Google released details of its buyout contract with Motorola Mobility yesterday, confirming reports that it has agreed to pay Motorola $2.5 billion if the acquisition falls through.
The Internet search giant will be forced to pony up the cash if antitrust regulators block the acquisition or it is unable to close the deal before Feb. 15, 2013, according to a merger agreement filed with the SEC.
Google is paying $12.5 billion for the handset maker.
The massive fee, which represents 20 percent of the deal’s value, is substantially larger than the amount Motorola has agreed to pay Google if it decides to take a better offer from another company.
Motorola will shell out just $375 million to Google if it decides to go with a more lucrative deal.
Some have tied the exorbitant charge to increased scrutiny of Google by U.S. antitrust agencies. The Federal Trade Commission is reportedly investigating Google over whether it is using its search engine to quell competition, and the European Union is also said to be conducting a similar investigation.
Regulators will probe whether the deal will impede competition. Blocking the deal on antitrust grounds could be difficult for the vertical acquisition, since Motorola lies outside Google’s core search business and only overlaps on the Android operating system.
Google’s acquisition of Motorola will allow it to wield influence over a top manufacturer of Android smartphones, as well as make a major play for the consumer electronics market.
The deal will also help Google protect its Android platform from a storm of patent lawsuits launched by competitors such as Apple and Microsoft. Motorola has more than 17,000 approved patents worldwide, and 7,500 pending patent applications.