Google charging Android device makers up to $40 per phone to install apps

Posted:
in General Discussion edited October 2018
Google's recent EU ruling-driven rule changes for licensing access to the Google Play Store and the company's other apps to Android devices could cost some vendors as much as $40 per unit, according to internal documents, but the high fee could be significantly reduced down or eliminated entirely if Google's clients preinstall specific apps onto European smartphones.




Google announced on Tuesday it will be updating the terms of licensing agreements it makes with Android device producers to allow them to pre-install the Google Play Store and other essential apps on hardware shipping in Europe. The move, to appease an antitrust ruling by the European Commission, means that the free licenses will cease in favor of paid versions.

According to documents received by The Verge, the fee schedule indicates the cost per device could be as high as $40 in order to install "Google Mobile Services," a selection of core Google apps that includes the Google Play Store, for devices activated on or after February 1, 2019.

EU countries are split into three tiers, with the highest consisting of Germany, the Netherlands, Norway, Sweden, and the United Kingdom. For these areas, smartphones with a screen pixel density of 500ppi or more will need to pay $40 to license the apps, reducing to $20 for between 400 and 500ppi, and $10 for sub-400ppi displays. For other tiers, the cost per device could reduce down to $2.50.

Tablets have a more even pricing scheme that is the same across all of the affected countries, charging as much as $20 per device. While vendors would be able to negotiate deals with Google, a source suggests there would be little in the way of variance from what is detailed in the schedule.

The source also suggested that separate agreements would be offered for vendors installing Chrome and Google Search on their products, which could lower the fee or, in some cases, remove it entirely.

Firms who do not pre-install Chrome on their hardware and add it to the home screen dock could also lose another source of revenue, as they would not be eligible for search revenue sharing when users use Google. The revenue sharing incentive has been available for quite some time, and in this case would be useful for vendors to keep using, in order to cover part of the cost of the app suite licensing fees over time.

Google's changes were made following an investigation by the European Commission into its app licensing practices, where the company required vendors to pre-install Google Search and Chrome as a condition of accessing the Google Play Store. Google also allegedly paid major device producers and carriers for exclusively pre-installing the Google Search app.

The Commission fined Google $5 billion, and demanded changes to the licensing scheme within 90 days. The regulator believed Google used Android "as a vehicle to cement the dominance of its search engine," effectively making it extremely difficult for other firms to compete on the Google-dominated platform.

Also as part of the changes, Google will be offering agreements to allow Search and Chrome apps to be installed non-exclusively, with competing apps able to be included on the same device, instead of the previous practice of requiring exclusivity. Other compatibility agreements will allow vendors to produce hardware using forked Android versions, while still allowing them to distribute Google apps.

Comments

  • Reply 1 of 19
    ksecksec Posts: 1,545member
    This gives Apple a competitive advantage, most of the android Phones in EU will now be average $30 more expensive, assuming devices maker don't do any mark up of the software. 
    watto_cobra
  • Reply 2 of 19
    Charging based on the PPI of the screen? That has to be the most bizarre fee structure I've ever seen.
    randominternetpersonracerhomie3netroxchiacrossladcornchipjbdragontycho_macuserwatto_cobrajony0
  • Reply 3 of 19
    maestro64maestro64 Posts: 4,415member
    ksec said:
    This gives Apple a competitive advantage, most of the android Phones in EU will now be average $30 more expensive, assuming devices maker don't do any mark up of the software. 
    I bet the EU did not realize this down side effect to their suit with Google, they got $5B from google and consumer will see higher price phones which the Government get to tax even more, well maybe they did consider this upside effect for them getting more tax money so they can waste it.

