Google Play: Android’s Existential Imperative!

According to testimony from Epic Games Inc., Google has agreed to a payment of $8 billion over a span of four years to Samsung Electronics Co. This payment is intended to ensure that Google’s search engine, voice assistant, and Play Store are set as the default options on Samsung’s mobile devices.

James Kolotouros, Google’s director of partnerships, testified Monday under questioning by Epic’s attorney at a San Francisco trial that Google planned to share app store revenue with Android mobile device manufacturers to ensure their products have Google Play preinstalled on home screens.

Epic, the maker of the popular Fortnite game, claims that the tech giant’s app market violates competition laws. Epic’s lawyer presented the deal with Samsung as an example of Google’s deals with mobile phone manufacturers that use the Android operating system that began four years ago. Kolotouros’ testimony revealed that Samsung devices generate half or more of Google Play’s revenue.

Epic is seeking to show that executives at Alphabet Inc. wanted to prevent the proliferation of third-party app stores, which would erode Google Play’s operating profit — which Epic previously estimated in a trial at more than $12 billion in 2021. , from sales that include a standard 30% cut of revenue that the company took from app developers.

Monday’s testimony followed evidence presented by Epic last week to show that Google was so concerned about game developers publishing their products independently that it was willing to pay millions to keep them on Google Play. On Tuesday, Epic’s lawyers will question Alphabet CEO Sundar Pichai.

Google has long made similar deals to keep its search engine as the preferred choice on mobile devices — deals that are at the center of a separate antitrust battle with the Justice Department in an ongoing lawsuit in Washington.

“The Existential Question”

In 2019, Epic’s attorney Lauren Moskowitz gave an internal presentation at Google about “Project Banyan,” an initiative that involved investing funds to make the Google Play Store stand up against Samsung’s Galaxy App Store. The first slide said: “The existential question – How do we continue to keep Play as the most important distribution platform for Android?”

In 2019, Google offered to pay Samsung $200 million over four years so that Samsung’s Galaxy Store app store would be available pre-installed on the Google Play store and the South Korean device manufacturer would not offer its own payment or billing system. But that proposal was rejected, and Google signed three deals with Samsung the following year, worth $8 billion over four years.

An internal document showed that Google saved nearly $1 billion over four years by withdrawing its request to make Google Play available exclusively on the device’s first screen, known as the Home screen. That meant Google Play appeared on the home screen, but there was “room” for Samsung to add the Galaxy Store as well, according to the document.

Internal emails

Epic’s lawyer questioned Kolotouros about internal emails that showed Google employees worried about Google Play revenue being compromised as Android phone makers began launching their own app stores and payment systems. One of the emails revealed that Amazon was perceived as a threat: “I’m concerned about the Amazon store (200,000 apps and growing) getting a foothold in the Android world,” a colleague wrote to Kolotouros in 2014.

Another internal presentation showed Google’s plans in 2019 to offer mobile device makers in addition to Samsung a Google Play revenue cut to protect the company’s search engine and app from being ignored on mobile devices. A proposal was made to Google’s senior executives that the company would spend $2.9 billion in 2020, rising to $4.5 billion in 2023 through Search and Play. Wireless operators and non-Samsung manufacturers are supposed to secure platform protections for Search and Play, as well as critical applications. protections for more devices.”

To secure Google Play’s “exclusivity,” the company put together a tiered plan that would offer a 16% share of Google Play revenue to mobile device manufacturers, or 4-8% of app store sales to smaller manufacturers. It would also increase the share of search business sales by up to 12 percent.

Under questioning from Google attorney Glenn Pomerantz, Kolotouros said Google and Samsung never reached an agreement that would prevent Samsung from placing its Galaxy store on a device’s home screen. The deals were intended to prevent users from switching from Samsung Android devices to Apple Inc’s iPhone, Kolotouros said, bolstering Google’s claims that its practices and agreements with developers and device makers were legitimate efforts in the name of competition.

In July 2019, Google lawyers showed an email from Jamie Rosenberg, who previously led Google Play and Android operations and now serves as an adviser, saying his team was “stopping” Project Banyan. “It created an incentive dynamic where store teams compete against each other,” according to the email.