United States v. Google/Findings of Fact/Section 6B
- B. Android Agreements
- 1. Mobile Application Distribution Agreements
348. Google has entered into Mobile Application Distribution Agreements, or MADAs, with all Android OEMs, including Motorola and Samsung, among others. See, e.g., UPX5206 (Sony); JX49 (Motorola); JX37 (Samsung). The MADA is a device-by-device license that allows OEMs to use Google’s proprietary mobile applications developed for the Android ecosystem. Tr. at 775:9-14, 781:10-11 (Kolotouros). This suite of applications is referred to as Google Mobile Services (GMS). Id. at 775:9-17 (Kolotouros). OEMs pay no fee for the GMS license, but Google requires OEMs to preload certain applications in prominent placements. See id. at 9415:16-18 (Rosenberg).
349. The MADAs may be terminated only by a breach by either party. E.g., JX49 at 877–78 (Google-Samsung MADA).
350. As of 2019, about 2.3 billion Android devices were subject to the MADA. UPX129 at 904. Google employees were not aware of any non-MADA Android device sold in the United States. See Sept. 19, 2023 (Sealed Session) Tr. at 9:23–10:4, 12:8-10 (Yoo); Tr. at 780:23-25, 791:25–792:2 (Kolotouros). Moreover, there are no Android OEMs that have revenue share agreements but are not MADA signatories. Tr. at 777:1-15 (Kolotouros); see also id. at 778:5-6 (Kolotouros) (“I would say to the extent the RSA generally does not happen unless an OEM has entered into a MADA, that is correct.”).
351. Google views the MADA as securing “baseline distribution of [its] apps on Android[.]” UPX129 at 904. Under the MADA, partner OEMs must preload all 11 GMS applications onto a new device, including the Google Search Widget, Chrome, YouTube, Gmail, Google Maps, and Google Drive, among others. Id. at 904–05. Six of these applications, including the Google Search application and Chrome (which both default to Google), cannot be deleted by the user. Id. Without a MADA, an OEM cannot distribute any one of these GMS applications. Tr. at 779:10–780:16 (Kolotouros).
352. One of the GMS applications is the Google Play Store, the leading Android app store. See UPX129 at 905. Without a MADA, an OEM cannot distribute the Play Store. Tr. at 780:23-25 (Kolotouros). The Play Store contains a set of application programming interfaces (APIs), which support the functionality of all Android applications—both those developed by Google and by third parties. Id. at 784:7–786:5 (Kolotouros). A user cannot effectively utilize GMS applications without having the Google Play Store installed, because the GMS apps’ APIs rely on the Play Store’s infrastructure. UPX125 at 067; see Tr. at 3517:18-19 (Nadella) (“And without [the] Google Play [Store], an Android phone is a brick.”).
353. The Play Store is not just technically required, but it also contributes significantly to the user experience. Carriers view the Play Store as essential. See Tr. at 1025:11-12 (Higgins) (“A device would need to have an app store on it in order to be successful[.]”); Giard Dep. Tr. at 111:18–112:7 (stating the Play Store is “[v]ery important” and “a primary function of allowing customers to access the apps that they want to have [o]n their device”; it “would be extremely difficult for a device to be successful without it”); Ezell Dep. Tr. at 61:1-3 (“[H]aving on the home screen the icon for the Play Store makes sense. It’s a core functionality of the device.”).
354. Samsung, which preloads its own proprietary app store onto its devices, does not see its “Galaxy Store” as replacing the Play Store. See Baxter Dep. Tr. at 91:20-23 (“I can probably count on the number—on one hand the numbers of times that I went into the Galaxy app store. So it was not a real relevant solution.”); see also UPX1011 at 290 (Google “believe[s] that the cannibalization of Play store revenue due to Galaxy store is none to minimal,” given that most of the popular applications present on the Play Store are absent from the Galaxy Store).
355. Even Microsoft signed a MADA (thereby preloading the rival Google Search Widget and Chrome) for its Duo mobile devices because it “needed the license from Google[.]” Tr. at 3117:2-3, 3125:19 (Tinter).
