How does Google make money from Android?

by: Bogdan PetrovanJanuary 22, 2016

money smartphone android

Google made $31 billion in revenue from Android, according to a court filing by Oracle.

Oracle is engaged in a protracted lawsuit against Google, over its alleged infringement in Android of two of Oracle’s Java-related patents. In a hearing last week, Oracle’s counsel claimed that Google not only makes money off Android, it does so on a large scale: $31 billion in revenue and $22 billion in profit since 2008.

It’s important to note that these figures didn’t come from Google directly. It looks like Oracle calculated the profits based on documents provided by Google. Because Oracle wants compensation from Google, it benefits from a higher estimate, so take it with a grain of salt.

On the other side, Google is in a tricky situation: publicly admitting it makes a lot of money from Android bolsters Oracle’s financial claims, while denying it could spook investors worried that Android is a money sink. That’s why Google has always been tightlipped about Android financial data.

Android is, of course, free to use by any OEM. So how is Google able to make billions in profits from it?

We can only guess, but two sources stand out: mobile advertising and app sales.

Mobile advertising

Mobile advertising is clearly the main source of revenue when it comes to Android. We know – also thanks to Oracle’s lawyers – that Google paid Apple $1 billion to be the default search engine on iPhones and iPads in 2014. That’s just the tax that Google had to pay for the privilege, so the actual iOS revenue is likely a few times larger.

iOS users are more lucrative compared to Android users from an advertising perspective, because, on average, they have larger incomes and they are more likely to buy stuff online. But Android users are much more numerous than iOS users. In September 2015, Google said there were 1.4 billion Android devices in use worldwide. Even with a lower average revenue per user, the money that Google makes from ads shown on Android devices is probably significantly larger than the iOS revenue. And, there is no Apple tax to pay.

Google makes money from the ads that are displayed when users search via its app and online. Many people also use YouTube, Google Maps, Drive, Gmail, and Google’s many other apps and services. Google shows ads in some of these services, but it also analyzes user data to improve the relevancy of the ads it serves in other places. And, because every phone user has to sign in with their unique account when setting up a phone, the data is accurate and highly personal.

Google also makes a few cents whenever you click one of those ads shown in many ad-supported apps.

google apps nexus 5

Now mobile advertising makes Google less money than computer searches, because the value of a “click” is generally smaller. But mobile usage increases every year, and thanks to Android and its suite of apps, Google has a network of capillaries extracting money out of the entire ecosystem.


Apps are the second big source of money for Google. The company takes a cut from every sale app developers make on the Play Store. And it’s a big store, with over 1.5 million apps, out of which a big chunk are paid apps or apps that offer in-app purchases. Google takes a 30% cut out of every sale, offering in exchange the platform and some of the required infrastructure, including a cloud system for delivering notifications.

Android apps tend to generate less revenue compared to iOS apps, for the same reason iOS users tend to be more valuable from an advertiser’s point of view. Revenue from Apple apps is 70% larger than Android apps revenue, despite the fact that Android apps have twice the number of installs. All that considered, thanks to the sheer size of the Android platform, it’s safe to say that Google makes a decent chunk of money out of its 30% cut of app revenue. That chuck is only getting bigger, as Android app installations continue to grow rapidly.

Google said during Google I/O 2015 that in 2014 alone it paid $7 billion to developers.  At a 70% developer share, the revenue from Android apps in 2014 was an impressive $10 billion.

App Annie 2015 installs revenue App Annie

Play Store media

Google also makes some money from the media side of the Play Store. Paid music, movies, books, and subscriptions are just a tap away for hundreds of millions of users, so even with a low usage rate, it’s fair to assume that there’s a steady trickle of money coming in from this source.

Google Photos best android apps of 2015See also: 10 best Android apps released in 2015!35

Everything else

Mobile advertising and app sales are the biggest sources of Android revenue for Google. The company sells some hardware, but with the small profit margins that hardware allows, that money is largely insignificant. The same can be said about ventures like Android Pay and Project Fi.

