Google is not naive and is determined to stop those who are trying to strangle Android. These are the exact words that Google’s Senior Vice President and Chief Legal Officer, David Drummond, used in his public tirade hurled at the collusion of competitors, particularly Apple and Microsoft, who are working against Google’s fast-becoming dominant Android operating system.
Before Android came along, Microsoft and Apple have never been good bed partners. Android suddenly forced the two archenemies to call for a ceasefire and point their guns at a different target: Android.
Drummond noted that the presence of Android in the mobile operating systems scene has caused Android and other platforms to “[compete] hard against each other, and that’s yielding cool new devices and amazing mobile apps for consumers.”
Ganging Up on Android
Android’s rise to stardom was quick, though, and its incendiary success yielded “a hostile, organized campaign against Android by Microsoft, Oracle, Apple, and other companies” in a war that Drummond sees being “waged through bogus patents.”
Other competitors seem to want to keep the game to themselves. According to Drummond, Android’s competitors join forces to make sure that Google doesn’t get patents that Android can use for self-protection. The patents have allowed the patent owners to seek 15-dollar licensing fees for every Android device sold–fees that make Android production more expensive for manufacturers (and, of course, more expensive for consumers). The patents have enabled Android competitors to sue Samsung, HTC, Motorola, and Barnes & Noble.
Both Apple and Microsoft joined the group (“CPTN”) that won the bid for Novell’s old patents. Both companies also joined the group (“Rockstar Bidco”) that acquired Nortel’s patent portfolio. Google had no share of those patents, and Android becomes a sitting duck because of that. Android’s competitors made sure of that.
“Bogus” Patent Claims
With those patents–which Drummond considers “largely questionable,” “bogus,” and “dubious”–Android competitors can impose licensing fees that can raise prices for manufacturers, and eventually for consumers. If your product sells cheaper than your competitor’s product, and granting both products are of similar quality, which do you think would a consumer choose? That kind of logic seems to be at work here: beat competition by raising your competitor product’s price and/or bleed them to death by exacting exorbitant “taxes” and patent licensing fees. One way to do that, it seems, is to acquire patents and use the patents for that purpose.
Drummond also bewails another consequence of the anti-competitive strategy being used by Apple, Microsoft, and others–it raises the cost of patents to more than what the patents are really worth.
Google’s initial stalking-horse bid for the Nortel patents, for example, was US$900 million. We can safely assume that, in Google’s eyes, that was the price Google was willing to pay–unchallenged–for the patents. The final sale price for the Nortel portfolio eventually rose to about 5 times the initial bid–US$4.5 billion.
Intervention from the Department of Justice
Google saw “protection” in the Nortel patents and tried (with Intel) to acquire them for as much as US$4 billion–but lost. Whether Apple, Microsoft, and others saw “weapon” splattered all over the Nortel patents remains up to the Department of Justice (DOJ) to figure out. The sale of the Nortel patents has caught the attention of the DOJ, which is now inquiring into possible anti-competitive intentions being contemplated on by Android competitors.
Drummond also noted that, as in the case of the Novell patents, the DOJ compelled Microsoft to sell its newly acquired Novell patents and demanded the winning group that acquired the patents to give a license to the opensource community, as such move is “necessary to protect competition and innovation in the open source software community.” Sometimes, the Department of Justice has to step in so that business games are played fairly and evenly.
The catfight over patents isn’t going away anytime soon. In fact, it may not even have fully warmed up. Expect more heat to come as the story further unveils its twists and turns. Streetfights are fun to watch, you know. For the meantime, have you thought of munching on popcorn? Or nachos?
Image credit: Olivier Hodac (Flickr)