Google announced on its blog Monday that it plans to purchase Motorola Mobility for $12.5 billion in cash. If the deal is approved by antitrust regulators, then it will go down in the books as Google's largest acquisition to-date.
Google's VP of Corporate Development David Lawee told Reuters in 2010 that the tech giant's agressive M&A strategy is "paying off huge." Big bets on young companies like Android and YouTube might have raised doubts when the deals were going down, but now most will agree that those have, thus far, turned out to be success stories
So will Google's latest buy prove to be a winner--or a costly, billion-dollar blunder? The purchase price of Motorola Mobility is more than four times the size of the DoubleClick deal, which until now was Google's largest acquisition. Further, skeptics doubt whether Google should even be buying a handset hardware maker to begin with, because the company's core business is in software technology, not low-margin manufacturing.
People have doubted Google's M&A activity before, but that's not to say it will stop them from continuing to make bold, aggressive bets. Google acquired over 20 companies in 2010 and more than one hundred to date.
Take a look at Google's five most expensive acquisitions (so far) below, and tell us in the comments whether you think the Motorola Mobility deal is the right move.
What people said... Henry Harteveldt, analyst at Forrester Research: "Google's mission is to organize the world's information, and ITA does that for travel" Edward Hasbrouck, author and policy analyst for Consumer Travel Alliance: "Google's purchase of ITA Software is likely to be a bad thing for travelers." Acquired: 2010 Source: Google Blog
What people said... Neil Strother, analyst at Forrester Research: "The deal shows that Google is serious about becoming a major player in the mobile advertising ecosystem" Marc Rotenberg, executive director of the Electronic Privacy Information Center: "We've reached a point in Google's evolution in which Washington agencies and Congressional committees need to look more closely at the company's dominance of Internet services" Acquired: 2010 Source: Google Blog
What people said... Goldman Sachs: "We expect investors to be excited by the strategic opportunities, but they will be skeptical of the $1.65 billion price, given YouTube's early stages" Martin Pyykkonen, analyst at Global Crown Capital: "I would think that a lot of advertisers would be willing to pay a premium for a video search ad opposed to paid search text" Acquired: 2006 Source: Google
What people said... Federal Trade Commission: "The FTC lacks the legal authority to block the transaction on grounds, or require conditions to this transaction, that do not relate to antitrust" Jeff Chester, executive director of the Center for Digital Democracy: "The FTC is supposed to protect the privacy of Americans in the digital age. The excuse offered by the majority of the commission-that consumer privacy can't be addressed by current antitrust law-reveals a lack of leadership and determination to protect U.S. consumers" Acquired: 2008 Source: Google Blog
What people are saying... Henry Blodget, editor-in-chief at Business Insider: "This deal could end up being a disaster" Jeff Jarvis, author: "Google buys rat poison" Hendi Susanto, analyst at Gabelli & Co: "Google and Motorola will create a stronger hardware - software integration to compete with Apple, Samsung, and HTC." Acquired: 2011 Source: Google Blog