Another monopoly evidence? Google pays Samsung a "huge fee" for pre-installing Gemini AI applications

According to court testimony, Google (GOOGL.US) pays Samsung Electronics (SSNLF.US) "huge sums" each month in exchange for the latter pre-installing Google's generative AI application Gemini on its phones and devices, despite the fact that the company's practice of paying for installations has been deemed illegal twice.

Peter Fitzgerald, Vice President of Platform and Device Partnerships at Google, testified in federal court in Washington on Monday that the company began paying Samsung for Gemini-related fees starting in January of this year. Fitzgerald revealed to Judge Amit Mehta, who is overseeing the case, that the contract lasts for at least two years, with a fixed monthly fee paid to Samsung based on the number of devices, while Google also pays Samsung a certain percentage of the revenue it earns from app advertisements.

Amit Mehta ruled last year that Google's payments to Samsung to become the default search engine on its devices violated antitrust laws. He is currently hearing testimony to determine what adjustments Google should make to rectify its illegal conduct.

The specific amount that Google pays Samsung each month was not disclosed in court. In opening statements, U.S. Department of Justice attorney David Dahlquist stated that Google pays Samsung a "huge fixed monthly fee."

Additionally, testimony in another case regarding Google's monopoly in the Android ecosystem revealed that from 2020 to 2023, Google paid Samsung $8 billion to ensure that its search engine, Play Store, and Google Assistant were set as default options on Samsung mobile devices. In that case, a federal jury ruled in 2023 that Google abused its Google Play Store policies to consolidate its market position in the Android app market. Subsequently, a federal judge in California ruled that Google must remove restrictions, allowing developers to establish competitive app markets and billing systems. Google is currently appealing that ruling.

Google Faces Off Against the U.S. Government Over "Antitrust" Issues Again

It is worth noting that Google's "huge payments" to Samsung for pre-installing the Gemini AI application is another piece of evidence obtained in the U.S. Department of Justice's antitrust lawsuit against Google. On Monday, Google faced off against the U.S. Department of Justice and dozens of state attorneys general in a Washington courtroom, debating what antitrust remedies the judge should order to prevent the company from continuing to monopolize the online search engine and online advertising markets.

Proposed remedies from U.S. antitrust regulators include requiring Google to sell its Chrome browser business, licensing internal search engine data to competitors, and stopping the practice of paying huge sums for exclusive status on other online services and devices.

Google firmly stated that the government's proposals would undermine a range of products that people use every day, harming the U.S.'s technological leadership and, consequently, American consumers. It is understood that Google representatives have opposed being forced to sell the Chrome browser business and have proposed an alternative antitrust remedy: allowing users to automatically select their preferred default browser while still enabling the company to share related revenue with competitors The latest antitrust trial is the most recent example of the escalating antitrust pressure faced by Google in recent years. Just a few days ago, another federal judge ruled in a separate case that Google illegally monopolized a broad online advertising technology market, a decision that will trigger another so-called "antitrust remedy hearing" in the coming months.

Google's antitrust remedy process is the first time in 25 years that U.S. courts are considering whether to break up a large tech company since American tech giant Microsoft (MSFT.US) successfully "shed its skin" from an antitrust case. If Amit Mehta ultimately forces Google to sell its Chrome browser business, it would mark the first time since the breakup of the "Bell System" (Ma Bell) in 1982—later AT&T—that a U.S. Department of Justice antitrust case has led to the complete breakup of a domestic company.

Amit Mehta wrote in a 286-page preliminary ruling last year: "Google's distribution agreements block the vast majority of the general search service market, harming competitors' competitive opportunities." He pointed out that Google has been able to significantly increase online advertising prices without any impact by monopolizing distribution on smartphones, mobile devices, or PC browsers.

Regardless of Amit Mehta's ruling, it will have far-reaching implications for the U.S. government's ability to regulate the tech industry and more broadly control corporate business concentration. However, Google is expected to continue appealing and may take the case to the U.S. Supreme Court, meaning that any corrective or antitrust remedy measures may take years to take effect rather than being immediate this year.

Since Washington's unsuccessful attempt to break up Microsoft 20 years ago, this represents the most significant potential move to control illegal monopolistic behavior by a large American tech company, indicating that Google may face a long legal battle similar to that of Microsoft at the time, with the possibility of a breakup remaining. Google will need to undergo a lengthy legal process to avoid a breakup