356. Part of the GMS suite of applications is the Google Search Widget (or Quick Search Box). Signatories of the MADA agree to preload and place the Widget on the default home screen of the device. Id. at 793:21-23 (Kolotouros). Signatories also receive Chrome, and generally speaking, they agree to place Chrome in the Google applications folder, which appears on the default home screen. UPX141 at 244. The MADA requires the Google applications folder to be on the default home screen, but it does not require its placement on the dock, sometimes known as the “hotseat,” as depicted below. Tr. at 793:15–797:20 (Kolotouros) (discussing default placements).
Search entry points on a typical Android phone
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UPX76 at 184.
357. Although OEMs must preload the Google Search Widget, users can delete it. As of 2016, there were about 200,000 logged widget deletions daily but over 2.5 million daily Android activations. Id. at 188.
358. Nothing in the MADA expressly requires an OEM to preload only the GMS applications. See Christensen Dep. Tr. at 49:25–50:4. OEMs are, for instance, free to preload a second (or third) browser or search widget.
359. In practice, however, OEMs recognize that preloading more than one of the same search access points, especially in similar prominent positions, is a suboptimal design that would degrade the user experience. This overloading of apps is known as “bloatware.” See Tr. at 2456:20–2457:8 (Cue). Even Microsoft avoided adding a Bing search widget on its Duo devices to avoid degrading the user experience. See, e.g., id. at 3126:7-10 (Tinter) (“I do remember us having some conversations that from a user-interface standpoint, it would be really confusing if there were two boxes there, and it wouldn’t be a good product for the user.”).
360. As another example, Samsung already preloads a second browser—its proprietary S browser—on all Samsung devices. Rival browser and GSE providers, like Microsoft, understand that Samsung is extremely unlikely to preload a third browser on Samsung devices. See UPX301 at 646 (2019 Microsoft email: “Therefore to take Edge [Samsung] would either need to ship 3 browsers on the device (Samsung browser, Edge, and Chrome) or drop the Samsung Browser. 3 browsers is DOA,” or “dead on arrival”); UPX133 at 811 (internal Microsoft analysis: “On browser, [Samsung is] not willing to ship three browsers on the device. This is due to overall concerns about the number of applications pre-loaded on the device and concern about operator push back.”).
361. Google recognizes this reality, too. See UPX141 at 819 (describing device configuration with two preinstalled browsers and two default widgets as “[a]llowed but not likely”); Tr. at 1528:6-11 (Yoo) (“[F]rom the angle of like a user experience for these devices, what we understood and what we were trying to convey here was that OEMs want to sell devices, they want to be competitive. And we thought that having two widgets was a little too much, so that OEMs are not likely to put two widgets on a device.”). Google employees were unable to identify any Android device that is preloaded with two search widgets. Tr. at 1528:17-20 (Yoo); id. at 2877:2–2877:7 (Kartasheva); id. at 803:9-16 (Kolotouros).
- 2. Revenue Share Agreements
362. A revenue share agreement, or RSA, is a separate agreement from the MADA. Each RSA generally follows a tiered structure, in which a carrier’s or OEM’s payment is tied to the degree of device exclusivity. The RSAs are device-by-device, meaning that partners can opt into different tiers based on the device model sold. The RSAs do not prohibit the preinstallation of social networks like Facebook and Instagram. Id. at 8689:7-9 (Israel).
363. Although no OEM or carrier is required to enter into an RSA, all do so. It would be irrational for a profit-maximizing firm to sign a MADA but then forgo at least some revenue share under the RSA.
- a. Carrier RSAs
364. Google has signed RSAs with each major wireless carrier: Verizon, AT&T, and T-Mobile. Google’s agreement with Verizon has three tiers, whereas its contracts with AT&T and T-Mobile only have two and one, respectively. See JX93 at 515 (2021 Google-Verizon RSA, outlining three tiers); JX91 at 765 (2021 Google-AT&T RSA, outlining two tiers); JX95 at 695–98 (2021 Google-T-Mobile RSA, describing one tier). All three carrier RSAs may only be terminated should either party breach the contract. See JX93 at 508; JX91 at 758–59; JX95 at 704.
