A significant revelation has emerged as the legal battle between Epic Games and Google unfolds, revealing intricate details about the tech industry’s inner workings. In recent testimony reported by Bloomberg, James Kolotouros, Google’s Vice President for Partnerships, disclosed that Samsung devices accounted for “half or more” of the revenue generated on Google Play as of early 2019.
The testimony shed light on a pivotal moment in 2020 when Google entered into three deals with Samsung, agreeing to a substantial $8 billion payout over four years. This agreement aimed to establish Google’s Search, Assistant, and the Play Store as the default services on Samsung devices. Notably, Google’s decision to invest in Samsung was part of a strategic move to enhance the Android experience, positioning it favorably against competitors like Apple and appealing to potential iPhone switchers.
Before finalizing these deals, Google considered, and later abandoned, a proposal that would have restricted Samsung from placing the Galaxy Store on device home screens. The ongoing lawsuit underscores Google’s arguments about the steps taken to improve Android’s functionality and user experience.
For non-Samsung partners, including various Android OEMs and wireless carriers, Google proposed a significant investment of $2.9 billion in 2020, with a planned increase to $4.5 billion in 2023. This financial commitment aimed to guarantee the availability of critical apps, including search and Play, on devices. This initiative, known as RSA 3.0 (via The Verge), involved revenue-sharing agreements with manufacturers, such as OnePlus, based on specific percentages of ad revenue and transaction revenue.
Google contends that these deals also enable the company to enforce stringent requirements, including requiring manufacturers to provide a minimum of six security updates annually. As the legal proceedings progress, the revelations offer a rare glimpse into the tech industry’s complex negotiations and financial intricacies.
Last week, Epic Games and Google launched their initial arguments in a San Francisco courtroom, marking the commencement of the highly anticipated antitrust trial. Bornstein, Epic Games’ representative, underscored Google’s dominance on the Android platform, alleging that Google employed a “bribe or block” tactic to deter competition.