Mobile device makers mull fee for Google to pre-install its apps

Mobile device makers are considering seeking a fee from Google Inc to pre-install its apps on phones as part of pending negotiations to rejig the contentious Mobile Application Distribution Agreement (MADA) between the two parties.

A meeting of key mobile device brands is expected soon to discuss Google’s changes in its app policy and take a final call.

“All options are on the table. As we give Google access to customers, they should pay for that access either as an upfront fee per app or in a revenue-sharing advertising model. It has happened before with other apps, too, which wanted to be pre-installed paid phone brands,” says a top executive in a device company.

He also pointed out that accepting pre-installation of most or all of the nine Google apps because alternatives were not available — even after Google has accepted unbundling of their apps from Play Store — could seem like a tacit understanding between mobile manufacturers and the tech major and invite fresh investigation from the Competition Commission of India (CCI).

“We have to see all legal angles before we come to a conclusion on the new MADA licence agreement. It should not lead to mobile device players suffering,” said the executive.

The apps in question are YouTube, Google Chrome, Google Search, Duo, Google Play Music, Google Play Movies, Google Photos, Gmail and Google Drive.

Many suggest that the mobile device players might take a more aggressive stance in order to get a better bargain in the reworked MADA licence agreement.

Google had earlier announced that it will be implementing the CCI order asking it to lift restrictions on device makers including those related to pre-installation of apps, after the Supreme Court refused a stay. Google has agreed to unbundle its nine apps from Play Store and allow auto updating of sideloaded apps with warnings to ensure they are aware of the security risks and offer the choice of default search engine to users. It will also offer consumers the choice of billing option for all games and apps.

It is not clear whether Google will also allow third-party app stores on its Play Store, which might take more time to implement.

Sources in the know, however, say that Google’s contention has been that the CCI order had impelled it to change the business model — which simply allows mobile manufacturers to get the apps and Play Store for free, while Google makes money from advertising on the apps.

However, with the unbundling and choice of Google apps for pre-installation now available with device makers and consumers, Google has to look at the financial implications since it has to invest in the Android operating system as well as improvements of apps — and this costs money.

So, there is every possibility that mobile manufacturers might share some of these costs, which would only make smartphones more expensive.

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Mobile device makers are considering opting for a revenue-share model

They want to study legal implication of agreeing to a new Mobile Application Distribution Agreement

Their argument: Google leverages their consumers (who buy the phones) to grow in India but don’t pay anything due to their market dominance

Sources close to Google hint at business model needing a change, which could lead to hike in smartphone prices