365. Google has long viewed RSAs with carriers as essential to securing query traffic on Android devices to the exclusion of rivals. In fact, Google viewed exclusivity on Android devices as “very strategic to Google.” UPX134 at 865. In a 2011 email, Google executive Chris Barton wrote about then-existing exclusive distribution deals with T-Mobile, Verizon, and Sprint, “I think this approach is really important otherwise Bing or Yahoo can come and steal away our Android search distribution at any time, thus removing the value of entering into contracts with them. Our philosophy is that we are paying revenue share *in return for* exclusivity.” Id. at 869. Another Google employee wrote as part of the same conversation, “The exclusive across all the [A]ndroid search entry points is very strategic to mobile search. [T]he nightmare scenario is for [Microsoft] (or others) to come and scoop us by simply paying more. [W]e know they have shown an appetite to do this in the past and will likely do so again to gain traction.” Id. at 866. Barton finally added, “We need to incentivize carriers to ship Google using the same approach we at Google have used for many years: ‘We will pay for revenue share in return for exclusive default placement.’ This contract is an exchange. . . . Without the exclusivity we are not ‘getting’ anything. Without an exclusive search deal, a large carrier can and will ship alternatives to Google[.] . . . Android is by far the greatest opportunity for Search monetization in mobile over the next years and is very strategic to Google. You can bet that Microsoft and Yahoo will enter into contracts for search on Android through carrier deals if we do not.” Id. at 865.
- i. Verizon
366. Verizon’s RSA has three tiers: Core, Qualifying, and Preferred. Google pays Verizon % revenue share on devices where the “core” search access points have been preinstalled and defaulted to Google. See JX93 at 515–16 (describing the “Core Devices”). Those include Chrome, the Samsung Browser (on Samsung devices only), and the Google Assistant application. Id. at 516. Verizon also receives % revenue share for old devices that comply with the prior RSA terms (i.e., that are grandfathered in). See id. at 515 (describing the “Qualifying Devices”). In exchange for more placements, Google pays more revenue share. The RSA requires Google to pay Verizon % revenue share on Preferred Tier devices (a three-fold increase from Verizon’s Core Tier), provided that those devices have several other default Google placements. Id. at 515, 517. Those include, but are not limited to, the Google Search Widget, Chrome, and the default homepage on the browser. See id. at 517.
367. Verizon’s “Core Devices” tier was developed through negotiations. Verizon has entered into RSAs with Google for over a decade. “From 2009–2014, Google paid Verizon 40% revenue share,” and from 2014–2020, Google decreased the revenue share, paying Verizon 20%. UPX947 at 105.
368. The Qualifying Tier devices earn carriers a % revenue share but are only applicable to devices sold during the prior agreement terms and whose configuration conforms to the requirements of the previous agreement. JX93 at 515. Verizon previously earned a 20% revenue share on these Qualifying Tier devices but now only earns %. Tr. at 1049:25–1050:4 (Higgins).
369. On June 13, 2017, Verizon purchased Yahoo. Id. at 1043:15-18 (Higgins). One of Verizon’s goals was to preload certain Yahoo features, including search, onto its devices. See id. at 1056:11-15 (Higgins). Verizon raised this with Google in its negotiations for the 2021 Google-Verizon RSA. See UPX1026 at 080–81.
370. In November 2018, during RSA negotiations, Verizon shared a redline of the draft RSA with Google, striking out the exclusivity provision, which previously read: “Company will not include on the device any alternative search service that is similar to Google Search.” Id. at 080. In that same redline, Verizon sought to limit the search access points governed by the RSA to expand its “flexibility for additional search capabilities on devices.” Tr. at 1056:5-10 (Higgins); see UPX1026 at 081.
371. During those negotiations, Verizon hoped to increase the revenue share it was paid under the RSA. See UPX947 at 105 (a “top Verizon Ask[] to Google” was for “Google to increase revenue share to Verizon from 20% to 23%” under the RSA).
372. Despite these asks, Google insisted on the tiered revenue share system in effect at the time. UPX306 at 976–77. It “advised [that] all go-forward agreements with carriers include exclusivity provisions and exceptions cannot be made.” UPX642 at 198. Despite Verizon “arguing vigorously . . . to keep [the] contract non-exclusive,” id., Google was insistent that Verizon could not preload any other GSE, such as Yahoo Search, and still receive the then-20% revenue share, Tr. at 1075:16-21 (Higgins). In order for Verizon to preload Yahoo onto its devices, it had to accept the much-lower % revenue share on those models in the Core Tier, which does not require exclusivity. See JX93 at 515.