    If you think you have problem now, wait until you see the solution your government comes up with.
    edited October 2018 randominternetpersonrossb2cornchipjbdragonexceptionhandlerwatto_cobra
  • Reply 4 of 19
    charlitunacharlituna Posts: 7,198member
    Interesting. I would think that this scaled system with discounts for including certain apps would be as bad as no fee but requiring installation. Wouldn’t it just make more sense to say “hey if you wanna give the OS away you have to do it with zero strings”. Or if they want to charge then it’s one fee or sure they can charge by device size if they can show that it’s different software that simply won’t work as you go down in hardware. I mean fewer features for less money makes sense. If that’s the case. But no discounts for installing whatever
    edited October 2018 watto_cobra
  • Reply 5 of 19
    gatorguygatorguy Posts: 19,805member
    Charging based on the PPI of the screen? That has to be the most bizarre fee structure I've ever seen.
    I suppose it's their way of determining premium market phones (ie Samsung...and there's your reason. See reply to Ksec) from down-market ones. 

    ksec said:
    This gives Apple a competitive advantage, most of the android Phones in EU will now be average $30 more expensive, assuming devices maker don't do any mark up of the software. 
    If you read beyond the first paragraph you'd find that there may be no charge at all depending on how "dedicated" they are to Google services. 

    Nice one Google. Now to win friends and influence people, not!
    It seems that Google wants... oh never mind.
    The EU mandated changes. It's not something Google would have chosen to do without the insistence and fines from the EU Commission. 
    edited October 2018 muthuk_vanalingamphilboogie
  • Reply 6 of 19
    Nice one Google. Now to win friends and influence people, not!
    It seems that Google wants... oh never mind. I'm done with Google.
    watto_cobra
  • Reply 7 of 19
    croprcropr Posts: 883member
    ksec said:
    This gives Apple a competitive advantage, most of the android Phones in EU will now be average $30 more expensive, assuming devices maker don't do any mark up of the software. 
    I don't think the Android phones will become more expensive.  The proposed charging gives smartphone vendors the theoretical opportunity to build an Android Phone with the Play store access but without Chrome and Google search pre-installed.  The chances that a vendor in Europe is willing to pay 40$ for this possibility is about 0%.  This is nothing more than window dressing.  In other parts of the world where Google search does not have a 95% market share, this might happen, but the offer of Google is only available in the EU.
    muthuk_vanalingam
  • Reply 8 of 19
    This could destroy the entire profitless Android “dumpster phone” market which has flooded markets by the Chinese and Koreans 
    jbdragonwatto_cobra
  • Reply 9 of 19
    Rayz2016Rayz2016 Posts: 4,556member
    Still a bit of a head scratcher for me.

    Hurts competition? No, there are more folk making Android phones than you can shake a stick at.
    Hikes prices? No, these things were getting cheaper by the minute.
    Prevents companies from entering the market? They're not making any money, but no one's stopping them.

    So now consumers are getting the same crappy phones at higher prices?



    cornchipjbdragonwatto_cobrajony0
  • Reply 10 of 19
    This is more or less what I'd expect in the wake of the European Commission's decision.

    Google now needs to monetize the part of its services which device makers really need (i.e. Play Store accessibility) directly by charging for it. On the flip side, it might need to pay device makers to pre-install the parts which device makers may not need as much, but which Google really needs to have on Android phones in order for Android to be a major profit driver for Google (i.e. Google Search and Chrome). The key, when it comes to compliance with the Commission's decision, will be that those things be separate transactions. For instance, device makers will have to be allowed to license the Play Store even if they aren't willing to pre-install Google Search and Chrome.

    While this will represent an additional cost for device makers, it will also potentially open up a new (or strengthen an existing) revenue stream for device makers. Search and browser providers can compete for pre-installed status on various devices. Microsoft, e.g., might be willing to pay a substantial amount to effectively be the default search service on some devices. Or Google might have to pay more to retain that status.
    Gaby
  • Reply 11 of 19
    Um, did a bot write the summary of this story???
    Google's recent EU ruling-driven rule changes for licensing access to the Google Play Store and the company's other apps to Android devices could cost some vendors as much as $40 per unit, according to internal documents, but the high fee could be significantly reduced down or eliminated entirely if Google's clients preinstall specific apps onto European smartphones. 
    I have no idea what an "EU ruling-driven rule change" is, and I'm fairly certain that "down" is the ONLY way you can "reduce" a price. It can't be "reduced up." 
    watto_cobra
  • Reply 12 of 19
    fronesis said:
    Um, did a bot write the summary of this story???
    Google's recent EU ruling-driven rule changes for licensing access to the Google Play Store and the company's other apps to Android devices could cost some vendors as much as $40 per unit, according to internal documents, but the high fee could be significantly reduced down or eliminated entirely if Google's clients preinstall specific apps onto European smartphones. 
    I have no idea what an "EU ruling-driven rule change" is, and I'm fairly certain that "down" is the ONLY way you can "reduce" a price. It can't be "reduced up." 
    The EU issued a ruling to Google to make policy changes. Th changes made by Google are a “rule change” in the policy. 

