Google: Phone Makers Must Pay For Google’s Apps

Good for consumers? Or a licence to print money for Google?

by Aaron Macarthy Beards Oct 17, 2018 at 1:08 PM

  • In response to the £3.8 billion fine levied by the European Union against Google, the US tech giant has announced that manufacturers will have to pay a licensing fee for devices with Google's Apps pre-installed.
    By the sounds of it, this will only be applied to phones, or devices, that are shipped into the European Economic Area (EEA).

    Google’s Android operating system runs on 80 percent of the world’s mobile phones. This is largely due to its lack of licence fees combined with its access to the Google Play Store, the world's largest app marketplace.

    This means that a manufacturer doesn't have to make its own apps and maintain a marketplace. Rather Google runs the App Store and device makers reap the benefits.

    To get the full-featured version of the Android OS, device makers are required to pre-install a package of Google’s apps like Search and Chrome. This greatly helps Google’s massive ad business, because users often use the default stock apps.

    European regulators argued, successfully, that this practice gave Google an unfair advantage against competitors. In July, a court ordered it to change its practices and Google have just announced all actions they take will comply with the EU’s Ruling.

    Essentially, Android will remain open source with device makers allowed to change elements of the software. Device makers will now be allowed to make their own choices when it comes to pre-installed apps.

    However, Google has also announced they will require a license fee if some apps, such as the Play Store, Gmail, YouTube, Maps etc, are pre-installed on devices, shipping to the EEA. A separate license would be required for Search and Chrome.

    This is how the regulator's moves were intended to work. The EU argued that with apps pre-installed on the Android OS it meant competitors had little motivation to build rival products or even make deals with manufacturers to pre-install different software.

    The question remains - is it too late for competitors? Microsoft, for example, has found it incredibly difficult to compete with Google’s search engine. However, if competing apps come pre-installed on an Android phone, they could make slow gains into Google’s search monopoly.

    Google says these changes will go into effect on 29th October, 2018. However, the company is currently appealing the EU’s antitrust decision.

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