There is speculation that Chinese computer giant Lenovo Group Ltd will buy Motorola Mobility from Google Inc. If the sale does go through, Lenovo will have more to say about the international tablet and smartphone market.
A deal, which is estimated to be worth not less than $2 billion, will give Lenovo access to 10,000 mobile communications patents which are now in the possession of the US-based Google. Lenovo spokesman have only said that they will be making an announcement about a “major acquisition” this coming Thursday, but no further details about that acquisition have been forthcoming.
Lenovo is the world’s largest personal computer manufacturer, but would like to make a bid to wrestle some business away from Apple Inc and Samsung Electronics in the global consumer electronics marketplace.
Apple and Samsung currently dominate the US and Western European markets for consumer electronics. Yang Yuanqing, chairman and CEO of Lenovo is aiming to challenge those companies for market share by 2015.
Google would like to sell Motorola Mobility as it is a money-loss subsidiary, to the tune of about $248 million during the third quarter of 2013, as stated in the Google financial report. Google paid $12.5 billion for Motorola Mobility in 2011.
The expected deal comes in the wake of Lenovo’s announcement that it plans to purchase IBM Corp’s x86 server unit for $2.3 billion. If the US government approves the deal then it will be the single largest deal involving a Chinese company to date.
Google, the web-search giant, will be carefully scrutinized by US and European regulators as their bid to purchase Motorola Mobility is approved, giving Google possession of 17,000 patents and an additional 7,500 patent applications.
The purchase price for Motorola was a cool $12.5 billion, paving the way for Google to continue to compete with its market rivals such as Apple Inc and also defend itself and other Android manufacturers in patent lawsuits.
Regulators have said they will carefully monitor Google to ensure that all patents that are crucial to the telecommunications industry would be licensed at fair prices. European antitrust authorities as well as the US Department of Justice said they will watch how the patents are used to make sure that they comply with antitrust laws.
The regulators are concerned that the patents, which are critical in making sure that the large number of communications devices on the market, which are sold by many different companies, will be compatible with each other and are licensed for a reasonable fee.
“The (Justice Department’s antitrust) division will not hesitate to take appropriate enforcement action to stop any anticompetitive use of SEP (standard essential patent) rights,” the Justice Department said in a statement.
The deal with Motorola gives to Google one of the largest patent libraries in the mobile phone industry. Also included in the deal are Motorola’s manufacturing operations which will give Google the ability to create its own line of smart phones.