It’s a turf war. Oracle sued Google last year. Apple is suing HTC. Microsoft is suing Motorola over infringements of mobile technology. It is hardly news that Google and Apple are arch rivals locking horns in a hostile battle over technology rights. Google’s weapon of choice against Apple and other smart phone manufacturers has been its Android operating system for mobile services. Nokia Corp and Research in Motion Ltd., maker of the BlackBerry, have been relegated in the battles over a mere year. The difference here, however, is that Google has resisted taking the track to the kingdom of hardware manufacturing. Software has been its metier. Instead of manufacturing, it has relied on licensing its Android product (Chicago Tribune, Aug 16). The same can’t be said of Apple, whose iPhone has proven a huge success.
Enter the flanking move by Google against Apple – the acquisition of Motorola Mobility for $12.5 billion that takes Google out of its traditional lines of battle in Silicon Valley into Libertyville, Illinois. In this crossing of the continent, the booty will be staggering – some 17,000 patents, with 7,500 pending. In acquiring such products, Google will be able to have (or in some cases avoid) legal skirmishes with Apple, and other companies, over patent violations. But it also has increased the size of the company by 60 percent.
Google’s Chief Executive Larry Page said in a blog post on Monday that, ‘Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.’ Evidently, Page’s concept of competition is skewed: surely, the very idea of competition implies a contest, something which Google is keen to stifle.
Other questions will need to be asked. Is a 63 percent premium – which is what the purchase of Motorola amounts to – a tad excessive? Besides, Motorola is probably the less appealing manufacturer of the Android. Samsung and HTC are better in the phone making business (Business Insider, Aug 15). The company is dysfunctional. To suggest that Motorola will be left in placid waters to function freely is a fantasy. Nor can we be certain if Google is up to the hardware manufacturing side of the business which, in the words of Henry Blodget of Business Insider (Aug 15), ‘is a crappy, low-margin commodity business.’
All in all, the spirit of Karl Marx resurfaces with renewed vigour like Banquo’s ghost. And he will be telling us again and again that capital tends towards some all present monopoly. Markets and competition eventually concentrate in the hands of a few interests who solemnly divide the spoils. Back in 2007, when a free standing YouTube was bought by Google, there were already fears about a giant running amok. Then Google CEO Eric Schmidt simply had a deflating response to Rob Hof of Bloomberg Businessweek (Mar 29, 2007): ‘Too powerful relative to what?’
The warnings that Google itself is simply getting too powerful in the manner of its operations do persist, notably in terms of how it stores and uses the data it accumulates. In January, the impressively named Sabine Leutheusser-Schnnarenberger, German Minister for Justice, warned that ‘what’s taking shape there to a large extent is a giant monopoly, similar to Microsoft’ (The Register, Jan 11). Google’s response is that transparency is the name of the game. You have nothing to fear, so simply capitulate.
In truth, there is much to be concerned by. Innovation itself is the head thumping mantra yet we see attempts by the technology giants to frustrate efforts to go down that path, pruning and constraining the very system that they should be thriving in. The patent is the ultimate object of frustration, and the law the sword that enforces it. Market share is not a share of innovation in of itself. It is control.
Device manufacturer’s given the Google-Motorola deal, may well be looking to alternatives to Android. This is going to be something of a challenge, with Android accounting for 43 percent of worldwide smartphone sales. We are left with a curious scenario: HTC and Samsung, who are ‘partners’, are now direct competition with Google.
Competition is eventually negated by its very own premise, a self-cannibalising enterprise that should make us suspicious about any pronouncements in its name. But who, it seems, cares? After all, everyone wants a smartphone.