Inside the world of business

Google move one of driving traffic

GOOGLE’S $12.5 BILLION (€8.7 billion) purchase of Motorola’s mobile phone division is not about creating Google branded phones. Such a move would put it in direct competition with the likes of Samsung, HTC, Sony Ericsson and LG Electronics, which are all investing millions in creating and marketing phones running Google’s Android operating system.

Unlike Apple with its iPhone, Google is more interested in mobile phones as a way to increase usage of its other products than as an end in itself. Almost 40 different manufacturers make phones that run Android, which drives traffic to Google services rather than those from Apple and Microsoft.

The deal also creates a legal fire-break between Android manufacturers and Apple, which has been keeping its lawyers busy with patent infringement complaints around the world. On an analyst call yesterday, Google chief executive Larry Page and his senior executives talked more about patents than handsets.

The canned quotes which appeared on the Google website yesterday from the chief executives of Sony Ericsson, Samsung, HTC and LG Electronics confirm what Google’s priorities in this deal are. Each talks about “defending Android” and “its partners” which suggests a stunning coincidence or a concerted public relations campaign.

The gloves have been off between Google and Apple since early 2009, when the one-time partners realised that they were going to be increasingly competing rather than co-operating. When then Google chief executive Larry Schmidt, stepped down from the Google board, Apple stated that it was a direct result of Google entering “more of Apple’s core businesses”.

It might have been hoped that increased competition would have lead to more innovation and cheaper products. While consumers have benefited, in recent months it has looked more like sparking a legal battle royale with questionable patent claims the weapon of choice.

Google has paid a high price but the Motorola deal may signal the beginning of an uneasy truce. For the moment at least.

Sarkozy and Merkel running to stand still

The meeting today between German chancellor Angela Merkel and French president Nicolas Sarkozy appears just the latest attempt to persuade the markets that activity equates with action.

Merkel has made clear throughout the most recent crisis that she sees no requirement for or merit in taking additional measures on top of those already agreed at an emergency summit on July 21st. In advance of the meeting, German officials have been at pains to talk down expectations.

Markets are not quite sure what to make of the conflicting signals and the euro rose yesterday ahead of the talks.

That, presumably, is exactly what Sarkozy is hoping for. With French banks under attack last week over concerns about the economy and the short- term nature of some of their funding, he felt he needed to do something to stem the tide – and presumably deflect attention from a ban on the short-selling of financial stocks that is seen by many analysts as a futile effort to stem the tide.

Sarkozy all too often feels the need to “do something” without considering whether his initiatives can deliver.

In this case, failure to get Merkel to agree to steps on easing the crisis or addressing euro zone governance could land the French president in an even worse position than he was at this time last week.

Jean Pisani-Ferry, head of the Bruegel think tank in Brussels, notes that Germany has traditionally stood ready to help France in crisis. Merkel though has her own problems at home and little to gain politically by taking bold steps at this juncture.

In the wings, the markets wait to deliver their verdict.

Today

German chancellor Angela Merkel meets French president Nicolas Sarkozy in Paris to discuss the euro zone crisis

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