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Google launches paid licensing after $5bn fine

Written by Hannah McGrath
/17/10/2018

Google is planning to introduce new ‘paid licensing agreements’ for manufacturers of smartphones and tablets that run its software and apps, in order to comply with a landmark European Union ruling on the dominance of its Android operating system.

The move, which will see manufacturers shipping devices into the EU charged for pre-installation of its apps and browser, is a response to an ultimatum issued by to the EU Commission’s competition watchdog in July, which handed the search giant a record $5 billion fine for abusing the monopoly over its Android operating system.

Google is currently appealing the decision, but is now complying with the antitrust watchdog’s ruling that it no longer require device makers to pre-install a bundle of its most popular apps browser for access to the Play store.

The Commission gave Google 90 days to correct the anti-trust issues it had identified, or risk being fined up to five per cent of the daily revenue of Alphabet, its parent company, which could amount to more than $15 million a day.

In a blog post on the company’s website, Google’s senior vice president of platforms and ecosystems, Hiroshi Lockheimer explained that the crackdown by European regulators meant the company was introducing a number of changes to licensing agreements with European smartphone and tablet manufacturers, with effect from 29 October 2018.

The first of these will enable device manufacturers to license the Google mobile applications suite separately from the Google Search App and the Chrome, meaning that EU-based mobile device makers that use Android will not be required to accept the full bundle of the company’s apps.

However, as Google would no longer be able to sell of pre-installation of Google apps as a service, the blog post set out plans to recoup the revenue by introducing paid licensing agreements in order to keep Android, its open source operating system, available for free.

Lockheimer explained: “Since the pre-installation of Google Search and Chrome together with our other apps helped us fund the development and free distribution of Android, we will introduce a new paid licensing agreement for smartphones and tablets shipped into the EEA.

“Android will remain free and open source,” he added.

The company said it would work with its Android partners to assist with the transition to new agreements and that new commercial agreements would be offered for the non-exclusive pre-installation of Google Search and Chrome.