Google’s plan to stop bundling pre-installed apps on its Android platform and charge smartphone makers to licence apps in Europe is likely to hurt low-cost handset vendors in Asia which rely on free apps from the search giant, Nikkei Asian Review reported.

The decision to charge was part of a bid to avoid additional fines from European Union regulators. The European Commission in July issued a €4.3 billion fine to Google after it found the tech giant abused the dominant position of its Android platform to force manufacturers to install its apps on devices. It gave the tech giant until 28 October to change its business practices or face further penalties.

Starting 29 October, Google will offer individual paid licences for its Search app and Chrome browser, as well as a bundled licence for the rest of its app suite, which includes YouTube, Maps and Gmail, for manufacturers who want to pre-install the apps on devices shipped to the EU.

The move could raise costs for Android phone makers, which includes Samsung, Huawei as well as the likes of Xiaomi and Oppo.

China impact
Makers of higher-end devices could pass on the licensing fees to customers by raising prices, but Nikkei Asian Review noted that would be difficult for players such as Xiaomi and Oppo which have gained traction in Europe with their low-cost smartphones.

Xiaomi moved into France and Italy, after launching in Spain last year, while rival Oppo markets its devices in Spain, France, Italy, Russia and the Netherlands, and reportedly plans to launch in the UK.

Richard Windsor, founder of research blog Radio Free Mobile, estimates that after Google apps are unbundled from both Google Play and Chrome, for it to break even it would need to charge between $48.50 and $58.20 per device to any handset maker that did not wish to install Google Search and Google Chrome on its Android device that also has Google Services.

“However, even at $25 per unit, this will destroy the already anaemic profitability of Android handset makers, the vast majority of whom make less than $10 operating profit on every handset they make,” he warned.

He suspects that “given the choice, Android handset makers will continue installing both Google Search and Google Chrome on their Android devices as the alternative would seem to be economic suicide”.

Windsor added: “I think that there is nothing to prevent Google’s continued dominance of Android as the EU remedies make life for Android handset makers even more impossible than it already is.”

Google will now allow device makers to build modified or “forked” versions of its Android platform for smartphones and tablets offered in the EU. The move reverses a previous policy which blocked manufacturers from offering its suite of apps on such devices.