Samsung's Android Success Gets Google Worried

Samsung's Android Success Gets Google Worried

According to The Wall Street Journal (WSJ), Google executives are worried that Samsung's success with Android devices could lead to Samsung eating away at Google's bread-and-butter mobile advertising revenue. There are fears that Samsung would use its success as leverage to renegotiate their arrangements with Google, and integrate themselves deeper into Google's mobile advertising business.

Now, as top executives from the world's mobile industry gather in Barcelona, Google is meeting with other companies in hopes that their Android devices can keep Samsung's leverage in check by providing legitimate competition, the people said. The Internet-search company is hoping new Android devices from manufacturers such as HTC Corp. and Hewlett-Packard Co. can challenge Samsung, people familiar with the matter said.

In the same report, WSJ also mentioned that Samsung has received as much as 10% of Google's online advertising revenue in the past, and has signaled that they might want more. 

Outside observers are beginning to recognize the changing nature of the relationship. "There is a threat from Samsung to Google that is real," said Rajeev Chand, a managing director at boutique investment bank Rutberg & Co. "Over time, Samsung will be able to leverage its market-share dominance to negotiate better terms from Google." That could include getting "better versions of Android software before other manufacturers," Mr. Chand said, as well as the ability to load more applications of its own choosing onto devices.

Of course, Google has the choice of turning to Motorola, which they had bought last year, to produce better Android devices. However, such an action could alienate other Android manufacturers who have placed their bets on Android. 

Source: The Wall Street Journal