373. Verizon viewed the % revenue share as “punitive.” UPX495 at 003. It conducted a “full revenue impact” assessment if it were to either not renew the RSA or renew but accept the Core Tier to allow it to “commingl[e] search” with Yahoo. Id. at 003–04. That analysis demonstrated that Verizon’s acceptance of the Core Tier revenue share payment would result in a $1.4 billion loss in revenue to the company. UPX304 at 606; Tr. at 1068:3-5 (Higgins). This was both due to the decreased revenue share from Google, as well as Yahoo’s revenue projections, which indicated “smaller [revenue] relative to the agreement that [Verizon] had with Google.” Tr. at 1090:2-5 (Higgins).
374. As a result, Verizon determined that “the lower revenue from Yahoo [was] not worth it.” UPX306 at 976. Instead, it determined that it would preload Yahoo properties that “do not have general search capabilities outside of the app,” which would not run afoul of the Preferred Tier requirements. UPX642 at 198. Those properties included vertical offerings such as news, finance, and sports. Tr. at 1093:3-7 (Higgins). Google and Verizon in fact did agree to a carveout in the RSA that would allow for these vertical properties to be preloaded onto Verizon’s Android devices, without demoting them from the Preferred to Core Tier. Id. at 1095:1-7 (Higgins). Those vertical properties, however, could not serve as a search access point or otherwise direct users to a non-Google GSE. Id. at 1095:13-15 (Higgins).
375. Ultimately, these negotiations regarding Yahoo verticals became moot because Verizon sold Yahoo shortly before the 2021 RSA was executed. See id. at 1056:16-18 (Higgins).
- ii. AT&T
376. AT&T’s RSA is very similar to Verizon’s, although it does not have a tier for Core Devices. AT&T may instead choose to enroll its devices in the Preferred Tier, maintain them as Qualifying Devices, or forego any revenue share. See JX91 at 765.
377. The RSA requires Google to pay AT&T % revenue share on Preferred Tier devices provided that all search access points default to Google and those devices preload the Google Search Widget on the default home screen. Id. at 751, 765–68.
- iii. T-Mobile
378. T-Mobile’s RSA is structured differently than the others. T-Mobile is compensated for the default placements on Qualifying Devices and Preferred Devices through a $ bounty per device. JX95 at 692, 696. If T-Mobile does not configure a device on an exclusive basis, it is entitled to no bounty at all. See id. at 696. In the RSA negotiations, the initial term sheet included a tier-based system, where T-Mobile would earn more revenue share in exchange for exclusivity (“Optimized Tier”) and less in exchange for a minimum level of device configuration without exclusivity (“Core Tier”). Giard Dep. Tr. at 328:23–330:25. Google ultimately dropped the Core Tier from the RSA, even though T-Mobile “still wanted to be able to configure devices and receive revenue share from Google for the devices that were nonexclusive,” because “Google preferred not to do that.” Id. at 330:7-11.
379. It is not economically rational for any profit-maximizing carrier to opt for the lower-revenue share option. Consequently, all three major carriers under their current RSAs have enrolled all Android devices sold at the highest revenue tier. Tr. at 1050:18-22 (Higgins) (Verizon, all at Preferred Tier); Ezell Dep. Tr. at 193:5-9 (AT&T, all at Preferred Tier); Giard Dep. Tr. at 39:3-16 (T-Mobile, all distributed devices qualified for bounty).
- b. RSAs with OEMs
380. Google also has RSAs with the two primary Android OEMs, Samsung and Motorola. These RSAs cover the relatively small number of Android devices sold directly by OEMs.
381. Under its current RSA, Samsung receives % revenue share for devices complying with prior terms. JX71 at 404, 417. Additional incremental revenue share requires Samsung to configure certain search access points to Google. “Core Devices” per the Samsung RSA must have Google set as the default GSE on the S Browser and must not allow users to change the S Browser default from the browser search bar itself (as opposed to the device settings). See id. at 401, 426–28. In exchange, Google pays Samsung % revenue share on certain search access points for Core Devices. Id. at 416.
