Google, Burned By $7 Billion Fine, Tells Europe That Phone Makers Will Have To Pay To Preload Apps

Google, Burned By $7 Billion Fine, Tells Europe That Phone Makers Will Have To Pay To Preload Apps

In response to the record-setting $US5 ($7) billion fine recently levied against Google by the European Union, the search giant is making some changes. On Tuesday, it announced that manufacturers will soon have to pay a licensing fee to ship devices into the European Economic Area (EEA) with Google apps pre-installed.

Google’s Android operating system controls more than 80 per cent of the world’s mobile market share. Its ubiquity is based on it being a quality product and free, open source software. But the full-featured version of the Android OS has required device makers to pre-install a package of Google’s apps like Search and Chrome. This helped cement Google’s massive ad business, because users often just accept the stock apps that come with their phones. But European regulators successfully argued that Google’s practices gave it an unfair advantage against competitors. In July, a court ordered it to change its practices. And this afternoon, Google outlined how it intends to comply in a blog post.

First and foremost, Android will remain open source and device makers will be allowed to tweak the software to their own specifications. They’ll also be allowed to make their own choices when it comes to pre-installing software. But Google explained that its mobile application suite (Play Store, Gmail, YouTube, Maps etc) will require a licence fee if pre-installed on devices shipping to the EEA and a separate licence would be required for Search and Chrome.

We’ve reached out to Google for more information on how the licence fees will be structured, but we did not receive an immediate reply.

At first glance, this might seem like Google using its muscle to pass the consequences of its pseudo-monopolistic behaviour onto others. But this is how the regulators’ moves were intended to work out. Now, competitors have a certain amount of motivation to build rival products or strike deals with manufacturers to pre-install existing software.

The question is whether it’s too late for competitors, in general. Even a company as big as Microsoft has found it incredibly difficult to compete with Google’s search engine. Apple’s Maps rival has floundered. And no one has come close to beating YouTube in the user-generated video streaming market. Still, most of these services have struggled because of the Catch 22 situation in which they need more users generating content and algorithmic data. If competing apps come pre-installed on an Android phone, they could theoretically edge their way into Google’s space.

Another open question is whether manufacturers will even bother to pay the licence fee or pre-install rival apps at all. Outside of including a browser, everything else can just be downloaded from Google by the user after they purchase their device. Why pay a fee when you can just install Firefox and suggest some links?

Google says these changes will go into effect on October 29, but it’s not all set in stone just yet. The company is currently appealing the EU’s antitrust decision.

[Google via The Verge]