China extends probe of Google-Motorola merger

Google said on Thursday it will continue to wait for approval from China after the government extended the review of the company's merger with Motorola Mobility.

The extension of the review was revealed by a Motorola filing to the US Securities and Exchange Commission Monday.

"We will await approval in China and continue to work closely with regulators. We are ready to answer their questions and talk about concerns," a Google spokesperson told the Global Times yesterday.

The merger review, now in its second phase, is being handled by the Anti-Monopoly Bureau under China's Ministry of Commerce (MOFCOM), which is likely to announce the result within 90 days.

Google has got clearance from officials in the US and Europe for the $12.5 billion deal.

Both Google and Motorola expect to close the deal, the largest in the wireless equipment industry in a decade, in the first half of this year. However, Motorola said that neither company is able to provide assurances that the transaction will be approved by the MOFCOM.

On top of the filing to the SEC, "we cannot comment now," Motorola said.

"It is still unclear what caused the extension of the investigation of the case," an unnamed source from Motorola told the National Business Daily Wednesday.

The MOFCOM had not answered why the probe has been prolonged and how long it will possibly take.

According to China's Anti-monopoly Law, all companies operating in China with more than 10 billion yuan in combined revenue worldwide and 400 million yuan in revenue from China are required to get an approval from the bureau for mergers.

"There could be various reasons for the extension of the probe, including the merger's possible impact on related industries," said Xin Haiguang, an IT commentator. "Google is keen to embed Android with Google Map, a function still not approved by China."

Google announced the deal last August, a time when its Android smartphone system was entrapped in a pile of legal disputes. The company will get some 17,000 Motorola patents worldwide through the deal.

"Patent ownership means so much for an IT company that a big pool can give the company an edge in swapping the patents' right of use and in dealing with other companies," Yu Xiaoguang, an industry insider, told the Global Times.

"After a long period of tussle, Google needs to change its business focus in China, and Android is Google's best bet to win back some of the ground it lost to Baidu," a professor from Renmin University of China, who declined to be named, told the Global Times.

However, "it might be difficult for Baidu to benefit from such a short period of extension, unless some of Baidu's core technologies overlap with Motorola's patents," Yu said.

Shen Danyang, spokesperson of the MOFCOM, said last month that the ministry is verifying the facts in the purchase and "will give an update once there is further information."