In the previous blog post, I have just reported on Oracle's bold move to propose to the court that it stay (or dismiss without prejudice) its patent infringement claims against Google in favor of a near-term copyright trial. Oracle's pleading also contains a very interesting portrayal of Google's Android-related business model and the economic value Android represents to Google, which is pertinent to Oracle's argument that its infringement lawsuit must be adjudicated at the earliest opportunity. I decided to separate those business issues from the legal/procedural issues discussed in the previous post.
In the following, I will quote from (and comment on) Oracle's representations of Google's Android-related business opportunity:
"While this case awaits trial, more than 700,000 Android-based devices are activated every day, all fundamentally built around the copyrighted Java APIs and the enhanced performance enabled by Oracle's patents."
The number of daily activations was recently announced by Andy Rubin himself. Google wouldn't agree on the second part of the sentence, but there's no denying that Java is a key element of Android's success, given that most Android apps are written in that language.
"Each day's worth of activations likely generates approximately $10 million in annual mobile advertising revenue for Google."
Oracle doesn't provide any particular source for this estimate. It's based on the assumption of annual advertising revenues of $14 per Android user. This litigation has allowed Oracle to conduct some discovery of Google's business model, but Google might deny this per-user revenue level.
The sentence I just quoted refers to a footnote in which Oracle points out that Android is much more to Google, in a strategic sense, than merely a source of mobile advertising revenue. In that footnote, Oracle highlights that Google leverages Android to grow the user base for its Google+ social network, and notes that Android is not as open as Google would have everyone believe:
"This revenue does not even include all the other value Android generates for Google, ranging from Android Market revenue, to other Android-related services, to ensuring that Google will not be locked out of the mobile business, to lucrative relationships with manufacturers of myriad devices on which Android can and does run, to the inordinately valuable access Android provides to customers for its new social network service, Google+. Indeed, Android has enabled Google to wield such power with regard to search and other services that its Android distribution and licensing practices -- far from the 'open' practices Google has proclaimed it lives by -- are under investigation by competition law agencies in the United States, Europe and elsewhere."
The reference to antitrust investigations isn't off-topic in connection with Oracle's IP infringement lawsuit. In fact, the court agreed with Oracle that it would be entitled to damages based on network effects (a concept that's key to many antitrust cases) if it could prove a connection between Google's alleged infringement of Oracle's Java IPRs and an overall strengthening of its search engine and other services.
Getting back from the footnote to the body of the document, Oracle also tosses out this number:
"Analysts have predicted that the number of new Android devices will reach 2.5 million per day within twelve months."
There is no particular citation. I've meanwhile seen one example of an analyst having predicted this volume, and at the end of the year we'll know if he was right, or the extent to which he wasn't.
Oracle obviously doesn't have an antitrust agenda against Google. It simply wants to be paid for the use of Java in Android. But the competition issues that Oracle raises, such as Google's use of Android to strengthen Google+, are relevant way beyond this intellectual property lawsuit. One of the contexts in which these issues must be evaluated is Google's proposed acquisition of Motorola Mobility. Last month the European Commission stopped the clock in its investigation of the proposed transaction, and I'm not yet aware of the process having been resumed.
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