Google Pays Samsung $124 Billion
Google has reportedly paid Samsung $8 billion (around Rp 124.3 trillion) to have its services, including Google Search, Google Assistant, and the Google Play Store, pre-installed on Samsung smartphones. The agreement, which runs for four years, was revealed in a trial in San Francisco, California, where Google is being sued by Epic Games for antitrust violations.
Epic Games' lawyer, Lauren Moskowitz, cited the agreement as an example of how Google has been sharing Play Store revenue with Android device vendors to ensure that its services are installed on their devices.
Google Vice President of Partnerships James Kolotouros confirmed the agreement in his testimony. He also revealed that Samsung contributes half or more of Play Store revenue.
Epic Games is trying to show that Google executives are so intent on preventing the distribution of third-party app stores because they would reduce Play Store profits. According to Epic's lawyer, Google also offered Samsung $200 million (around Rp 3.1 trillion) over four years in 2019 to have the Samsung Galaxy Store available in the Play Store, not as a pre-installed app on Samsung phones. This would also have prevented Samsung from offering its own payment or billing system.
However, Google later scrapped that proposal. Ultimately, Google and Samsung agreed to three agreements worth $8 billion over four years, as Kolotouros revealed. The agreements were signed in 2020. Kolotouros also confirmed that Google and Samsung never agreed on the placement of the Galaxy Store on the home screen or in the app drawer.
The agreements are also aimed at preventing users from switching from Samsung Android devices to iPhones. Kolotouros argued that this practice is legitimate, both between Google and device vendors and developers, under the guise of healthy competition.
Google Search Monopoly Allegations
Not only Epic Games, but also the U.S. Department of Justice (DOJ) and a coalition of U.S. states have accused Google of engaging in monopolistic practices and maintaining its dominance of the Google Search engine.
According to the DOJ, Google has entered into billions of dollars worth of agreements with browser developers and phone makers, such as Apple, Samsung, Mozilla, and others, to make Google Search the default search engine on their devices.
The DOJ says that Google typically pays more than $10 billion (around Rp 153.7 trillion) per year for this privilege. This gives Google access to a large amount of user data that helps it maintain its dominance and grip on the market. With this privilege, Google reportedly controls around 90% of the general search market share, far ahead of its closest competitor, Bing.
One of the concerns is Google Search on the Safari browser on Apple devices. According to the DOJ, when Apple first installed Google as the default search engine in Safari in 2002, there was no payment agreement involved.
However, in 2005, Google began proposing to pay Apple to keep Search as the default search engine. This was done because Google was afraid that its dominance would be eroded. Gradually, the DOJ says, Google used the payment agreement to threaten Apple.
Google threatened to cancel the payments if other companies got similar access. Google also prohibited Apple from expanding its own search products. As a result, iPhone, iPad, Mac, and MacBook users still use Google Search by default when browsing the internet.
Samsung, which makes Android phones, also does not work with different search companies. This is believed to be due to a payment agreement with Google.
Google denies that it engages in anti-competitive practices in an illegal way.
Google says it faces stiff competition, not only from general search companies, such as Microsoft Bing, but also from more specialized sites and apps that people use to find restaurants, flights, and more.
On the issue of Google Search being the default search engine, Google argues that users can switch to a different search engine with a few clicks. Google insists that its company competes in winning pre-installation and default status. In addition, that browsers and their Android partners believe Google is the best search engine for their users, so it is installed as the default search engine.
The trial is ongoing and it is unclear what the outcome will be. However, the allegations against Google are serious and could have a significant impact on the company's business.