Google Pays $8 Billion to Samsung for Default ‘Play Market’ and Search in Galaxy Devices
In the ongoing legal battle between Epic and Google in San Francisco, details of Google’s $8 billion agreement with Samsung have emerged. Epic alleges Google’s monopoly over the Android mobile app market and cites the Samsung deal as an example of Google’s exclusive arrangements with Android smartphone manufacturers. The deal, initiated four years ago, ensured the pre-installation of Google’s search engine, voice assistant, and app store on Samsung smartphones.
Epic aims to prove that Alphabet Inc.’s executives obstructed the proliferation of third-party app stores, which could have diminished the operational profits of Google Play. According to Epic’s estimates, Google raked in over $12 billion in 2021 solely from the commissions, up to 30%, imposed on app developers in the Play Market.
James Kolotouros, Google’s Vice President of Partnerships, testified in court on Monday about revenue-sharing agreements Google forged with Android mobile device manufacturers. These agreements guaranteed the pre-installation of Google Play on device home screens.
Concerns about declining revenues from Google Play arose in 2014 as Android smartphone manufacturers began launching their app stores and payment systems. From 2019 onwards, Google engaged in negotiations with mobile device manufacturers, excluding Samsung, to secure the placement of its search system and app store on device home screens. The company was willing to spend $2.9 billion in 2020, with the payout increasing to $4.5 billion in 2023, to “ensure platform protection for search, store, and critical apps” on more devices.
To ensure Google Play’s exclusivity, a multi-tiered plan was devised. Major mobile device manufacturers would receive 16% of Google Play revenue, while smaller manufacturers would receive 4% to 8%. The revenue share for gadget manufacturers using Google’s search system was planned to increase to 12%.
In 2019, Google introduced Project Banyan, an initiative to counter the expansion of the Samsung Galaxy App Store. A key motivation for the project was maintaining Play as the leading app distribution platform for Android. Google offered Samsung $200 million over four years to refrain from pre-installing its app store, Samsung Galaxy Store, with its payment system. Though Samsung did not accept this proposal, Google signed three deals with Samsung the following year, committing to pay $8 billion over four years.
Internal Google documents confirm that the company saved nearly $1 billion over four years by abandoning the initial demand for Google Play exclusivity on device home screens. Google Play was placed on the main screen, with “space” for adding the Samsung Galaxy Store, according to the document.
Kolotouros insists that Google did not attempt to reach an agreement prohibiting Samsung from placing its app store on the device’s main screen. He claims the deals aimed to prevent the migration of Samsung device users to iPhones. Google asserts that its policies and agreements with developers and device manufacturers were lawful efforts in the name of competition.
Last week, Epic presented evidence that Google was willing to spend substantial amounts to convince developers to distribute their apps through Google Play. Epic contends that half or more of Google Play’s revenue comes from Samsung devices. Clarifications from Alphabet CEO Sundar Pichai are expected in the upcoming hearing on this matter.
Simultaneously, hearings continue for the antitrust lawsuit in which the U.S. Department of Justice accuses Google of monopolizing the web search market. The plaintiff alleges that Google has long-standing similar agreements to keep its search engine on the main pages of mobile devices.
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- I'm Vasyl Kolomiiets, a seasoned tech journalist regularly contributing to global publications. Having a profound background in information technologies, I seamlessly blended my technical expertise with my passion for writing, venturing into technology journalism. I've covered a wide range of topics including cutting-edge developments and their impacts on society, contributing to leading tech platforms.
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