Carriers mulling new search app worried about contract with Google

By Todd Shields

Wireless carriers balked at allowing Samsung Electronics Co. to load its Galaxy S10 device with an app search capability that Google lacked, due to potential conflicts over their contracts with Google, a former Samsung investment adviser said at the search giant’s antitrust trial Thursday.
 

“The carriers had concerns it cannibalized their existing search revenues,” said Patrick Chang, a former director at Samsung Next Ventures, a US-based venture capital arm of the South Korean electronics company. 

Samsung Venture officials considered the across-apps search function devised by Branch Metrics to offer “a huge potential opportunity” because Google at the time couldn’t do that, Chang said. Founded in 2013, Branch Metrics raised $650 million from New Enterprise Associates Inc., Samsung Next Fund and other venture capital investors to build a search engine for mobile apps.

Alex Austin, a Branch Metrics co-founder, earlier told the court that Samsung restricted some functionality because of concerns about its contract with Google. The product was only allowed to search 25 apps and hid results from any apps not already installed on the phone, Austin said.

The US Justice Department claims Google uses contracts with tech rivals, smartphone makers and wireless providers to illegally maintain its monopoly in online search, by making it the preselected option, or default, on PCs and mobile phones. Google denies the allegation and says users choose its search engine because it’s the best one. 

“Google is clearly buying its way to squelch competitors,” David Eun, who was president of Samsung Next at the time, said in a 2020 email to Chang that was entered into evidence Thursday. 

Not all Samsung executives were convinced the product would succeed. Some questioned whether the product slowed the phone’s browser or drained its battery, according to company memos introduced by Google near the end of Chang’s testimony. 

Chang said those criticisms were made “without much justification.” Still, Chang said, there were “multiple reasons” for the product to struggle, including placement within the phone that made it difficult to find.

Samsung introduced the S10 in January 2019. In February, Chang in an email wrote “Carriers blocking Branch’s” product and “believe it violates their agreements with Google.” 

Chang, who now runs the Dispersion Capital venture fund, said he didn’t have direct conversations with carriers Verizon Communications Inc., AT&T Inc. and T-Mobile USA Inc., but heard of their qualms from his own colleagues.

The case is US v. Google, 20-cv-3010, US District Court, District of Columbia.