In an unpredictable turn of events, Google bought out Motorola Mobility for $12.5 billion in cash, presumably to make a presence in the mobile computing industry and confront its biggest competitor, Apple, head-on. Google now faces a long regulatory approval process, but industry analysts believe they will ultimately pass these steps because Google and Motorola belong to two totally different industries, so an argument against a monopoly does not exactly apply.
As Google's CEO, Larry Page, explained, "Computing is moving onto mobile. Even if I have a computer next to me, I'll still be on my mobile device." Google's acquisition suggests that they don't want their biggest competitor, Apple, to dominate the market (Rusli).
"For Google, it's important for them to make sure that the mobile space is not dominated by one company, that being Apple," said Steve Weinstein, an analyst at Pacific Crest Securities. The acquisition allows Google to "drive down costs and create a product that is pioneering with Google services around it" (Rusli).
Apple oversees the operations behind its entire product - device and software. By acquiring Motorola, Google will gain even more control over its products, although it is doubtful whether Google can be successful in both areas of the business. Currently, Google maintains the software part of the business, but they do not deal with making the actual devices. If they are successful, they will have greater control over pricing and distribution (Rusli).
"This is an opportunity for Google to jumpstart the market, in pricing and innovation," said Avi Seidmann, an information systems professor at the University of Rochester (Rusli).
Many analysts are questioning Google's recent purchasing decision, especially because the price they acquired Motorola Mobility at is 63 percent above its stock price. Furthermore, as the owner of Android phone software, Google now placed itself in direct competition with some of its own business partners who use Android software in their own phones.