Complying with EU order
Alphabet’s (GOOGL) Google is ending its practice of requiring Android device makers to pre-install its Search and Chrome browser apps on their products as a condition for access to its Google Play app store. At the same time, the company is introducing charges whereby Android device makers will have to pay licensing fees if they want to pre-install its popular apps, including Gmail, Google Maps, and YouTube, on devices sold in Europe.
Google is making these changes as part of its compliance with an EU order. In July, the European Union’s antitrust agency ruled that Google had been abusing Android’s market dominance, hitting the company with a $5.0 billion fine and ordering it to make changes to how it licenses its Android operating system to handset makers.
Android powers the majority of smartphones
Google lets manufacturers use Android free of charge alongside its Google Play store, but it makes money from the Android platform by agreeing to pre-install its moneymaking Search app on manufacturers’ Android devices. The vast majority of smartphones are powered by Android. At the end of September, 73.5% of smartphones in use in Europe ran Android compared to 25.1% running Apple’s iOS and less than 1.0% running Microsoft (MSFT) Windows, according to StatCounter.
Internet search engine competition
Samsung (SSNLF) and Huawei are two of the largest Android phone makers, accounting for 19.3% and 13.3% of global smartphone shipments in the second quarter, respectively.
The EU antitrust agency argued that Google’s arrangement with Android device makers to pre-install its Search app stifled competition. In Europe, Google’s Internet search engine competitors included Yandex (YNDX), Bing, and Verizon’s (VZ) Yahoo. Google held 93.3% of Europe’s Internet search engine market at the end of September compared to 2.3% for Yandex, 2.2% for Bing, and 1.2% for Yahoo.