The European Union's regulatory body has unconditionally approved Google's acquisition of Motorola Mobility in a deal that could be worth about $12.5 billion.
The European Commission also said today it would monitor Google's and its rivals' use of patents to make sure that the deal complies with EU antitrust rules.
"We have approved the acquisition of Motorola Mobility by Google because, upon careful examination, this transaction does not itself raise competition issues," Joaquín Almunia, Commission vice president in charge of competition policy, said in a statement. "Of course, the Commission will continue to keep a close eye on the behaviour of all market players in the sector, particularly the increasingly strategic use of patents."
In its blog post, Google said: "We're happy that today the European Commission approved our proposed acquisition of Motorola Mobility, which we announced in August. This is an important milestone in the approval process and it moves us closer to closing the deal. We are now just waiting for decisions from a few other jurisdictions before we can close this transaction."
Google went on to say that the Motorola acquisition is meant to "supercharge Android." But the main reason Google is buying Motorola is for the company's 17,000 patents and its 7,500 pending patent applications. In the EU's examination of the deal, it was looking to see how Google's ownership of these patents would affect competition.
Motorola's patents could help Google fight off lawsuits from companies, such as Apple, which claim that Google's partners are infringing its patents via the Android operating system. Google has said it will help defend its partners.
There's also a chance that Google, which until this point has not made any smartphone or tablet hardware itself, could get into that business via Motorola. But European regulator Almunia said in a statement that he cleared the deal because Google's business model with Android has been to keep the software open to competitors. And he expects that to continue. But he also said he'd be monitoring Google to make sure that's the case.
And he expressed concern that so much power for setting technology standards rests in the hands of companies that hold the patents on smartphones. Google said last week that if it's allowed to buy Motorola and its patents, that it will make those patents available for license at fair and reasonable rates. The company also promised to keep a cap on the fees it charges for licensing its technology. And it also said it would outline conditions under which it would sue companies for patent infringement.
Microsoft's response to the EU decision homed in on the issue of patents and the need the software maker sees for regulatory oversight. It also made reference to that promise to standards bodies about licensing fees.
"We are encouraged by the European Commission's expression of serious concern around the misuse of standard-essential patents and the consequences to competition and to Internet users worldwide," Brad Smith, executive vice president and general counsel at Microsoft, said in a statement. "Google's letter sent last week to standards bodies only intensified these concerns, and we welcome the Commission's scrutiny of Motorola's past and Google's future conduct related to standard-essential patents."
There's been no love lost between Google and Microsoft when it comes to patents. Last summer, Google's chiefl legal officer, David Drummond, ripped into Microsoft, along with Apple and Oracle, for their pursuit of what he called "bogus" patent claims that might serve to drive up the costs of Android-based phones.
U.S. and European regulators generally coordinate their reviews of big mergers. So it's likely that the U.S. Department of Justice may soon announce its approval for the Google-Motorola deal.
Google wanted approval for the deal in November, but the review process went longer because the European regulators asked for more documentation in the case.
Google is also under investigation by European regulators looking at whether the search giant is abusing its dominant position in online search and advertising.
Update 11:30 a.m. PT with additional background and a statement from the European regulator and then again at 1:07 p.m. PT with Microsoft's response.