Amid a high-stakes antitrust trial, Alphabet Inc’s GOOG GOOGL Google executive, Jamie Rosenberg, stands by the firm’s revenue-sharing payments to smartphone manufacturers and carriers, arguing that these are critical in sustaining the Android ecosystem.
What Happened: Rosenberg, who has been with Google since 2010 working on Android and Google Play, testified on Wednesday that such payments are necessary for companies like Samsung Electronics Co. SSNLF and Verizon Communications Inc. to innovate and maintain Android products, reported Bloomberg.
This competition, Rosenberg argued, allows Google to better compete against Apple Inc. AAPL because the rivalry between the search and advertising giant and the iPhone maker is “as intense as it gets.”
According to Rosenberg, these revenue-sharing arrangements act as a “reinforcing mechanism” aligning Google’s interests with those of its partners.
However, the Department of Justice’s antitrust lawsuit claims that Google’s substantial payments to Apple, Samsung, and other companies for default search engine placement on mobile phones and PCs have stifled competition.
Lawyers for the Department disputed Rosenberg’s testimony, suggesting that the Android operating system could be sustained with profits from the Google Play store.
According to earlier testimonies in the trial, Google’s revenue-sharing agreements amounted to $26 billion in 2021. Rosenberg admitted that Google does not dictate how partners use this revenue. “We don’t require them to share with us how they are using the funds.”
In Europe, Google’s agreements are different due to competition laws. In the EU, smartphone manufacturers must pay a fee to license Google apps. If the manufacturers agree to include Google Search and Chrome on their devices, the tech giant offers to cover this cost.
Why It Matters: Previously, it was reported by popular tech analyst Mark Gurman that Apple has been contemplating reducing its reliance on Google.
He suggested that Cupertino might be developing its own search engine to replace Google Search, considering it has already made some headway in its services like the App Store, Maps, Apple TV, and News.
Gene Munster of Deepwater Asset Management has also previously noted that the DOJ’s antitrust lawsuit against Google over its search business may not hurt Apple, saying that it could play out to be a “net neutral to positive” for the Tim Cook-led company.
On the other hand, internal communications revealed during the ongoing Google antitrust trial also showed that Apple has referred to Android as a “massive tracking device.” However, despite this, an internal Google email from 2016 disclosed the two tech giants were discussing an arrangement about mutual data sharing.
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