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Chinese authorities reviewing Google, Motorola merger

Summary: Google¡¯s acquisition of Motorola Mobility for $12.5 billion is under review by the Chinese Commerce Ministry, a rejection considered unlikely.

A spokesman for the Chinese Commerce Ministry has announced that they are presently reviewing Google¡¯s purchase of Motorola Mobility.

The merger is being assessed by the ministry¡¯s anti-monopoly bureau, according to spokesman Shen Danyang, as a standard part of its acquisition procedure.

The $12.5 billion purchase of Motorola Mobility has already been cleared by the European Commission, and the U.S Department of Justice. The Chinese Commerce Ministry is the next big hurdle for the merger.

Chinese law dictates that businesses that are run in China and produce a global annual revenue of $10 billion yuan ($1.55 billion), or 400 million yuan in China, are required to seek government approval for any acquisitions.

According to an inside source, the ministry has until March 20th to either approve the deal, or launch a third phase of review.

If the merger is approved successfully, Google will acquire Motorola¡¯s significant patent library, with around 17,000 issued patents and 7,500 patent applications.

There are concerns that China might block the merger, considering Google¡¯s history in the country. Google has no permanent base in China at the moment, after a high profile pull out of the country in 2010 over hacking allegations.

Google moved its search business to Hong Kong, but still has interests on the Chinese mainland. Android currently powers around 60 percent of China¡¯s smartphones, making a push back into China a very profitable option for Google.

As a result, there is a possibility that China could use the deal to try and gain leverage over the company in future transactions.

Edward Yu, chief executive of Analysys International, says that China is unlikely to veto the merger. ¡°I don¡¯t think there will be anything extreme, warm or cold, or retaliation,¡± he said.

He did, however, suggest that the review could open up a dialog between Google and Chinese Authorities about conditions for returning Google¡¯s business to the mainland.

Web link: http://www.zdnet.com/blog/asia/chinese-authorities-reviewing-google-motorola-merger/1106

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