I believe word is that buy-out talks started approximately 5 weeks ago, so this wasn't on the table for very long. Rumor has it MS was also interested in Moto.

Google is only acquiring Motorola Mobility, which was spun off from the Motorola parent company early this year. The "home" division of the Mobility company may very well play into Google's quest for relevance in the living room. They've made absolutely zero impact with their GoogleTV project so far. To call it an abject failure is to put it mildly and too kindly.

If the new Moto doesn't get preferential Android treatment, including co-development, then I don't really see that the acquisition was worth anywhere near 12 Billion and it's most definitely just a very expensive patent gamble. Other Android licensees had better be very worried. Their canned and nearly identical responses to today's news were laughable.

As far as competition goes, I don't think either Microsoft nor Apple have much to worry about with this move. I don't think this deal alone will significantly change how the platforms currently compete.