Google paid Samsung ‘enormous sums’ for Gemini AI app installs, says lawyer

Alphabet Inc. pays Samsung Electronics Co. an “enormous sum of money” every month to preinstall Google generative AI app, Gemini, on its phones and devices, according to court testimony, even though the company’s practice of paying for installations has twice been found to violate the law.

The company began paying Samsung for Gemini in January, according to Peter Fitzgerald, Google’s vice president of platforms and device partnerships, who testified Monday and Tuesday in Washington federal court as part of the Justice Department’s antitrust case.

The contract, set to run at least two years, provides fixed monthly payments for each device that preinstalls Gemini and pays Samsung a percentage of the revenue Google earns from paid subscriptions for the app and ads, Fitzgerald told Judge Amit Mehta, who is overseeing the case. Gemini doesn’t currently have ads, he said.

Samsung also received “competitive offers” from other AI companies, Fitzgerald acknowledged, including Microsoft Corp., Meta Platforms Inc. and OpenAI to include their AI apps.

“We took into consideration what was being offered by competitors,” Fitzgerald said Tuesday about Google’s offer to Samsung.

On cross-examination, Fitzgerald said that the agreement with Samsung would allow the company to allow alternative generative AI services if it wants. The company also amended its search agreement with Samsung as of this month to eliminate the requirement that Samsung only pre-install Google’s search engine and personal assistant, he said.

Mehta found last year that Google’s practice of paying Samsung to be the default search engine on its devices violated antitrust law. He is currently hearing testimony to decide what changes to force Google to make to its business to remedy the illegal behavior.

The Justice Department has proposed barring Google from paying partners for its search engine to be the default. That ban would also apply to Google’s AI products, including Gemini, which the agency says were aided by the company’s illegal monopoly in search.

The amount of money that Google pays to Samsung wasn’t revealed in court. During opening statements, DOJ lawyer David Dahlquist said the search giant pays Samsung “enormous sum of money in a fixed monthly payment.”

Between 2020 and 2023, Google paid $8 billion to make Google Search, the Play Store, and Google Assistant the default on Samsung’s mobile devices, according to testimony in a separate case over the company’s monopolization of the Android ecosystem. The federal jury hearing that case found in 2023 that Google abused its power in the Android app market with its Google Play store policies.

A California federal judge later ruled that the company must lift restrictions that prevent developers from setting up rival marketplaces and billing systems. Google is appealing.

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In testimony Wednesday, Google’s head of Gemini Sissie Hsiao confirmed that the app doesn’t currently have ads but executives have discussed the need to add them. “We aren’t losing search/ads traffic yet,” an internal memo from last year said, but “this is inevitable.” Google’s head of ads pushed for “monetizing Gemini with Ads ASAP ‘writing is on the wall.'”

Google’s biggest source of revenue is advertising, particularly the ads that appear alongside search results.

“So far we have not seen cannibalization” of Google search and ads, Hsiao said. “I think it really depends on whether chatbots or AI assistants become good at helping people” shop online.

“Is it inevitable? I don’t know. Maybe.”

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