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Why Google is wary of Samsung's growing power

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While Google had strong earnings in the fourth quarter, it is struggling with the decline of desktop searches and the rise of mobile searches, where Google makes less money. The cost-per-click that advertisers pay Google decreased by 6 percent from the fourth quarter in 2011, though it increased by 2 percent in the third quarter of 2012.

James Kendrick of ZDNet says Google should be concerned about Samsung, and so should its partners. Why? Because Samsung is the only Android maker that matters.

“Samsung’s sales of both smart phones and tablets are far ahead of not just other Android players, but also of the entire Android ecosystem,” Mr. Kendrick writes. “Samsung is Android.”

What sets Samsung apart is its ability to build a phone with strong hardware and features and implement Android customization that caters to its customers, he notes. Samsung’s ability to dominate the market could give the company leverage to ask for cuts in the search revenue.

Chris Silva, a mobile industry analyst at Altimeter Group, notes that Google seems to be the victims and the beneficiaries of their own success when it comes to Android, from fines for fragmentation to concerns about Samsung looking for cheaper ad prices.

"Google's in an interesting spot as far as Android goes," Mr. Silva says. "Win or lose, they always have some sort of issue." 

Aside from the possibility of renegotiations, Google is likely concerned about Samsung customizing Android to the point where it prevents customers from getting a sense of the Android experience.

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