could shift the balance of the supposedly open Android ecosystem, claim critics, while others even think the patents themselves could be used in anti-competitive ways. Antitrust agencies such as the US Department of Justice have already expressed concern over the IPR build-up by players like Apple, and how these assets may be exploited against rivals.

Simpson wrote: "If Google is allowed to dominate the mobile market it will result in higher prices for consumers and stifle innovation," and even called on the EC to launch a formal antitrust investigation. He believes this would be more effective in Europe than the US because of Google's huge lobbying power stateside. "The Commission's role in keeping Google's abuses in check is essential. Its executives have close relationships with many US officials and the company just spent a record $9.7m in 2011 lobbying policymakers in Washington. We have faith the Commission will not succumb to such influence," he said. Google also has higher search market share in some European markets - up to 90% - compared to 65% in the US.

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