Google does not make money from Android in itself. Anyone can take the Android source code and use it on any device. Likewise, Google doesn’t make money from licensing its suite of mobile Android apps. Apps like Google and YouTube are free, even though manufacturers reportedly have to pay third-party testing companies six-figure sums to ensure that their devices meet Google’s compatibility requirements.

$31 billion?

Getting back to the revenues claimed by Oracle, how realistic is the $31 billion figure? Well, we know that in Q3 2012, Google boasted 500 million active Android devices and a mobile revenue run rate of $8 billion (including iOS). In the same quarter of 2011, it was just $2.5 billion.

Since then, the number of Android devices nearly tripled and the number of iOS devices ballooned as well. Plus, in 2016, Android has far more mobile apps and Play Store content. All this considered, the $31 billion lifetime estimate doesn’t look too farfetched. For what is worth, Google did not dispute this figure, it just wanted it to be made confidential. It’s even possible that the sum is actually smaller than reality, depending on how Oracle defines revenues.

At the very least, it’s clear that critics that derided Google for not making any money from Android were terribly wrong.

  • Celso Rodrigues

    I wish we had more insight into how successful things like Goole Play Music, Books and Movies actually are.

    For example, does anyone know how many Google Play Music users there are? Or paid subscribers?

    Every other music streaming service usually shares this number, but not Google.

    • philosopher_Mk

      Probably because number is to small to share,compared to other services like Spotify .

      • Mike

        I’d be interested to know what evidence you have to back up that statement. Spotify is ubiquitous, if dropping slightly. I know of quite a few GP Music subscribers and some are Apple fans. Don’t underestimate Google’s overall reach – with YouTube/YT Red too.

        • Oobiewan

          I know a ton of spotify subscribers, both from the iOS and Android camps. I know one single person who uses GP Music. That’s of course only what I see, but it also supports philosopher’s assumption

          • balcobomber25

            I use GP Music, so now you can bump that number up to 2 ;)

          • Mike

            As do I, so that’s 3 :-).

            And I have Spotify free, but never use it.

            I – and about a gazillion others – do use YouTube, so one way or another Google’s streaming reach is there.

        • Scr-U-gle

          You ‘know’ ‘quite a few’.

          Well that’s it done and dusted, Scr-U-gle Play must be about to shut down Spotify!

          Just like Scr-U-gle+ has destroyed Facebook!?!

          Before you start trolling someone’s opinion, try actually reading it, MK stated quite clearly that it is his opinion with the word ‘probably’.

          No wonder androne earn less and are dumber than in hone users in every poll produced, just need to scroll through a drone comment section for proof of that.

          • Mike

            Do you ever get fed up with your single topic postings?

          • Scr-U-gle

            Do you ever get fed up with trolling people and being wrong?

            I suggest you stick to the subject that you need to apologise to MK for being a douche.

            When you’re dead, you don’t know that you are dead. It is difficult only for the others. It is the same when you are Stupid.

            Maybe you are wrong yet again, and you just don’t know that I speak on numerous topics, or that you are just trolling yet again?!?

          • Mike

            philosopher_Mk, apologies. I overlooked the word “probably”. Mea culpa.

            Scr-U-gle, I worry for you, I really do. All you ever seem to do is come on an android site to spew your Google hate.

            You’ll get a girlfriend one day, I’m sure.

          • Scr-U-gle

            Someone had to put you drones right, good to see you washed down your humble pie with Hatorade

          • balcobomber25

            My guess is he was either fired by Google, got rejected, or was an employee at a company that was bought by Google resulting in him losing money. Only someone that was personally affected by them could have this much anger and hatred against them.

      • Scr-U-gle

        Funny how the Andrones want first hand evidence when you state the obvious but they blindly agree with and old nonsense that suits their belief that android and Google dominate everything.

        It’s like they are part of a cult! They live within its walled garden and refuse to look over its highly stacked wall.

  • balcobomber25

    “iOS users are more lucrative compared to Android users from an advertising perspective, because, on average, they have larger incomes and they are more likely to buy stuff online.”

    That is the biggest load of crock I have ever read. I would love to see the detailed studies that can back these statements up.

    • Sherpa

      On average, it is true. What you are not realizing is, many Android users are from 3rd world countries and they obviously are not lucrative. So, Android does dominate the market but only small segment of that market is lucrative.

