Google-Motorola Deal Approved By China; Android Required To Be Available For Free

China has approved Google Inc.’s bid to acquire handset maker Motorola Mobility, indicating that the $12.5 billion deal is likely to close early this week.

However, Chinese regulators made a major condition to the approval- Google’s Android operating system for mobile devices must be available to all for free for the next 5 years.

The important approval brings Google closer to completing its largest ever acquisition. Motorola will enable Google to diversify into making phones, tablets and more, for the very first time. Motorola will also bring to Google over 17,000 Motorola patents.

The gigantic deal was revealed in August 2011 and has been approved by all regulators, China being the last. The delay is caused due to strained relations between Google and the Chinese government, after Google withdrew from China two years back, over a disagreement regarding censorship issues.

Google’s Android OS currently runs on over 250 million mobile devices manufactured by several companies, including Motorola Mobility. China’s condition that the latest versions of Android must be available free of cost for the next 5 years makes sense because if Google provides Motorola Mobility with updated versions of the Android OS and does not offer them to others, it will result in unfair competition. Android is currently available free of charge.

However, even if Google decides to discriminate, smartphone makers will turn to operating systems offered by Microsoft, Research in Motion and HP among others.

Motorola Mobility Holdings Inc.’s patents are very important to Google as they will help it gain traction in the intellectual arms race competed in by Apple, Microsoft and others, which help them control more market share in different technological segments

Google will benefit significantly from Motorola Mobility’s expertise in set-top boxes for cable TV and its mobile devices, by enabling Google to develop more products to influence the future of portable mobile devices and home entertainment.

Google is paying $12.5 billion price to purchase Motorola Mobility, which is more than the 185 other acquisitions that the search giant has made since becoming public in 2004.