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Why making $31 billion off Android sucks for Google

While investors are cheering, why is Google sulking in the corner with its arms crossed?

Published onJanuary 21, 2016

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So the news just broke that Google has generated a revenue of $31 billion and $22 billion in profit from the Android since it acquired the operating system back in 2005. This is incredible news, because the long-standing narrative was that Android wasn’t making very much money for the company. In fact, Google has a history of being harassed by Wall Street for throwing money at projects that, while interesting, aren’t very profitable. So while investors are cheering, why is Google sulking in the corner with its arms crossed?

The reason is part and parcel with the way we found out about this $31 billion figure. Oracle currently has Google entrenched in an on-going legal battle. The case has its origins all the way back in 2010, when Oracle claimed the search giant violated its copyright by using Java APIs in Android. In 2014, the court ruled that API’s could, in fact, be copyrighted, and Google immediately escalated the case to the Supreme Court. This past summer, the Supreme Court upheld the ruling, and in many ways this looked like a killing blow for the Android owner’s side in the case, with Oracle pursuing damages of $1 billion.

Supreme Court rejects to hear Google's appeal in Oracle fight over Android

So when Annette Hurst, Oracle’s attorney, made public the $33 billion figure in court, Google acted quickly, asking the federal judge to redact and seal the public transcript. Their claim is that the information was extremely sensitive, and that Hurst inappropriately disclosed content from documents marked “For Attorney’s Eyes Only.”

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Investors all over the world are rejoicing at the figure, which seems to prove Android’s viability, but this puts Google in a very awkward spot. See, the damages that Oracle will potentially be awarded in this case are directly related to how much money Google made using their Java APIs. If the $33 billion in revenue figure is true, then the company could wind up paying out well over $1 billion.

Google, then, has to make a tough choice in how they move their court case forward. If they argue that Android isn’t as profitable as Oracle calculated from internal financial documents, then investors are going to be miffed. However, if they accept Oracle’s calculations, they weaken their own case and open the door for Oracle to ask for much higher damages.

What are your thoughts regarding this debacle? How do you think Google should proceed? Let us know in the comments below!

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