Google Admits to Gambling $4.6 Billion?

Friday, April 4th, 2008 by Andy Beal

Google Admits to Gambling $4.6 Billion?

Now that the FCC has awarded the coveted 700Mhz spectrum to Verizon Wireless, Google is lifting the “cone of silence” surrounding its bid.

As suspected, Google’s bid for the new mobile airwaves was really just a big bluff. Sure, Google did ante up the $4.6 billion it promised it would bid–if the FCC adopted Google’s conditions–but it has pretty much admitted it only really cared about the adoption of greater openness and choice for wireless customers.

Google’s top priority heading into the auction was to make sure that bidding on the so-called “C Block” reached the $4.6 billion reserve price that would trigger the important “open applications” and “open handsets” license conditions….

…Based on the way that the bidding played out, our participation in the auction helped ensure that the C Block met the reserve price. In fact, in ten of the bidding rounds we actually raised our own bid — even though no one was bidding against us — to ensure aggressive bidding on the C Block. In turn, that helped increase the revenues raised for the U.S. Treasury, while making sure that the openness conditions would be applied to the ultimate licensee.

So in effect, Verizon Wireless was played like a violin. OK, so Google had the money to buy the “C Block” if it had actually won, but in the end Google probably spent less than $1 million in legal fees and forced Verizon to spend beaucoup bucks for a spectrum that would guarantee Google’s Android gets fair treatment.

Here’s a question for you. Google has a huge war-chest, other companies are scared of Google invading their turf, so it’s in a prime position to get what it wants, without actually spending the money. So, which poker game market do you think Google should shake up next?

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16 comments on “Google Admits to Gambling $4.6 Billion?”

Iowa Forum Says:

April 4th, 2008 at 10:44 am

Thats great, google fighting the good fight for all Americans!
Jaan Kanellis Says:

April 4th, 2008 at 10:54 am

Verizon would have went higher if necessary. This is worth everything to them
John Says:

April 4th, 2008 at 11:46 am

Thats quite a gamble!
Search Engine Optimization Journal Says:

April 4th, 2008 at 11:50 am

It’s not every day that we CAN commend Google but this was a pretty commendable action with the current economy. Thank you Google!
NextInstinct Says:

April 4th, 2008 at 12:04 pm

I called this way back. It was just smart business on Google’s part. They obviously have confidence in white space devices.
So they let the competition spend large, knowing they’ll end up with the space compete, while keeping 19 billion in their account.

Then, they spin it to the public (perhaps genuinely), that they engaged the auction, at their expense, in the spirit of opening up media for you and me.

Brilliant all around.
Steven Bradley Says:

April 4th, 2008 at 1:14 pm

Interesting gamble that turned out to be a smart business move. Was it smart though to let everyone in on what they were doing? Makes it harder to do the same thing again. Bluffs don’t work when people know you’re bluffing.
Kyle James Says:

April 4th, 2008 at 2:46 pm

This really is commendable of them. Google fighting for the rights of development and opening up standards, not because they gain anything out of this (it costs them money) but for overall good. It is true that they do have some interest in this working out as it did, Android will benefit, but Google has enough other things that are running successfully.
Soham Das Says:

April 4th, 2008 at 2:57 pm

Fantastic report. Shocking to say…
John Moore Says:

April 4th, 2008 at 5:22 pm

Great Job Google we need more corps to do good things for the rest of us.
PS3 Says:

April 4th, 2008 at 5:40 pm

They’ve sure got some great stategic minds at Google, you have to commend them for that.

The figures still stagger me though. We bandy around $4.6 billion and discuss it like pocket money….$4.6 billion – wowzers !!
Jayson Says:

April 5th, 2008 at 1:34 am

That’s a nice move – I’d like to see what a Google car can do.
Prosperity Writer Says:

April 5th, 2008 at 10:51 am

i dont know of google was sincere when they said that or they are just sour graping because they lost
Futon-Matt Says:

April 6th, 2008 at 11:02 am

Wow, that’s pretty gutsy. I think some sort of interactive Google clothing that allowed 24/7 search engine connection would really give Google a boost.
David Mulder Says:

April 6th, 2008 at 11:39 am

On the google blogs I follow this was already accepted as a fact ages ago and I believe that all the big companies knew about this and it was smart to tell the “world” how great Google was for them…
Forumistan Says:

April 6th, 2008 at 8:05 pm

Wow, that is incredible
Alex Isaacs Says:

April 7th, 2008 at 8:23 am

Google is by far the biggest bully on the playground. haha Hate to be in the competetive market Google tried to walk into next!

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