WSJ: Google execs worried by Samsung’s success with Android

While Google might be happy with the mobile ad revenue Samsung brings in shipping roughly 40 percent of the devices running Android, The Wall Street Journal said Google execs worry behind closed doors that Samsung could use its dominance to renegotiate its cut of revenue from mobile ads and search:

Google executives worry that Samsung has become so big—the South Korean company sells about 40% of the gadgets that use Google’s Android software—that it could flex its muscle to renegotiate their arrangement and eat into Google’s lucrative mobile-ad business, people familiar with the matter said.

Citing its usual “people familiar with the matter,” WSJ claimed executives at Google are betting on companies like HTC and HP to release compelling Android devices that compete with Samsung. According to the report, Android chief Andy Rubin discussed the situation at a recent event for Google executives. He described Motorola as “a kind of insurance policy against a manufacturer such as Samsung gaining too much power over Android.”

Mr. Rubin also said Samsung could become a threat if it gains more ground among mobile-device makers that use Android, the person said. Mr. Rubin said Google’s recent acquisition of Motorola Mobility, which makes Android-based smartphones and tablets, served as a kind of insurance policy against a manufacturer such as Samsung gaining too much power over Android, the person said. Google said Mr. Rubin wasn’t available for an interview.

The big fear for Google is that Samsung will attempt to use its dominance in the Android ecosystem as a bargaining chip to increase its share of revenue from online advertising generated through Google search, YouTube, etc.

Up until now, Samsung has received around 10 percent of revenue:

Samsung in the past has received more than 10% of such revenue, one of the people said. Samsung has signaled to Google that it might want more, especially as Google begins to produce more revenue from apps such as Google Maps and YouTube, another person familiar with the matter said.