Google says it's going to start charging phone makers in Europe for Android apps

Justin Sullivan / Getty Staff

Google CEO Sundar Pichai

• To comply with an antitrust decision by the European Union, Google no longer requires Android phone makers to give Google apps preferential treatment.
• The down side for manufacturers using Android is that if they want Google Play or Gmail on their handsets, they will have to pay.
• Google is appealing the EU's decision but must begin complying or risk getting hit with more penalties.

The European Union appears to be getting what it wants from Google, at least partly.

Following a crackdown by regulators in Europe, Google said Tuesday ina blog post that it will no longer require EU-based mobile-device makers that use Android to accept a bundle of the company's apps. The downside for device manufacturers is that Google for the first time will now charge for many of its most popular apps.

Complimentary Tech Event

Transform talent with learning that works

Capability development is critical for businesses who want to push the envelope of innovation.Discover how business leaders are strategizing around building talent capabilities and empowering employee transformation.Know More

Google said that it plans to introduce a new "paid licensing agreement" for smartphones and tablets that use its software and are shipped to the European market. The blog post did not specify which Google software it would sell when the licensing program takes effect on October 29.

According to a report in The New York Times, Google will sell licenses to Europe-based consumer-electronic companies for a package that includes the Google Play app store, Gmail YouTube and Google Maps.

The move marks a major change for Google, which has built a $780 billion company almost entirely by giving its products away for free and selling advertising. And the shift to paid licenses in Europe appears designed to appease regulators more than to a desire by Google to generate new revenue.

Google also said Tuesday that it will offer commercial licenses to European companies that wish to pre-install Google Search and the company's Chrome browser.

The changes come after Google got hit with a $5 billion fine

To spur adoption of Google's browser, email services and other products, the company has always offered the Android mobile operating system free of charge-provided manufacturers also loaded Google's apps onto their devices.

But in July, EU competition authorities found that Google had abused the market dominance of Android, the world's most popular mobile OS. In addition to a levying a $5 billion fine, the EU demanded Google stop forcing bundles of apps on device makers.

The EU believed this practice unfairly blocked competitors from reaching consumers and ordered Google to offer access to unbundled apps. Google has filed an appeal disputing the ruling, but Google SVP of Platforms and Ecosystems Hiroshi Lockheimer said in the blog post on Tuesday that the company was making the changes to comply with the Commission while the appeal is pending.

The changes announced Tuesday mean that handset makers should be able to pick and choose specific apps from Google, such as Google Search but not Google maps, mixing and matching them with apps made by the company's competitors.

But it remains to be see whether Google's moves on Tuesday will satisfy EU lawmakers. One question that they're sure to ask is whether device makers have any economic incentive to adopt apps from other companies if they must pay for Google's, which are among the world's most popular.

Google did not immediately respond to questions from Business Insider.

The crackdown on the EU comes at a time when Google is under an increasing amount of scrutiny in numerous jurisdictions on a variety of issues.

Get the latest Google stock price here.