Google's Insurance Policy

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When, in August of 2011, Google  signed the agreement to buy Motorola Mobility for $12.5 billion, some thought it might eventually be known as Google's Folly, a gamble too risky to take.

Other than Motorola's treasure trove of patents, why would Google want this once-great mobile phone maker that then had to compete against Samsung, LG, HTC, and the many other Android phone makers?

That deal may have caused raised eyebrows in some quarters, but it caused such anxiety for South Korea that its government called on a coalition of Korean companies, including Samsung and LG, to develop its own mobile phone operating system.


The fear was that Google would decide to keep Android for its own phones, those made by Motorola. A South Korean deputy commerce minister, Kim Jae-hong, caused a stir when he told reporters, "In the long term, we cannot go on like this by solely relying on Google."

Now, it seems, Google is the anxious party. The Google brass, according to The Wall Street Journal, which spoke to people knowledgeable of the matter, are worried that Samsung -- by virtue of its sheer size, selling 40% of all Android products -- now has the leverage to get a bigger slice of Google's mobile advertising revenues.

Google's ace in the hole
That concern was brought up last fall by Google's head of Android, according to the WSJ. At a Google meeting for executives, Andy Rubin, head of Android, said Samsung could threaten Google if it starts shipping even more Android devices than its nearest competitors.

What he said next harkens back to the days following the Motorola deal when industry watchers were scratching their heads. Rubin said acquiring Motorola was Google's insurance policy against any Android-phone company getting too much clout.

Aha! So maybe South Korea wasn't feeling paranoid without at least some reason.

Tension? What tension?
Meanwhile, at the Mobile World Congress in Barcelona, a Samsung executive said there were no points of contention between Samsung and Google.

Nick DiCarlo, a vice president at Samsung's U.S. mobile operation, told FierceWireless, "My interpretation is that we're a good partner and we build strong products that promote the ecosystem." Samsung has been a "big positive for the [Android] brand."

However, DiCarlo did confirm with FierceWireless that Samsung will be developing devices running on the Tizen open-source mobile operating platform. Apparently, there are two aces face down on the table.

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The article Google's Insurance Policy originally appeared on Fool.com.

Fool contributor Dan Radovsky has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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