Google Has Been Paying Wireless Carriers Billions To Not Develop Competing App Stores

from the not-so-innovative-I-guess dept

To be clear, wireless carrier app stores have always kind of sucked. Verizon's efforts to create its own app store were shut down in 2012, after underwhelming consumers for years. At the time, the narrative was that Verizon just didn't find it worth the trouble in the face of Google domination and innovation. And while that's still largely true (wireless carriers are utterly unfamiliar with competition and therefore historically suck at innovation and adaptation), it turns out there was another reason.

Namely, that Google was paying Verizon and other major wireless companies a big chunk of money to not compete with the Android marketplace. And they were paying smartphone manufacturers to ship devices without competing app stores installed. Both nuggets were buried in a freshly unredacted copy of Epic's antitrust complaint (pdf) against Google, first spotted by Jeremy Owens:

This agreement to start paying wireless carriers 20-25% of app sales was occurring right around the time that Google brass was visibly starting to wimp out on consumer-centric issues like net neutrality. That involved working closely with Verizon to push the FCC toward flimsy, loophole-filled, "compromise" 2010 net neutrality rules that excluded wireless entirely. Verizon proceeded to then successfully sue the FCC to have those repealed anyway, leading to better rules in 2015 that were also dismantled a few years, later, albeit thanks to lobbying, not the courtroom.

Google's shift from hugely innovative disruptor to entrenched, elbow-swinging turf protector has been a fairly ugly and historically unsurprising transition. You can clearly see the line in the sand somewhere around 2010 to throw away many of the guiding principles that made them successful and popular. There was another executive leadership pivot sometime around 2016 that brought with it increased timidity at the company (see: the company's abrupt decision to largely give up on expanding Google Fiber and many other exciting moonshot projects). Then, more recently there's the whole AI ethics scandals, which speaks for itself.

To be clear Google still does a lot of interesting and popular stuff, but it's pretty damn clear that the ethics and bravery that guided the company originally were obliterated some time back.

I have to think that revelations Google was paying wireless carriers and smartphone manufacturers to not compete with it will likely fuel several different antitrust inquiries and court cases. Maybe wireless carriers would have always failed to develop compelling app stores of their own thanks to innate incompetence, but it's harder than ever for that to happen when Google is paying you billions of dollars to not even try. And then, should those competing app stores succeed, paying handset makers not to carry them anyway, even if they happen to become popular.

As a little side note, the fact Google has been paying wireless carriers billions of dollars to do nothing kind of puts an additional dent in FCC Commissioner's ongoing, dumb claim that "big tech" gets a "free ride" on telecom networks. Getting paid to do nothing is the exact kind of thing AT&T has been pushing for since 2003 or so. It's the kind of stupid demand that started the net neutrality debate. Whether the payoffs violated the law is for antitrust lawyers to decide, but the fact Google repeatedly thought nothing about ignoring its original founding principles continues to speak pretty loudly either way.

Filed Under: android, app stores, competition, fees, mobile app stores, mobile operators
Companies: google, verizon