382. The Samsung RSA also provides for “Enhanced Devices,” which requires additional placements beyond the MADA, such as placing Chrome as the default browser (over S Browser) in the hotseat, or dock. See id. at 402–03, 422–24. The revenue share paid to Samsung is the same for Enhanced Devices and Core Devices ( %), but that percentage applies to a broader set of search access points. Id. at 402, 416, 422–24.
383. Nearly all Samsung devices sold in the United States are Enhanced Devices. Tr. at 921:5-7 (Kolotouros).
384. Motorola’s RSA with Google is structured differently. All devices sold must meet the minimum requirements of the Foundation Tier (preinstallation of Chrome with Google as the default GSE in the device’s dock or hotseat). JX62 at 184, 197. Motorola then earns at least $ monthly in return. Id. The Premier Tier requires exclusive preinstallation of Google as the default on all search access points on the device, in return for additional monthly payments. Id. at 186–87, 198, 201. Google estimates that the number of Motorola devices sold by the OEM that are subject to this RSA “is north of 95 percent[.]” Tr. at 911:11-19 (Kolotouros).
- c. Definitions of Alternative Search Services
385. All current Android RSAs contain a definition of “alternative search services” that limits the partner’s ability to preinstall or promote a different GSE. The 2021 Google-T-Mobile and 2020 Google-Motorola RSAs define “Alternative Search Service” as “any search service that is substantially similar to Google Search (as determined by Google in its reasonable discretion).” JX95 at 689 (T-Mobile); JX62 at 177 (Motorola). The 2021 Google-T-Mobile agreement prohibits T-Mobile, on Preferred Devices, from installing any Alternative Search Service or means of navigating to one; marketing any other Alternative Search Service; suggesting an Alternative Search Service to end users; or adjusting settings that would interfere with Google’s default search position. JX95 at 696–97. The 2020 Google-Motorola RSA contains similar restrictions. JX62 at 185, 187.
386. The 2009 Google-Verizon RSA defined “General Web Search” as “search functionality that produces search results by searching a large proportion of indexable websites, and where such search results may also include, unless excluded herein, other non-website results. Examples of General Web Search include Google, Yahoo, and Bing search services.” JX16 at 678.
387. That contract did not limit partners’ ability to preload “vertical and customizable search functionality such as restaurant search, local business search, application search, and video search” onto covered devices and states that those functions are “not General Web Search” within the meaning of the contract. Id.
388. The 2021 Google-Verizon RSA defines “Alternative Search Service” as “(a) any web or (b) any on-device search service that in response to queries incorporates multiple vertical search functionalities, and that, in each case of (a) and (b), offers functionality that is substantially similar to Google Search (as determined by Google in its reasonable discretion)[.]” JX93 at 489. This definition expressly carves out “search within a single mobile application that is limited to content within a particular, single or multiple vertical . . . that provides search results that [are] not substantially similar to Google Search (in its reasonable discretion)[.]” Id. The 2021 Google-Verizon RSA restricts the installation or promotion of Alternative Search Services, with a limited carve-out for Yahoo verticals, which was never implemented. FOF ¶¶ 371–375.
389. The 2021 Google-AT&T RSA defines “Alternative Search Service” as “any application, product, or service, other than Google Search, which, in response to queries, delivers search results consisting of (a) internet content or (b) content from multiple applications on a Device that [is] owned by entities that are not Affiliates of one another, in each case of (a) and (b), in a manner that is substantially similar to Google Search (as determined by mutual agreement of the Parties in accordance with section 7.2).” JX91 at 743. The AT&T agreement carves out similar functionality to the Verizon agreement, including any vertical content “that provides search results without searching the internet, other mobile applications, or web pages,” providing Spotify and Waze as examples. Id. The AT&T agreement prohibits AT&T from preloading or otherwise promoting on Preferred Devices any Alternative Search Services, with limited exceptions. Id. at 752, 753–54.
