Microsoft has a set of patents. We'll call them A. Google has a few patents. We'll call them B. The Novell auction was for a third set, C.
Now |A| > |C| > |B|, by a long shot. Defensive patents work by allowing you to countersue anyone who sues you, and claim they are infringing upon your patents. In the end, the parties settle out of court and agree to a cross-licensing deal, which amounts to, "I won't sue you and you won't sue me."
Because of the general stupidity of most patents issued, this is a game of quantity, not quality. Thus having 10,000 patents is far preferable to having 1,000, even if those 1,000 are for genuine innovations. This brings us back to our sets of patents.
Google doesn't have much to defend themselves with, hence their desire to acquire C. However, if they jointly acquired C with Microsoft, those patents could only be used to defend themselves against entities other than Microsoft. As MS has the rights to C, Google couldn't sue them for infringement, whereas Microsoft could still sue Google for infringement on A. The only thing Google would have gained is protection from Microsoft suing them for infringement of C. Since Google was primarily concerned about Microsoft suing them, this wouldn't have done them any good. It would have amounted to a multi-billion dollar settlement with Microsoft, only against suits based on C. It simply wasn't worth it for them, as they would have been sued anyway and still had no protection.
Now |A| > |C| > |B|, by a long shot. Defensive patents work by allowing you to countersue anyone who sues you, and claim they are infringing upon your patents. In the end, the parties settle out of court and agree to a cross-licensing deal, which amounts to, "I won't sue you and you won't sue me."
Because of the general stupidity of most patents issued, this is a game of quantity, not quality. Thus having 10,000 patents is far preferable to having 1,000, even if those 1,000 are for genuine innovations. This brings us back to our sets of patents.
Google doesn't have much to defend themselves with, hence their desire to acquire C. However, if they jointly acquired C with Microsoft, those patents could only be used to defend themselves against entities other than Microsoft. As MS has the rights to C, Google couldn't sue them for infringement, whereas Microsoft could still sue Google for infringement on A. The only thing Google would have gained is protection from Microsoft suing them for infringement of C. Since Google was primarily concerned about Microsoft suing them, this wouldn't have done them any good. It would have amounted to a multi-billion dollar settlement with Microsoft, only against suits based on C. It simply wasn't worth it for them, as they would have been sued anyway and still had no protection.