We’ve talked before about how Google profits out the back door from its “fair use” of scanning millions of books at its high security scanning center (see “Epsilons at the Brave New Googolplex“), what I call “non-display” uses of works of authorship. Here’s another one, this time with YouTube.
Remember–YouTube is essentially a datamining honeypot disguised as a video service. Google uses the behavioral and other data scraped from YouTube users (very likely indiscriminately including children) to assemble its highly refined data profiles that it makes most of its revenue from exploiting. That’s the real money, not the advertising that some YouTubers get a few mils from permitting to clutter up their videos.
Needless to say, none of that revenue finds its way to the pot. Hence–non-display, as in happening in the background and undisclosed.
Not only does Google profit from data profiling culled from YouTube users, Google also engages in what’s called “tying” in the antitrust world. Google forces handset makers to pre-load Google Apps on the phones as a condition of using the Android operating system. And that’s really non-display. This practice may well be “tying,” a practice that has been held to be unlawful in cases like U.S. v. Microsoft (although the Microsoft case was settled). Tying occurs “[f]or competitive purposes, [if] a monopolist [uses] forced buying, or “tie-in” sales, to gain sales in other markets where it is not dominant and to make it more difficult for rivals in those markets to obtain sales.”
Google for years has tweaked its search engine to promote other revenue-generating Google Web services in the search results, much to the dismay of some rival Web companies. Now, there is new evidence Google is following the same playbook with its Android mobile operating system, which has become a key vehicle to distribute its revenue-generating mobile apps on phones.
Confidential documents viewed by The Information show Google has been adding requirements for dozens of manufacturers like Samsung Electronics, Huawei Technologies and HTC that want to build devices powered by Android. Among the new requirements for many partners: increasing the number of Google apps that must be pre-installed on the device to as many as 20, placing more Google apps on the home screen or in a prominent icon folder and making Google Search more prominent.
So which Google apps might be forced upon handset makers?
A general theme has emerged: Google is finding new ways to integrate more of its services into Android and, in particular, to direct device owners to use Google Search.
[The Mobile Application Distribution Agreement (MADA) required of companies like companies like Samsung, Lenovo Group and Xiaomi] said there must be a Google search “widget” on the “default home screen” of the device, along with an icon for the Google Play app store. It said an icon on the device home screen labeled as “Google,” when clicked, must provide access to a “collection” of 13 Google apps (Google Chrome, Google Maps, Google Drive, YouTube, Gmail, Google+, Google Play Music, Google Play Movies, Google Play Books, Google Play Newsstand, Google Play Games, Google+ Photos and Google+ Hangouts). The newer agreement also specified the order in which this collection of apps must be listed, from left to right and top to bottom within the Google icon.
So Google uses YouTube and Google Play to force its way onto handsets, expand its monopoly and increase its Android footprint in mobile while at the same time leveraging YouTube for its other apps.
Handset makers and carriers aren’t as stupid as the music business–they can negotiate for a cut of Google’s revenues (albeit with some restrictions):
Beyond the MADA contracts, if a device manufacturer or wireless carrier wants a cut of the revenue Google generates from Google Search or Google Play on the device, it must sign an additional agreement. As The Information previously reported, those agreements now typically preclude partners from pre-installing Web-search apps like Bing or Yahoo Search that compete with Google Search. (Those apps are still available for manual download by the device owner.) There are also some restrictions regarding preloading app stores that compete with Google Play.
So it’s not like nobody ever gets a cut of Google’s revenues from Google Play, and given the competitive advantages that accrue to Google from non-display uses of YouTube and Google Play, it seems like we should be thinking about getting ours.