Google scraped together $12.5 billion from its petty cash fund this week to acquire Motorola Mobility Holdings, which once was a top manufacturer of cellphones and still is a leading maker of cable-TV converter boxes. Google executives said the primary lure was the cache of patents Motorola holds in the wireless field, which could help Google fend off the litigation that competitors have mounted against the company's Android software for mobile phones and tablets. Other observers suspect that Google plans to use Motorola's hardware acumen to help build its own Android-powered devices, in the hope of challenging Apple's market-dominating iPhones and iPads.
The prospect of one of the Internet's most powerful companies snapping up a major hardware manufacturer has some consumer advocates urging federal antitrust authorities to take a dim view of the deal. Said Jamie Court of Consumer Watchdog: "Should an information monopolist like Google have the power to dominate cellphone manufacturing and control patents that could require mobile phones to use its information-tracking Android operations and applications? The debate has just begun."
When thinking about the implications of the deal, however, it's useful to bear in mind one other headline-grabbing marriage of new and old economies: America Online's January 2000 acquisition of Time Warner. Those companies were right about broadband transforming the media industry. They just weren't able to translate their vision into a viable business.