FORTUNE — Sometimes, plan B is pretty good. When Google missed out on buying Nortel Networks’ patent hoard earlier this summer, few could have predicted it would make a stunning $12.5 billion cash bid for Motorola Mobility.
The move is sure to change Google’s (GOOG) business, not to mention alter the dynamics of Silicon Valley’s raging patent disputes. With rumors that rival Microsoft (MSFT) was interested in Motorola’s (MMI) patent cache as well, Google clearly made an aggressive defensive move that is also the largest acquisition in its young history. (See Google’s 10 biggest acquisitions here.) But every deal has risk – especially one that will likely increase headcount by 60%. Even if the acquisition is eventually deemed a success, it is fraught with potential difficulties.
Here are the five most plausible scenarios that could give those in the Googleplex serious headaches.
Risk 1: The Android ecosystem is endangered.
What does this deal actually mean for the company’s partners using the Android mobile operating system? Google’s been busy extracting positive remarks about the deal from various partners such as Sony-Ericsson, HTC and Samsung. But if this deal does threaten Android’s open ecosystem, it could stymie its growth. Either way, some analysts expect Microsoft to gain clients on its Windows Phone OS as hardware makers protect themselves against possible preferential treatment for Motorola down the line. (Google says Motorola won’t be favored.)
Most analysts Coins2Day talked to rank this as their top concern. But Brian Pitz at UBS says the company’s track record is pretty clean. “Google has never suggested that they want a proprietary ecosystem,” Pitz says. “That argument makes no sense when it’s not what they want to do.”
Risk 2: Integration.
Attention has been focused on Motorola’s portfolio of 17,000 existing and 7,500 pending patents. What about Motorola’s 19,000 people? The shape of the two workforces couldn’t be more different. One embodies the free-minded, engineering led culture of a company that’s been growing rapidly; the other is a storied group that has been struggling to stay relevant. Google CEO Larry Page told analysts in a conference call Monday that Motorola’s structure wouldn’t pose a problem given the planned separate operation of the two companies. That remains to be seen.
Risk 3: What happens to manufacturing?
Morgan Stanley warned investors that Google will face a tricky long-term decision about Motorola’s handset production: aggressively pursue it, spin it off or simply shut it down. ‘Making stuff’ may prove a mounting distraction in a year or two, but won’t be an immediate drag on Google. If Page’s plan isn’t to keep the patents and valuable technology and quickly cut the rest, expect pressure for a spin-off to build up momentum over time.
Risk 4: The patents weren’t worth it.
The two big questions about Google’s patent pickup: did Google overpay? And, do they really solve Google’s legal problems?
Morgan Stanley, for one, estimates their worth at between just $2 billion and $3 billion. But others disagree. Credit Suisse notes that the anti-Google consortium led by Microsoft, Research in Motion (RIMM) and Apple paid more per patent for Nortel’s intellectual property. Plus, Motorola’s patents include in-development, pending patents with more potential upside over the long-term.
The picture for Google’s current legal troubles is also unclear. Analysts told Coins2Day that the key is not so much what each new patent covers in terms of current lawsuits but more so in terms of future leverage in reaching a deal with rivals. So the company’s headaches in the short-term won’t disappear, but it is in a much better bargaining position now. Google’s choice to purchase Motorola outright rather than simply license its patent portfolio has raised some eyebrows. But UBS’s Pitz compares Google’s position to an arms race, “The more paper you can stack in your safe, the better-off you are going to be.”
Risk 5: FTC Rejection
This would be the worst-case scenario for Google, as it would immediately lose the patent benefits outlined above and pay dearly for its trouble. According to JPMorgan, Google’s promised break-up fee, $2.5 billion, is over six times the standard amount for such a deal. If regulators reject Google’s bid, it stands to lose all that cash and face costly settlements in ongoing legal attacks.
Analysts disagree on the odds of a regulatory setback though. Given the months-long delay for Google’s most recent acquisitions, there’s no question this one will garner intense scrutiny at the Federal Trade Commission. Google doesn’t have to worry as it would if it bought a company in its core business, but the FTC has made it clear it’s concerned about Google’s increasing size and scope. We won’t know until likely early 2012, but Google will hope to prove wrong analysts who consider approval its greatest concern on the deal.