390. The 2017 Google-Samsung RSA used to define “Alternative Search Service” as “any web search service that is substantially similar to Google Search.” JX41 at 967. That definition was changed in 2020, however, to include “any web or on-device search service (including on-device search that incorporates multiple vertical search functionalities) that offers functionality that is similar to Google Search.” JX71 at 394. This change resulted from Samsung’s preinstallation of an on-device search technology from Branch, discussed infra Section VI.B.2.d. The 2020 Google-Samsung RSA limits Samsung’s ability to install or promote Alternative Search Services on Enhanced Qualified Devices, with limited exceptions. JX71 at 403, 405.
- d. Branch
391. In 2019, Samsung sought to integrate Branch’s deep-linking technology onto its devices. Tr. at 2907:11-20, 2908:1-4 (Austin). That technology primarily enables on-device search of mobile applications, but it also has the capacity to serve limited web search results if a user does not have a relevant mobile application on their device. This web search functionality was known as “Discovery.” Id. at 2894:9–2895:6, 2900:4-12, 2909:16–2910:14 (Austin).
392. Branch also developed a “Deepview” functionality where, based on partnerships with SVPs, it would allow users who did not have a particular app downloaded to access the SVP’s website information directly from the Discovery interface, without reverting to the web. Id. at 2916:1-18, 2917:3-13 (Austin).
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DX612 at .011.
393. Branch understood the Google-Samsung RSA to be a roadblock to its distribution, as linking to websites could conflict with the agreement. See Tr. at 2908:18–2909:2 (Austin). Although Samsung eventually did preinstall Discovery on certain devices, its functionality was diminished. See id. at 2910:21-22, 2921:2-8 (Austin) (“Samsung implemented a number of severe product restrictions based on this concept of linking to the web.”). Branch was limited to a predetermined list of applications so that Samsung could ensure those applications did not link to the web. Id. at 2910:23–2911:9 (Austin). These restrictions affected Branch’s ability to monetize Discovery because monetization was driven by user access. Id. at 2912:22–2913:20 (Austin).
394. Following this episode, the newly negotiated 2020 Google-Samsung RSA included an amended definition of “Alternative Search Service” as “any web or on-device search service (including on-device search that incorporates multiple vertical search functionalities) that offers functionality that is similar to Google Search.” JX71 at 394.
395. AT&T also considered installing Branch’s technology. Ultimately, it decided not to partner with Branch after Google refused to clarify whether such a partnership would run afoul of the RSA. After initially meeting with Branch, AT&T was interested in distributing it, but sought reassurance from Google that if it did so, it would not violate the RSA. Ezell Dep. Tr. at 237:619, 239:15-23. AT&T felt that it was not “black and white or cut and dry,” and that “there might be some risks associated with” partnering with Branch, because it could be “considered a competing or alternative search,” which would require AT&T to “forego[] the Internet search revenue from Google and instead just earn[] this on-device search revenue from Branch.” Id. at 240:1-5, 242:25–243:9.
396. Ultimately, AT&T was unable to get a clear response from Google, see UPX982 at 686–87 (Google referring AT&T back to the “alternative search services” term without a concrete answer), and thus AT&T declined to preload Branch because it was not worth the risk, Ezell Dep. Tr. at 340:20–341:4 (“[T]he way it was reported back to me was that Google indicated they felt that it was inconsistent with the RSA.”); id. at 247:1–249:9 (“It didn’t appear that the economic upside from Branch was significant enough to . . . potentially put at risk a device not being eligible for our Google Search revenue.”).
- 3. Mobile Services Information Agreements
397. In 2021, every wireless carrier entered into a Mobile Services Incentive Agreement (MSIA) with Google, also known as a “go-to-market” agreement, wherein Google pays carriers incentives as consideration for meeting various requirements that are unrelated to search. See JX92; JX96; JX94; Tr. at 9460:24–9461:23 (Rosenberg).
398. The MSIAs are separate and apart from the MADAs and RSAs. Tr. at 9376:21–9377:8 (McCallister). They require partners to collaborate with Google as to how the incentive is spent, which goes towards the goal of supporting the sale of Android devices and the Android ecosystem. Id. at 9460:24–9461:23 (Rosenberg); id. at 9378:23–9379:1 (McCallister).