      • balcobomber25

        On average you have no clue if it is true or not, you are just assuming based on what you think you know. Apple is sold in 3rd world countries as well. Do you have accurate information as to the income levels of people in those countries buying Android vs Apple? Do you know firsthand if a person buying an IPhone in Vietnam has more income than a person buying an Android in Vietnam?

        • Sherpa

          Yes, Apple devices are sold in 3rd world countries as well, but, unlike US, many other countries don’t have carriers subsidizing the cost of the phone. Meaning, if you have to purchase an Apple device, you have to pay big. On the other hand, there are many options for affordable Android devices. Unless you are one of those idiots who would sell their kidney to buy an Apple device, you are either already well off or have a good job to buy an Apple device in those 3rd world countries.

          And yes, just because you purchase an Apple device does not necessarily mean that you are rich. Anyone can buy one, but, it’s easier to buy an affordable Android device.

        • Scr-U-gle

          Seems like this fact that has been analysed by professionals many times hurts you for some reason and you can’t accept the facts.

          Why do you accept the fact that Android is in more people’s hands but not that those hands are grubby and poor? Have you seen first hand that android is more prevalent than iOS?

          You need to accept that the poorest, least educated and worst employed own Android, until they can afford an iPhone.

          I have been traveling in Asia for three months and can tell the more affluent countries by counting how many iPhones you see, more iPhones indicate a wealthy society. And I have experienced this first hand.
          iPhone dominates in Thailand, Japan, South Korea and Singapore.
          Android dominate in Cambodia and Malaysia.

          The only anomaly I have found is Vietnam, but the economy is growing very fast there and iPhone dominates.

          All first hand experience.

          • balcobomber25

            So you have links to these professional analytical studies that you claim have been done?

          • Scr-U-gle

            Firstly, I have given you my first-hand experience.

            Secondly, scroll up and read the article above.

            Thirdly, put into any search engine the words ‘android poorer iPhone more affluent’. The funny thing is Google only brings up two or three reports, Bing brings up a few hundred.

            Or ar Gartner, com.score and MORI not profession enough for you? There are a wealth of articles on this pro-drone site that state the same thing again and again.

            Enjoy that humble pie, It has a bitter taste, but is full of truth.

          • balcobomber25

            It is full of speculation. Without a detailed study of every phone owner and there income levels there is nothing but speculation. Which is why it’s irresponsible journalism to even make that statement.

          • Scr-U-gle

            Good idiotic response, I guess you didn’t bother doing a search yourself?!?

            Keep your head in the sand and pretend things are not the way they really are.

            You live in a fantasy.

          • balcobomber25

            We can prove that Android is more prevalent because we have something to actually measure it by: sales figures. That is an actual metric for measuring something. We have actual numbers too look at that say there were X amount of Android phones sold vs Y amount of iPhone. That is not fantasy, it is reality.

            Maybe we need to do a survey for you to accept that.

          • Scr-U-gle

            Why bother, you are an androne who refuses to accept anything but what suits your cults distorted reality.

            Sale or Return are reported by androne manufacturers, not sales figures, Scr-U-gle are one of the most deceitful companies on the planet so you can’t trust a word they say. A good example is their ad sales, with 90% of their ads being for Scr-U-gle, no wonder they manage to fudge their figures.

            An independent survey’s carried out by independent professionals has far more standing, but isn’t good enough for you sheeple.

            Just keep repeating the same old cod-shit that drones earn more, you might really believe it yourself one day!

            Again I have given you first hand examples but you just keep droning on about your fantasies.

            No I do not want to go large, when is that going to get through your thick skull?!?

          • balcobomber25

            Keep on with your crusade against Google, did they fire you or reject your application?

          • Scr-U-gle

            Why would I want to work for a morally bankrupt government shill like Scr-U-gle?

            it’s funny how you drones try and troll or go off topic when you make a fool of yourselfs.

            Then again, why would I expect a drone of such obviously low intelligence to be able to put forward a cogent debate!?!

            I guess the humble pie has given you verbal diarrhoea.

