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US Move Against AT&T-Mobile May Spell Trouble For Google

Discussion in 'More News from Your Google TV News Team' started by Rickaren, Aug 31, 2011.

  1. Rickaren

    Rickaren New Member Staff Member

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    US Move Against AT&T-Mobile May Spell Trouble For Google

    Aug 31, 2011

    [​IMG]A big story today is the US government’s effort to block the proposed $39 billion acquisition of T-Mobile USA by AT&T. AT&T wants T-Mobile’s spectrum and network and the US thinks it will harm competition in the wireless market.

    According to the New York Times the government’s lawsuit boils down to the argument that less competition equals less innovation and ultimately higher prices for consumers:
    “AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,” the complaint said. “Thus, unless this acquisition is enjoined, customers of mobile wireless telecommunications services likely will face higher prices, less product variety and innovation, and poorer quality services due to reduced incentives to invest than would exist absent the merger.”



    AT&T is likely to fight the litigation and may wind up settling with the US. However if it fails to acquire T-Mobile the deal calls for almost $7 billion worth of concession payments and spectrum access to the AT&T network.
    But how does this relate to Google?

    I was somewhat surprised to see the US file to block the deal. I’m sure AT&T was also surprised (so were investors who are pushing AT&T stock down this morning). Even though it would pretty obviously harm competition, I believed that AT&T would be able to negotiate with or twist the arms of regulators into approving the deal. But that didn’t happen.

    While the ultimate outcome of the litigation is uncertain this relatively bold move suggests that the US Justice Department is being tougher than in the past. (Some would argue the DOJ is simply doing its job here.) Either way it’s probably not great news for Google, as the antitrust investigation against the company begins in earnest. However I don’t think this darkens the outlook for Google’s acquisition of Motorola Mobility, because the handset market is quite competitive.

    Perhaps there’s no connection between the move to block AT&T-Mobile and the antitrust investigation against Google. But I suspect the tougher stand against AT&T, combined with the recent $500 million Google-Canadian pharmacy settlement, don’t augur well for big G.

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  2. stuberman

    stuberman Member

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    This doesn't pass the sniff test "would remove a significant competitive force from the market". T-Mobile is an also ran that has some 4G like technology that ATT wants. ATT (and many of us) will benefit from the adoption of this technology within the 2nd largest cell carrier. Innovation tends to come from smaller, hungry firms looking to set themselves apart from the big guys (Verizon and ATT in reality) or by design get purchased by a big guy. In the realm of high tech less regulation has led to better choices. Anti-monopoly attacks by the justice department must be well founded and not a stretch. We can imagine Google being hamstrung for being too big in search, too big in video or too big in advertising.
     
  3. ChrisG8

    ChrisG8 Well-Known Member

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    If the AT&T acquisition of T-Mobile goes through, it will result in too big a percentage of the market with too few companies. T-Mobile is 4th now and an also ran compared to the top 2 but Sprint has probably already argued this will put them in an even worse position as #3. I am certainly not an attorney and an anti-trust attorney can probably already accurately predict which side will win this litigation or described a likely compromise settlement. I speculated Google may have trouble getting their acquisition of Motorola Mobility through but it is a totally different situation.
     

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