Google’s European fan base will help it maintain momentum in the region despite being forced to drop a business model that gave its apps a competitive edge but spurred a $5 billion antitrust fine, Chief Executive Officer Sundar Pichai said Thursday.
The Mountain View, Calif.-based company will begin offering licensing options next week that allow European carriers and Android device makers to offer access to Google products separately from the Google Search App or the Chrome browser. Agreements with manufacturers will be altered to allow those who want to distribute Google applications to also build noncompatible smartphones, a practice that was barred until a European Commission fine this summer.
It’s too early to estimate the impact of the shifts on licensing, Pichai told investors Thursday, “but our products are very popular with users across platforms,” and Google is focused on making the transition as smooth as possible for both manufacturers and Android customers.
“You’re dealing with life cycles for mobile phones, so changes are going to take some time to reach users,” he said. Google parent Alphabet’s revenue from Europe and the surrounding region climbed to $10.9 billion in the three months through September, helping drive total sales to $33.7 billion, according to a statement on Thursday.
Net income climbed 37 percent to $9.19 billion, or $13.06 a share, topping the $10.41 average estimate from analysts surveyed by FactSet.
While Pichai said the company is focused on complying with the European Commission’s June order, Google has appealed the ruling and the accompanying fine to the General Court of the European Union.
The case was built around three specific practices: requiring phonemakers who used the company’s open-source Android operating system to install the Google Search and Google Chrome apps on devices in order to connect to the Google Play app store; paying large phonemakers and network operators if they installed the Google Search app exclusively; and barring phonemakers from pre-installing Google apps on any devices if they also offered products running Android software developed without the company’s approval.
For Silicon Valley, the July fine carried ominous implications. While it scarcely made a dent in the cash Google has on hand, which amounted to $106 billion as of Sept. 30, it underlined the rising concern internationally that U.S. technology firms such as Alphabet, Facebook, and Amazon have become large enough to constitute monopolies.
Even in the U.S., lawmakers have begun paying attention to free-market advocates questioning whether the companies’ size — and in some cases, their competition with their own customers — is enough to justify blocking future acquisitions, if not breaking them up altogether.
UBS analyst Eric Sheridan noted the rising risk of tighter regulation as long ago as last December, though he suggested that any changes were likely to be piecemeal.