          • balcobomber25

            Your level of despise, immaturity and hatred can only come from someone who was personally affected by Google. That or you have way to much time on your hands.

          • Scr-U-gle

            What a brainwashed drone you are showing yourself to be, it’s sad and funny that as a drone you are affected by Scr-U-gle every time you use them and you recall that as a good thing.

            It’s sad that you are too stupid (as the article says) to realise it.

            It’s that lack of education and having a McJob that makes you a soft target for conmen like Brin, Page and Schit.

          • balcobomber25

            Ahh so Brin and Page conned you out of money. Now the reason for your personal vendetta is showing, it still makes you look incredibly sad and pathetic but at least it has a purpose. The funniest thing is you seem to be under the impression that I am in love with Google, I was simply pointing out a flaw in this article. I could care less about Google themselves. But good luck with your battle against the “drones”, aka people who think your immature and a troll.

          • Scr-U-gle

            I never fell for the con trick by Scr-U-gle, I understand how to read.

            I suggest you scroll up, you are the one who started trolling Sherpa with your cod-shit factless nonsense.

            All you have done is make spurious fact-less comments about how you refuse to accept the fact that you are an uneducated buffoon.

            You then tried unsuccessfully to turn this into a personal attack, and made a bigger fool of yourself.

            Andrones are poorer, less educated, and less likely to be successful unless, like you, they think 5-stars on a badge at Mcdonslds is success.

            I still don’t want to go large dummy.

          • balcobomber25

            Keep trying, making yourself sound dumber with each post. But it is hilarious to read!

    • Brad Fortin

      – CivicScience did surveys of about 27 million people and found that iPhone users tend to have higher education (>25% iPhone owners have a graduate degree compared to $125,000 compared to ~10% of Android owners). As with any survey results they have to be taken with a grain of salt, so the real-world differences won’t quite match the numbers in the survey but it’s still worth considering.

      – There was a project called Mapbox that took 280 million geo-tagged tweets, plotted their location on Google Maps, and coloured the plots based on the OS used. If you look at populated areas like the area around New York City you’ll see that most iPhone-based tweets were sent from more affluent locations, like Lower Manhattan or JFK, whereas Android-based tweets tend to originate from less affluent locations, such as Jersey City and Newark.

      – If you look at international sales numbers you’ll notice that iPhones have high sales numbers in regions with higher GDPs (North America, Europe, Japan, middle-and-upper-class China), whereas Android tends to dominate in regions with lower GDPs (South America, Africa, India, working-class China). Regions with money skew toward iPhones, while regions without skew toward Android.

      – In terms of how each positions itself, Apple aims to be a premium brand (premium materials/price/stores/service/support/etc), while Android aims to be the every-man brand (free license, huge range of hardware prices, Android One, Cardboard, etc). In other words, Apple targets people with money, Android targets everyone (else).

      – Worldwide Android has at least twice as many users as iOS, and download at least twice as many apps (as counted by the Play Store), but the Play Store still only bring in about half as much revenue as the App Store. While this is only an indication of users’ spending habits, not their income, people with higher incomes tend to have more disposable income, which is worth considering when looking at the numbers.

      So while not comprehensive, the data points to iPhone users as having more money (and more of it to spend) than Android users.

      • balcobomber25

        27 million out of a worlwide population of 6 billion isnt that much. And most of those “studies” rely on self reporting of income, most people on survey’s say they make more than they actually do. The information isn’t reliable at all.

        • Brad Fortin

          If “most people on survey’s say they make more than they actually do” why do the numbers still favour one side over another? If everyone’s lying wouldn’t the lies be spread pretty evenly across the board? Otherwise you’re drawing the conclusion that iPhone owners lie about their income ~5x as much as Android users while ignoring the rest of the data like OS usage based on neighbourhood, sales numbers based on region, target market for each OS, etc.

          Like I said, even if the survey is taken with a grain of salt it’s still something worth considering.

