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Google to buy Motorola Mobility for $12.5 billion

Setting its sights on rival Apple Inc, Google Inc announced its biggest deal ever, a $12.5 billion cash acquisition of mobile phone maker Motorola Mobility Holdings Inc.

Setting its sights on rival Apple Inc, Google Inc announced its biggest deal ever, a $12.5 billion cash acquisition of mobile phone maker Motorola Mobility Holdings Inc.

Google's biggest foray into hardware comes weeks after a failed attempt to buy patents from bankrupt Nortel, and gives it an intellectual property library in wireless telephony to wage war on Apple and Microsoft Corp.

But in buying Motorola, the Internet giant risks alienating the hardware partners that license its free Android software. Google CEO Larry Page sought to calm the jitters by stressing on Monday that Android will remain open to all.

"The danger is that other handset makers feel disenfranchised," said Nomura Securities global technology specialist Richard Windsor.

"Motorola is the weaker player. This could actually collapse the entire community."

Shares of Motorola Mobility jumped 59 percent, while Nokia's stock gained more than 10 percent on speculation the Finnish mobile company is now an acquisition target.

The deal -- which took Wall Street by surprise -- appears to mark a shift in strategy for a company that had focused on shoring up its Internet search and advertising empire with forays into video and social networking.

After being shut out of Nortel deal, Google Chief Legal Officer David Drummond wrote a blog post accusing Microsoft, Apple, Oracle Corp of colluding to buy up patents and curtail growth of its Android mobile operating system.

Page echoed Drummond's blog post on a conference call, saying Motorola has a strong patent portfolio that will protect Android from "anti-competitive threats."

 
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