Google Will Charge Phone Makers to Pre-Install Apps in Europe -- Update
October 16 2018 - 12:16PM
Dow Jones News
By Sam Schechner
For phone makers selling devices in Europe, Google-owned apps
like Gmail, YouTube and Google Maps are about to get a new feature:
a price.
Alphabet Inc.'s Google said Tuesday that it will start charging
device manufacturers fees to pre-install Google apps on devices
running the company's Android operating system in Europe, a stark
shift in the business model for an advertising-dominated company
that has until now distributed its consumer software for free on
mobile devices.
The company disclosed the shift as part of its plan to comply
with the European Union's antitrust order in July that fined the
search company EUR4.34 billion ($5.03 billion) for allegedly
abusing Android's dominance. Google has appealed the decision, but
faces an Oct. 29 deadline to implement it or face further
fines.
As part of the decision, the EU ordered Google to stop forcing
phone manufacturers to pre-install its cash-cow search engine and
the Chrome web browser if they want to pre-install Google's Play
store, which is the dominant way to download Android apps. It also
ordered Google to stop restricting phone makers from selling
tweaked versions of Android if they also want to sell an official
Android phone.
Google said Tuesday that it has dropped those restrictions. But
it will start charging an unspecified per-device license fee for
manufacturers to pre-install the suite of apps that includes the
Play store. Google declined to specify the fee, except to say it
will be modest and apply uniformly across all manufacturers.
People close to the company said it applied the fee to guarantee
the viability of the Android business model if it can no longer
bundle its biggest moneymaking apps in the EU.
The change will have ripple effects on the global mobile phone
ecosystem around the world. While the new fees only apply to
devices sold in Europe, phone makers in Asia, the U.S. and
elsewhere will have to adjust their cost structures in Europe --
one of the world's most mature smartphone markets. Consumers bought
more than 94 million new Android smartphones in Europe last year,
according to research firm IDC.
Write to Sam Schechner at sam.schechner@wsj.com
(END) Dow Jones Newswires
October 16, 2018 13:01 ET (17:01 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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