          If that’s not enough, just consider the price. People buy what they can afford. The average selling price of an iPhone is ~$700 USD, whereas the average selling price of most Android devices is <$200. Cheap iPhones don't really exist, with the cheapest being the iPhone 5S at $450 USD. On the other hand there's plenty of expensive Android devices on the market but not nearly as many as the <$200 devices, especially when you take into account countries outside North America and western Europe. Apple rules the high end, in terms of price, and the people most likely to be able to afford it are the ones with higher incomes.

          • balcobomber25

            Never said everyone was lying, just that the numbers are far from reliable. If you want to believe them more power to you. I don’t believe everything I read, you apparently do.

            I just found an Iphone 4s selling for $129 on ATT website and numerous sites have the 5s for around $200. There goes the rest of your argument.

          • Brad Fortin

            Oh boy, you found a handful of used/refurbished models at a cheaper price. That’s great. But that doesn’t change the average selling price of new models.

          • balcobomber25

            I found one of the biggest carriers in the world offering the iphone for under $200. The average selling price for new models is probably around $200 in the US, because most people buy iPhone on contracts and payment plans.

          • Brad Fortin

            AT&T, Verizon, Sprint, and T-Mobile have all eliminated all new 2-year contracts and only offer payment plans now.

          • balcobomber25

            A payment plan means you don’t pay for the full cost of a phone up front, not having to pay the full cost means people with lower income can buy it. Just like a subsidized phone meant lower income people could buy it. Sprint and Verizon are both offering iPhone specific upgrade plans.

          • Brad Fortin

            To an extent. Apple still makes a full sale to the carrier, then the carrier takes the burden of debt for the phone in the hopes that the customer pays them back. But not everybody can, in the same way that many people can afford to finance a Nissan Micra but not a Tesla. Sure, you can get financing for a Tesla, but most people who have a hard time affording a cost that’s 1/10th the price won’t qualify for the more expensive model.

          • balcobomber25

            Cars and Phones are completely different products. It’s much easier to be approved for a $700 smartphone with monthly payments of around $35 (with interest) than a $70,000 Tesla. You don’t need to have a high level of income to afford $35 payments, most students can qualify for that.

          • Brad Fortin

            Same idea, though. Some people can’t even afford that much, because they’re on welfare, a pension, disability, or just have other expenses that come first. When you can’t afford a $700 iPhone you’re more likely to look at the Android phone that’s only $70.

          • balcobomber25

            If everyone was that sensible there wouldn’t be billions of dollars in debt in this world. People these days are more likely to think about what is going to cost me the least today. Many people if given the option will take a payment plan for a better phone that they can’t really afford over paying more upfront for the Android device. This is something that is completely left out of a lot of those surveys.

          • Brad Fortin

            Why wouldn’t they be able to get the cheaper Android phone on the same payment plan? Instead of having $35 payments they can’t afford they’d have $3.50 payments that are much easier to afford.

            Yes, there are people who will try to buy things out of their price range but those people are hardly the majority.

          • balcobomber25

            If someone wants an iPhone they will get one no matter their income level, someone interested in an Apple product won’t settle for a $70 Android phone. And actually those people are the majority in the US where 80% of Americans are in debt.

          • Brad Fortin

            “If someone wants an iPhone they will get one no matter their income level, someone interested in an Apple product won’t settle for a $70 Android phone.”

            Many people don’t have a choice. If you can’t even afford to eat some days you’re definitely not going to splurge on an iPhone. People without money don’t have a choice but to settle, and keep the iPhone as a pipe dream.

            Even if we assume all iPhone users are in debt (bad assumption to make given all the above data) the iPhone only has <50% smartphone market share in the US, and only ~75% of Americans own a smartphone, so even if 100% of American iPhone owners are in debt that's still <38% of Americans, less than half of all Americans in debt, which means the "majority in debt" are either Android owners or can't afford any phone at all.

          • balcobomber25

            Except people that can’t afford to eat do splurge on things like an iPhone, which is why a lot of people in this country are in serious debt. You must live in a bubble and have no exposure to society outside of it. You need to get out more.

