Google Pays Samsung $8 Billions to Keep Galaxy Users Locked in Its Ecosystem

Epic Games Inc. testified that Google had agreed to pay Samsung Electronics Co. $8 billion over the course of four years to set its search engine, voice assistance, and Play Store as the company’s default apps on its mobile devices. Under cross-examination from an Epic attorney on Monday during the San Francisco trial, Google Vice President of Partnerships James Kolotouros revealed that the company came up with the scheme to split App Store profits with manufacturers of Android smartphones so that their products would ship with Google Play pre-installed on the home screen.

Big G’s App Store allegedly breaks antitrust rules, as per Epic, the company behind the will not game Fortnite. The agreement with Samsung was showcased by an Epic attorney as an illustration of Google’s four-year-old agreements with manufacturers of Android-powered smartphones. As per Kolotouros’ evidence, Google Play makes at least half of its money from Samsung headsets. In an attempt to discredit third-party app shops, which Epic projected in a previous test would cost Google $12 million in operational profit in 2021, Epic is attempting to demonstrate that management at the Alphabet Inc. company was keen to hinder their spread.

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Including the customary 30% revenue share the corporation collects from app developers, more than a billion was invested from sales. Google has suggested investing $2.9 billion in 2020 to ensure that search, play, and other critical apps are available on devices for partners that are not Samsung, such as non-Android OEMs and cellular carriers. As a part of this, the makers will receive some cash from Google Play and Search ad sales, this is called RSA 3.0. Samsung would be able to supply its own payment or billing, while Google promised to pay Samsung $200 million over four years in 2019 in exchange for the Galaxy Store app marketplace being accessible through the Google Play Store instead of being pre-installed.

Internal Mails:

Google workers were worried that Google Play earnings were in jeopardy when Android phone manufacturers started creating their own app stores and payment systems, as per internal emails that Epic’s attorneys questioned Kolotouros about. One email states that Amazon was viewed as a potential danger. Coworker Colotouros emailed in 2014, “I’m concerned that the Amazon Store (200K apps and growing) is gaining a foothold in the Android world.” In order to prevent its search engine and applications from being neglected on mobile devices, Google proposed in another internal presentation from 2019 to provide a portion of Google Play revenue to manufacturers of mobile devices other than Samsung.

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Kolotouros stated that Google and Samsung never came to a consensus that would have stopped Samsung from putting its Galaxy Store on device home screens when questioned by Google attorney Glenn Pomerantz. To him, the arrangement is intended to keep customers from moving from Samsung Android phones to iPhones made by Apple. This supports Google’s arguments that agreements and regulations with developers and device manufacturers are justifiable attempts to promote competition. Attorneys for Google revealed an email sent in July 2019 by Jamie Rosenberg, a consultant who formerly oversaw Android and Google Play operations, stating that his team was pausing Project Banyan. An incentive dynamic where shoppings would compete with one another was formed following the email.

Additionally, manufacturers are required to pre-install Google applications and are prohibited from including rival ones on devices in the “RSA 3.0 Premier tier” of handsets, which are eligible for full revenue share. You may preload rival app stores, though, if you are not on the tier.

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Thanks to “Bloomberg