Google To Charge For Its Android Apps In The EU - Update: Annual Revenue of $5 Billion
Written by Mike James   
Monday, 22 October 2018

The European Commission's strong approach to controlling all things computing might be a good thing, but it is certainly creating a two-tier environment. Google is now going to charge for its Android Apps and services but only in the European Economic Area.

Update: 22 October 2018

Google seems to be planning to charge as much as $40 per phone for access to its Apps. The charge is to be applied from the 29th October on new smartphones and tablets running Android with the Play Store, Gmail, Maps and so on. It also seems that the fee will be tailored according to the size of the device and country it is to be sold to. A lower charge will also apply for phones that only use Google's search engine and Chrome browser. Even so it seems that the average charge will be around $20 per phone. Using the figure of around 350 million Android phones sold worldwide per quarter (Gartner) and an estimate of the number of phone users in the EU (using data gathered by Wikipedia) as 15% of world total means that a ballpark figure for Google's income from the move is around $5 Billion per annum. Of course, there is a wide margin of error in this estimate - but unless the Android market in the EU collapses because of the charge, it does seem that Google will earn back the EU imposed fine in around a year.

It is also interesting to note that if the same licence was applied world wide Google would earn more than $30 Billion per annum.

Original news report continues below:

androidEU

I have to admit that this news raises more questions that I can currently answer and it is far from clear how all of this is going to work. The basic idea, however, is simple enough.

Google was fined $5 billion for monopolizing Android services. It used Android as a way to increase its domination of the search engine market. Google is appealing the case but this could take a long time and so it has changed the way Android is licensed in the European Union (EU).

"Going forward, Android partners wishing to distribute Google apps may also build non-compatible, or forked, smartphones and tablets for the European Economic Area (EEA)."

So no more Google lock down and if you make an Android phone with Google apps you can also build a phone using a non-Google oriented version of Android. This is clearly good and an extra freedom, although it is difficult to know how many phone makers want to create a whole new phone OS that is just targeted at the EEA. It also raises the question of how Google is going to police the arrangement.

"Second, device manufacturers will be able to license the Google mobile application suite separately from the Google Search App or the Chrome browser. 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 EEA. Android will remain free and open source."

This is a bit of a shock and it is likely going to be a shock to phone makers and buyers in the EEA. Phone makers are likely going to have to pay to install Gmail, Drive, Play and so on. This is likely to result in the cost being passed on and so Android phones in the EEA are going to cost more with the Google bundle than without. Again it raises the question of how this is going to be enforced?

Some analysts have stated that this is a clever move that doesn't harm Google's position in Android, but I'm not sure that this is true. To a big extent it depends on how much the licences cost. No matter what the cost, it is a pressure against using Google services for the end user. It is worth remembering the  Larry Page quote:

"Android isn't critical, it's a delivery vehicle for Google services."

Finally we have:

"Third, we will offer separate licenses to the Google Search app and to Chrome."

My reading of this is that you can now have Chrome without Google search. Also:

"We’ll also offer new commercial agreements to partners for the non-exclusive pre-installation and placement of Google Search and Chrome. As before, competing apps may be pre-installed alongside ours."

So overall it is a loosening of Google's hold on Android in the EEA as manufacturers are now able to offer both non-Google and Google versions of their phones. However, to offer a fully Google-based phone there is a financial cost and this is an incentive to move to the non-Google version. This has got to hurt Google's position; how much depends on how much it charges.

Are they trying to recoup the $5 billion fine while appearing to drop the monopoly of Android?

Is this an attempt to punish the EU by increasing prices for increasing regulation?

It is difficult to say, but both are possible.

The new licensing options are to come into effect on October 29. How the borders of the EU (or the rather larger area that constitutes the EEA) are to be policed to make sure that phones intended for other regions aren't available under the counter is yet to be seen. Of course, the smuggling may go the other way, "wanna buy this Google-Free phone from a top manufacturer not available in the US?"

The fragmentation of the market is clearly not a good move, even if it does offer the prospect of alternatives to the Google app suite, and even to complete forks of Android like Amazon's Fire.

androidEU

 

More Information

Complying with the EC’s Android decision

Related Articles

Android's Uncertain Future

Is Google's Fuchsia OS Destined For Android?

Google's Fuchsia OS And The Forking Of Swift

Larry Page says - Android Not Critical for Google

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Last Updated ( Monday, 22 October 2018 )