Google to Charge Phone Makers for Android Apps in Europe

By Adam Satariano

Samsung unveiled its Galaxy Note 9 handset in Brooklyn in August. The device is one of 24,000 that use Google’s Android operating system.CreditCreditTimothy A. Clary/Agence France-Presse — Getty Images

LONDON — Google has always made its Android mobile operating system available free, as a way to get its search engine, web browser and other applications on as many devices as possible to collect data about users and sell advertising.

But on Tuesday, the company said that in response to a European antitrust ruling earlier this year, it would for the first time begin charging handset manufacturers to install Gmail, Google Maps and other top applications for its Android mobile operating system in the European Union.

The new arrangement is the latest sign of global technology companies adjusting their business practices in Europe to account for stiffer regulations.

Online privacy regulations adopted in May have forced companies in Europe to add new data protection policies that restrict how people are tracked across the internet. Germany has adopted tough laws to prevent the spread of hate speech and misinformation that require Facebook, YouTube and Twitter to take down more content or risk fines — a strategy other countries in the region are considering. A copyright law being negotiated in the European Union would also limit what articles and videos a website can post online without a license.

Google faced a deadline to make changes to Android after European regulators in July fined it a record 4.34 billion euros, or about $5 billion, for breaking antitrust laws by unfairly bundling free Android services to maintain its dominance of the online search and advertising market.

By obligating handset makers to load the free apps along with the Android operating system, regulators said Google had boxed out competitors.

Regulators mandated that Google decouple its services. In Europe, handset manufacturers such as Samsung and Huawei will now have more flexibility to pick and choose what applications they want to pre-install on phones.

Google said it would sell a license for a package including its Google Play app store, Gmail, YouTube and Maps. Another license will be available for companies wanting to pre-install Google Search and the Chrome browser, allowing handset makers to partner with rival services.

Google did not say what the charge would be.

The European Commission left Google to come up with its own ways to comply with the decision, putting pressure on regulators to ensure the company is meeting its obligations. Already, Google is facing criticism for not complying with an earlier antitrust ruling over the company’s unfair favoring of its own search results.

Margrethe Vestager, the European Commission’s competition commissioner. In recent years Europe has become a tough watchdog over the global technology industry, with policies that are influencing other countries to take a tougher approach.CreditJohn Thys/Agence France-Presse — Getty Images

The ultimate effect of Tuesday’s change remains to be seen, but European customers are likely to see a wider variety of Android devices available for purchase. Some will come with Google’s services, while others may more prominently feature applications made by rivals.

Android is the world’s largest mobile operating system, powering more than 80 percent of the world’s smartphones. Google said more than 24,000 different kinds of devices are running the software. Android has allowed companies like Samsung to compete against Apple’s iPhone without having to make software of its own.

Google has long provided Android to any gadget maker to use and modify for free. It helped make the software available everywhere, from phones and tablets to cars and refrigerators. But Google tied the use of its popular Play app store, where customers can download more than 1 million apps made by outside developers, to requirements that companies feature other services like Google’s search engine and web browser that drive advertising revenue.

Some handset makers had argued to European regulators that Google’s terms made it impossible for them to create devices less dependent on the search giant’s applications. Now the companies will now have more freedom to offer alternative services without facing consequences from Google.

“Android phone makers wishing to distribute Google apps may now also build noncompatible, or forked, smartphones and tablets” in Europe, Google said in a statement. “They will also be able to license Google Play separately from Search and Chrome, with full freedom to install rival apps as before.”

Google declined to say what financial impact the changes would have, and said the fee was needed to make up for any loss in advertising revenue. But it could make money from handset makers that choose to use its applications. Google will collect the licensing charge and the advertising revenue when its services are used.

Google also plans to offer financial incentives to companies that continue featuring its search engine and browser, a tactic that could give the deep-pocketed company an advantage over other rivals.

Samsung and Huawei, two of the largest makers of Android phones in Europe, had no immediate comment.

The Android changes may not be permanent. Google is appealing the European Commission’s decision, a process that could drag on for years. But if it prevails, the company could revert to bundling its free services.

Europe has become the world’s toughest watchdog over the global technology industry. Once seen as overly aggressive, the policies are now influencing other countries to take a tougher approach. In the United States, where the tech industry has long enjoyed little regulation, members of Congress and the Federal Trade Commission are speaking more favorably of stricter oversight of online platforms such as Facebook and Google.

Follow Adam Satariano on Twitter: @satariano.