            “iPhone only has <50% market share", Iphone has around 47%, Android has around 50%, Windows/others have around 3%. In actual numbers:

            Android: 120 million
            iPhone: 112 million
            Windows: 7 million
            Others: 1 million

            What data above says anything about debt? Even if Apple users did have a higher income (which is impossible to definitely say given the data at hand), supposed higher income doesn't mean lower debt. Once again your making assumptions about something you have literally no clue about, a growing trend in you quest to be "right". Now if you have detailed statistics to share about the income and debt levels of iPhone vs Android users, please share them, otherwise this convo has run it's course.

    • bt

      If you own an iPhone you’re likely to have a higher income or at least be freer with your technology spending. The same is true if you own a high end Android phone, but there are many low end Android phones and users make up a large percentage of Android users. So yes I think it does make sense.

      • balcobomber25

        I know plenty of iPhone owners that are dirt poor.

        • bt

          Hence the second point. If someone who has no money buys an expensive phone they’re likely to be pretty bad with money. Exactly the people who spend lots on apps and buy a lot of stuff online.

          • balcobomber25

            I don’t so much have a problem with the “spend more online” because that is something that actually be tracked. But the income part is complete speculation.

  • mrochester

    I’d be looking to diversify away from generating revenue from advertising if I were Google. The increasing intolerance and blocking of advertising must be sending chills through Mountain View

  • James Childress

    The income derived from the platform is peripheral and dependent on selling content made by others on the Play Store. It is a stretch to say this is how much the OS made them when they don’t charge for it. I think the plaintiffs are reaching a bit with their estimate. Now if the Play Store itself used code w/o permission/compensation, profits from the Play Store would be fair game especially if the store cannot operate without it. Do I think the plaintiff should be compensated for the code used w/o permission? Maybe. This depends on how vital it was for the platform and whether the code design was truly unique enough to deserve a patent. The bigger issue is what stopped the patent owner from finding a way to monetize the code design themselves instead of waiting for a third party to find a use for it instead and pounce like a predator that set a trap? It might be in their best interest to simply settle for a more reasonable amount than to reach for the brass ring of extortion.

  • strauzo

    Maybe you forget the 1$ or maybe more for every google certified device sold. Google add google play services only on certified devices, to be a google certified device and install google play the manufacturer must send to google a cts report and have a collaboration with google. If the device is certified google get an amount of money for every device sold. Or others commercial agreements. If the device is not certified you can’t add google play on your device.
    Investigate on this if you want eliminate the cancer inside Android

    • Karly Johnston

      My device isn’t certified yet i still get Play services.

      • Jay Hopkins

        Same with my device: Jide Remix Ultratablet.

  • Jay Hopkins

    No one needs to coach Google on how to make money.They are obviously doing very well.Their stock is currently worth $740.00 dollars a share, while Apple’s is worth $106.Now granted they are technically playing in two different markets.Not too very long ago Apple’s was worth $400 plus.Google runs some of(if not THE largest) infrastructure in the world,The cost of maintaining and operating those data-centers is astronomical.Google understands that in technology you have to run just to stay in place.This is why they are playing into every venue there is.Google give’s Android away because they know the power it gives them in advertising and big data.Big data is EVERYTHING right now.And as for the whole iPhone owner vs Android owner I agree with both sides of your arguments.Wealthy people may be very likely to buy iPhone,but they are just as likely to buy high end Android devices.I know most people who are tech-savvy/nerdy definitely tend to gravitate toward Android because of the customization it allows.These same people may tend to prefer Apple’s computer offerings over Microsoft’s.But the bottom line is both platforms have their merits.iPhone definitely has a nice secure ecosystem,but it comes at both a monetary cost, and the cost of some freedom.I don’t know many Apple users who like to deal with iTunes(UGH).On the other hand Android has some flaws due to any app being apple to be submitted to the Play store, but the choices in apps is unbelievable.I had an iPhone before I owned a high end Android(Sony Xperia Z3), and I found there many apps I wanted to use that I couldn’t because they weren’t being developed or weren’t approved for Apple’s App store.But Apple has made good strides forward by open sourcing Swift/WebKit/Cocoa API’s and you can now develop for Apple on platforms that aren’t Apple.Bottom line,they’re both good,but depending on your orientation/focus one is going to be better for you, Not based on your income.In 3rd world countries maybe, but not in the fully developed world.

    • yo

      This gave me cancer