(Bloomberg) – Google will pay Samsung Electronics $8 billion over four years to make its search engine, voice assistant and Play Store the default on its mobile devices, according to testimony filed by Epic Games. agreed.
James Kolotouros, Google’s vice president of partnerships, said Monday in a San Francisco trial that, under questioning from Epic’s lawyers, Google uses app store revenue from Android phones to ensure that its products come pre-installed with Google Play on the home screen. He testified that he devised a plan to share with the manufacturer.
Epic, the maker of the popular game Fortnite, and Milfy City has alleged that the tech giant’s app marketplace violates antitrust laws. Epic’s lawyers offered the deal with Samsung as an example of deals Google has made four years ago with cell phone makers using the Android operating system. Kolotouros’ testimony revealed that Samsung devices account for more than half of Google Play’s revenue.
Epic is trying to prove that executives at Alphabet Inc.’s division were intent on preventing the proliferation of third-party app stores that would eat into Google Play’s operating profits. Google Play’s operating profit was estimated by Epic at the beginning of the trial to be more than $12 billion in 2021. , from sales that include the standard 30% revenue cut the company receives from app developers.
Monday’s testimony goes to show that Google is so concerned about game developers releasing products on their own that it is willing to spend millions of dollars to convince them to stick with Google Play. , which followed evidence Epic submitted last week. On Tuesday, Epic’s lawyers will question Alphabet CEO Sundar Pichai.
Google has long had similar agreements to keep its search engine the pre-selected option on mobile devices. The agreement is at the center of a separate antitrust showdown with the Justice Department in a court case in Washington.
“Existential Question”
Epic attorney Lauren Moskowitz highlighted a 2019 internal Google presentation about Project Banyan, an effort to invest money to help the Google Play Store compete with Samsung’s Galaxy App Store. The first slide read, “Existential Questions — How do we keep Play as the preeminent distribution platform for Android?”
In 2019, Google made Samsung’s Galaxy Store app marketplace available within the Google Play Store rather than pre-installed, and gave Samsung a 4. He proposed paying $200 million a year. However, this proposal was scrapped, and Google signed three contracts with Samsung the following year worth $8 billion over four years.
Google has saved about $1 billion over four years by rescinding a request to make Google Play available exclusively on a device’s first screen (known as the home screen), according to an internal document. According to the document, this means Google Play will appear on the home screen, but Samsung also has “room” to add Galaxy Store as well.
Internal email
Epic’s lawyers told Kolotouros about internal emails showing Google employees were concerned that Google Play revenue was at risk as Android phone makers began launching their own app stores and payment systems. asked. In an email he made it clear that Amazon is perceived to be a threat. “I’m worried that the Amazon store (which has 200,000 apps and continues to grow) will gain a foothold in his Android world,” a colleague wrote in Kolotouros in 2014. .
In another internal presentation, Google announced plans in 2019 to offer a portion of Google Play revenue to mobile device manufacturers other than Samsung to prevent its search engine and apps from being sidelined on mobile devices. Indicated. Google executives told wireless carriers and non-Samsung manufacturers that the company would spend $2.9 billion across Search and Play in 2020 to “ensure platform protection for Search and Play and critical apps.” However, a proposal was made to expand the amount to $4.5 billion in 2023. Protect more devices. ”
To ensure Google Play’s “exclusivity,” the company has outlined a phased plan that would give 16% of Google Play revenue to handset manufacturers and 4% to 8% of app store sales to smaller manufacturers. . Additionally, the company plans to increase its revenue share from search business sales to a maximum of 12%.
Under questioning from Google attorney Glenn Pomerantz, Kolotouros said Google and Samsung have never reached an agreement to prohibit Samsung from putting the Galaxy Store on devices’ home screens. Kolotouros said the agreement was aimed at preventing users from switching from Samsung’s Android devices to Apple’s iPhones, and that the company’s policies and agreements with developers and device manufacturers were legitimate efforts in the name of competition. He said this supports Google’s claims that there was.
Google’s lawyers showed a July 2019 email from Jamie Rosenberg, who previously led Google Play and Android operations and is now an advisor, saying his team had “shut down” Project Banyan. He said there was. “It has created an incentive dynamic for store teams to compete with each other,” the email said.
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