    Umm, yeah, to your second point. It would have read just fine as “reduced or eliminated”. 
    edited October 2018
  • Reply 13 of 19
    Is that way Google doesn't have to pay itself royalties? It's screen is a single "Pixel", so it has no density.
    philboogiecornchipwatto_cobra
  • Reply 14 of 19
    Charging based on the PPI of the screen? That has to be the most bizarre fee structure I've ever seen.

    In Eastern/Asian countries, they have a lot of cheap knock-off phones with really low-quality screens. Such phones would never survive in our marketplace here in the West. The user experience is well below grade, but "good enough" for people with limited budgets.

  • Reply 15 of 19
    davidwdavidw Posts: 938member
    Charging based on the PPI of the screen? That has to be the most bizarre fee structure I've ever seen.
     When one think about it, it's a round-a-bout way for Google to charge a licensing fee, based on the cost of the phone. Phones with higher PPI cost more, thus are charged more for the same license that will cost less for lower priced phones, with lower PPI screens. If a vendor wants to lower the licensing fee by installing a lower PPI screen, then they have to lower the cost of the phone as buyers won't be willing to pay as much for it, as a phone that comes with a better screen.  
    cornchip
  • Reply 16 of 19
    so to satisfy EU antitrust, giggle resorts to bribery?

    I seem to remember a phrase "shooting yourself in the foot".
    cornchipGabyGabywatto_cobra
  • Reply 17 of 19
    fronesis said:
    Um, did a bot write the summary of this story???
    Google's recent EU ruling-driven rule changes for licensing access to the Google Play Store and the company's other apps to Android devices could cost some vendors as much as $40 per unit, according to internal documents, but the high fee could be significantly reduced down or eliminated entirely if Google's clients preinstall specific apps onto European smartphones. 
    I have no idea what an "EU ruling-driven rule change" is, and I'm fairly certain that "down" is the ONLY way you can "reduce" a price. It can't be "reduced up." 
    The EU issued a ruling to Google to make policy changes. The changes made by Google are a “rule change” in the policy. 
    You are right: that IS what they were trying to say! :) The hyphenation and the repetition of the word "rule" (with two different referents) made it impossible for me to follow; technically the hyphenation should be "EU-ruling-driven-rule-change" since it's one single object to which they are referring. 

    If editors still existed in this world, one of them might have suggested something like this: "Google's recent changes to its licensing policy (dictated by an early EU ruling) could cost..."
    watto_cobra
  • Reply 18 of 19
    foggyhillfoggyhill Posts: 4,767member
    Rayz2016 said:
    Still a bit of a head scratcher for me.

    Hurts competition? No, there are more folk making Android phones than you can shake a stick at.
    Hikes prices? No, these things were getting cheaper by the minute.
    Prevents companies from entering the market? They're not making any money, but no one's stopping them.

    So now consumers are getting the same crappy phones at higher prices?



    It allow the own phone makers to reclaim their platform from google and differentiate on software offers not just hardware. It also allows them to monetize themselves as a broker to their market. That way a few will have more profits than before and clients more offers as software services will compete with those venues
  • Reply 19 of 19
    GabyGaby Posts: 42member
    fronesis said:
    Um, did a bot write the summary of this story???
    Google's recent EU ruling-driven rule changes for licensing access to the Google Play Store and the company's other apps to Android devices could cost some vendors as much as $40 per unit, according to internal documents, but the high fee could be significantly reduced down or eliminated entirely if Google's clients preinstall specific apps onto European smartphones. 
    I have no idea what an "EU ruling-driven rule change" is, and I'm fairly certain that "down" is the ONLY way you can "reduce" a price. It can't be "reduced up." 
    The EU issued a ruling to Google to make policy changes. Th changes made by Google are a “rule change” in the policy. 

    Umm, yeah, to your second point. It would have read just fine as “reduced or eliminated”. 
    It’s called tautology. - repeating the same thing with different words. 
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