Unlocking The Mystery About How Android Makes Money

Google (NASDAQ: GOOG) investors have been puzzled about how the company will make money on its Android mobile operating system. It is offered to mobile and portable hardware firms for free. The software might promote the use of Google search features on these devices and that might bring Google online marketing dollars. But, it is an interesting theory that has not shown any promise in the search company’s earnings.

The Wall Street Journal uncovered data that shows both Apple (NASDAQ: AAPL) and Google collect large amounts of data from wireless consumers who use the software from the two companies on their phones and tablets. It may point to how Google plans to profit from Android. “Google and Apple are gathering location information as part of their race to build massive databases capable of pinpointing people’s locations via their cellphones,” the Journal reports. Some experts believe that the software is due to an unintentionally inserted part of the code in the OS. Bloomberg reports, “If this was a conspiracy, this file would have been hidden better and we wouldn’t have found it,’’ said Alasdair Allan, one of the computer programmers who discovered the tracking feature. But, the experts do not mention that tracking technology is not usually well hidden as several media reports about PC-based privacy problems have pointed out.

Apple, Google, and online content and search companies probably think it is their “right” to collect a certain amount of data about the activities of their customers. The firms have spent tens of billions of dollars on software which helps consumers. The tech firms should get some of that back. The argument has at least some basis for Google. Apple, on the other hand, makes money from the OS it puts on its smart devices, or so some privacy experts and customers would claim. That raises the tricky issue of whether Apple’s profits come from its hardware, its software, or both. It does not matter. Apple customers are targeted by Apple software. If that is a consumer “cost” of owning an Apple product, the company should at least say so.

Google’s investors might be heartened that it has found a way to make money on Android. The software can track user behavior and Google can sell that data to marketers, or use it to offer better search results and sell more profitable search ads. It appears that even with Google, nothing is free.

Douglas A. McIntyre