Google to Charge Licensing Fee for Its Android Apps, Unbundle Chrome and Search in Europe

Google will have to allow smartphone manufacturers to ship Android devices in the EU without Google Chrome preinstalled, as a result of the massive EUR 4.34 billion fine imposed on the company by European Commission antitrust regulators in July this year. In order to avoid additional penalties while its appeal of the fine is pending, Google has announced that it will begin allowing manufacturers to ship Android phones without any of its apps or the Google Play Store. Manufacturers will have to pay a fee to continue bundling Google's apps, but even if they do this, they will not have to preinstall Google's Chrome browser. That has the direct effect of making Google Search less entwined with the operating system.

Android manufacturers will be able to ship smartphones and tablets running forked versions of the Android Open Source Project (AOSP) operating system that do not include Google's apps and services. Chrome and Google search will not be compulsory even if manufacturers want to continue offering the Google Play Store, Google Maps, Gmail, Google Play Music, and other apps. While Android will continue to be free and open source, the lack of guaranteed revenue from Google search through Chrome and the Google app means that a license fee will be introduced for the suite of apps and services. This creates opportunities for manufacturers to partner with third parties such as Amazon, or promote their own app stores and services.   

Google has not announced what the fee structure will be, but it will only apply for devices that are intended for sale in the 31 member countries of the European Economic Area. It is not clear whether this will lead to price increases for end consumers, or whether similar licensing terms will eventually be available for other global markets.

The Commission's ruling described Google's licensing terms for its search and browser apps with the Android operating system as "two instances of illegal tying", beginning from 2011 and 2012 respectively. The Commission found that Google search accounted for 95 percent of search volume on Android devices in 2016, and that users do not download competing apps enough to offset a "status quo bias" that gives Google's preinstalled apps a commercial advantage.

The new licensing structure will take effect on October 29 in order to comply with the 90-day period set out in July's ruling. Google's Hiroshi Lockheimer, Senior Vice President of Platforms and Ecosystems, said in a company blog post that Android has led to rapid innovations, wider choices and lower prices for consumers, and that while these measures have been put in place to comply with the ruling, an appeal was filed last week.