Regulators Likely to Approve Google-Motorola Deal | Adweek Regulators Likely to Approve Google-Motorola Deal | Adweek
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Regulators Likely to Clear Google-Motorola Deal

But search giant could face tough approval process
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Google may be right that its $12.5 billion deal to acquire Motorola Mobility will be approved by regulators. But that doesn't mean that Washington won't submit the deal, and the search company itself, through some close scrutiny, especially since the Federal Trade Commission is already looking hard at Google's dominance in the Internet and mobile search space.

The fact that the Motorola deal represents a new—albeit significant—push for Google, which has largely stayed out of the hardware business, will likely be counted as a point in favor of regulatory approval. 

"Google and Motorola do not appear to compete head-to-head in any significant way—and vertical deals are rarely challenged by antitrust regulators," wrote Paul Gallant, a research analyst with MF Global, a Washington, D.C. research group. "So at the end of the day, we are inclined to believe that Google-Motorola will win government approval."

But Google's other businesses, particularly advertising and search, raise questions about how Google might use the Motorola acquisition to drive usage and adoption of its services and mobile operating system. That could lead to some conditions being attached to the deal. Since the FTC is already looking into Google's competitive search business, it already has a lot of background and expertise that it can share with the Department of Justice about the possible impact the Google-Motorola deal might have on market share and advertising.

"Antitrust officials increasingly impose behavioral remedies like competitor and consumer safeguards, so I wouldn't be surprised if strings are attached," said Jeff Silva, senior policy director, telecommunications, media, and technology for Medley Global Advisors. "They may want to make sure Google keeps the businesses separate and that there is no preferential treatment given to Motorola when it comes to the Android operating system."

There are some indications, like an abnormally high termination fee attached to the deal, that the two companies are at least a little nervous about the deal's prospects in Washington. At the very least, Google could face some harsh scrutiny. Executive chairman Eric Schmidt would likely be the first to feel the heat; he could face questions about the deal on Sept. 21 when he testifies before the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights.

Still, the company is staying entirely positive in public. "We are quite confident this will be approved," David Drummond, Google's chief legal officer, told analysts during a conference call Monday morning. "This is a pro-competitive transaction. Android has clearly added competition, innovation, and increased user choice. Protecting that eco-system is pro-competitive almost by definition. This is not a horizontal transaction. Google has not materially been in the handset business."

Google said it expected to close the Motorola deal early next year.