Google Has Yet Again Turned an Antitrust Ruling Into a New Money-Making Opportunity
Google has announced how it will change its relationships with Android phone manufacturers, in order to comply with the European Union’s big antitrust ruling against it. And, in line with its previous tactics, the changes it’s introducing will give Google a new revenue source—this time by charging manufacturers to sell Android devices in Europe.
The European Commission’s July decision may have hit the headlines for the $5 billion fine that it involved—a fine that Google (GOOGL) is now appealing—but even more meaningful were the measures that the Commission insisted Google must take, to stop abusing its control over the Android ecosystem.
These are fundamental changes. As Google explained in a Tuesday blog post, the company will now allow manufacturers of Android devices to sell (in the European Economic Area) devices using a non-Google flavor of the open-source operating system, even if they also sell phones and tablets with Google’s apps on them.
Google previously did not allow this, which is why you don’t see many mobile devices out there running alternative versions of Android—Amazon (AMZN), for example, couldn’t get any manufacturers of regular Android phones or tablets to also make devices using its Android-based Fire operating system.
The Samsungs and LGs of this world will also, as of October 29, be able to install Google apps on their European products without having to also install Google Search and the company’s Chrome browser.
Crucially, this means they will be able to offer Google’s well-stocked Play app store while also giving prominence to alternative search apps and browsers. Search and Chrome will now come with their own licenses, rather than being bundled with Google’s other apps.
This is where the new revenue source comes in. “Since the pre-installation of Google Search and Chrome together with our other apps helped us fund the development and free distribution of Android, we will introduce a new paid licensing agreement for smartphones and tablets shipped into the [European Economic Area,]” wrote Hiroshi Lockheimer, Google’s senior vice president for platforms and ecosystems.
It’s not clear how much Google will charge manufacturers, or whether this would make Android devices more expensive in Europe—as the artificial suppression of non-Google versions of Android is now drawing to a close, setting too high a fee might work against Google’s interests.
This is not the first time Google has tried to turn compliance with an EU antitrust decision into a new money-spinner.
The Android decision came roughly a year after the Commission fined Google $2.7 billion for abusing its dominant position in the search market by boosting its own comparison shopping services, to the detriment of rival services. That fine (which Google is also appealing) was also accompanied by demands for Google to change its ways.
Google’s solution in that case was to allow competitors in the comparison shopping space to bid for the chance to have their results show up in the shopping box that tops results pages for product searches. Google previously reserved that prominent position for its own comparison shopping service, but now it gets to make up for the loss of that exclusivity by making more money.