Android device manufacturers could pay Google up to $40 for each phone in EU to license certain apps: The other day, we told you that Google was going to stop having manufacturers sign agreements requiring them to pre-install certain Google apps on their Android phones, such as Chrome and Google Search, in order to include the Google Play Store with their devices. This was the result of a $5 billion fine that the EU imposed on Google during the summer after it found that the company had violated certain antitrust regulations in the common market.
Google will now allow manufacturers to use alternative third party apps instead of Chrome and Google Search. But since Google will lose the ad revenue it collected from those apps, it will start charging a licensing fee for those who skip out on Chrome and Search but still want the Google Play Store on their devices. A confidential document examined by The Verge reveals that Google will charge these manufacturers up to $40 a phone for the use of “Google Mobile Services.” This is a suite of apps that includes the Google Play Store. The agreement starts with Android devices that are activated on or after February 1st, 2019. Manufacturers who don’t install Chrome on their phones will no longer receive a share of ad revenue generated by that app.
The actual licensing fees that Google is asking for depends on the country where the device is being sold, and the pixel density of the phone. The EU is separated into three tiers by Google with the top tier consisting of the U.K., Sweden, Germany, Norway, and the Netherlands. Devices in those countries with a pixel density above 500 would cost the manufacturer $40 for each unit to license Google Mobile Services. The sliding scale drops to a $20 fee for devices in that tier carrying a pixel density between 400 and 500, and $10 for models with a ppi under 400. In some markets, the fee on low-end units could be only $2.50 for each device.
However, some manufacturers might not have to pay the aforementioned amounts. Google will apparently offer to cover part or even all of the licensing cost if a manufacturer agrees to install Chrome and Google Search on its devices. This would be covered under a separate agreement between Google and the company producing the phone.
While a $5 billion fine is real money, Google parent Alphabet is currently valued at $765 billion. Truthfully, the only people getting spanked here will be phone buyers in the EU as manufacturers will no doubt raise prices to cover the new fees. And that is a shame because the antitrust laws on the books are supposed to protect the public from having to pay unreasonable prices for services offered by a monopoly. In this case, the EU regulations are going to result in higher smartphone prices in that market, hurting the very consumers that they are supposed to help.