Google could see big tax break from Motorola merger | Android Apps

Google could see big tax break from Motorola merger

Sep 2, 2011

In addition to thousands of patents that Google is looking to secure for its fight against other tech companies in the mobile market, Google has another incentive for acquiring Motorola Mobility – a big break on its U.S. taxes.

That’s according to a story from Reuters, in which tax expert Robert Willens explains that the losses Motorola has recently taken will likely help to knock down what Google will owe in taxes this year, reducing its tax liability by $1.7 billion: $1 billion in losses in the U.S. and $700 million in overseas losses. It should also get another $700 million in annual deductions that’ll last until 2019.

Motorola doesn’t have the revenue to be able to offset those losses, but Google does, so it can use the law to write them off. Certainly it’s probably not one of the primary goals Google has in acquiring Motorola in the $12.5 billion deal, but it doesn’t hurt the matter, either.

The real reason that Google went after Motorola isn’t entirely for the cell phone manufacturing business the company is known for, either. It’s mostly for the 8,000 or so patents that Motorola owns that Google will own once the deal is done. Google has been working to acquire patents to use to fight off other smartphone companies of various types in lawsuits over patent licensing, including Microsoft and Apple. Google wants those patents both to protect its Android operating system and the companies who use it, like HTC, from suits from other tech companies, as well as to launch suits of its own. It’s sort of like a ‘Cold War’ of patents that will discourage companies from filing suits for fear of Google responding with suits of its own.

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But the acquisition of Motorola isn’t going to be easy for Google regardless, according to a story from Business Insider. Google has no experience running a manufacturing business like Motorola, and it’ll be inheriting a whole lot of employees from a totally different corporate culture. Business Insider also speculates that the patents Google hopes to acquire might not be all that useful after all, or at least, not compared to the patents Apple and Microsoft banded together with other companies to acquire from Nortel and others. Motorola sold a lot of its assets already, including patents.

Just how the Motorola acquisition will affect Google’s legal chances, as well as its Android business, still isn’t clear. It’ll take time to see how Google handles the company, and what the overall ramifications are for Android could still go either way.

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Phil Hornshaw

Phil Hornshaw is a freelance writer, editor and author living in Los Angeles, dividing his time between playing video games, playing video games on his cell phone, and writing about playing video games. He’s also the co-author of So You Created a Wormhole: The Time Traveler’s Guide to Time Travel, which attempts to mix time travel pop culture with some semblance of science, as well as tips on the appropriate means of riding dinosaurs. Check out his profile.

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