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Google Might Pay Samsung $3.5 Billion in Licensing Fees This Year

Alphabet's (GOOGL) Google has renewed its license payment contract with Samsung (SSNLF) to ensure that the South Korean tech company preinstalls Google's search engine on its smartphones.

Alphabet’s GOOGL Google has renewed its license payment contract with Samsung SSNLF to ensure that the South Korean tech company preinstalls Google’s search engine on its smartphones.

Samsung receives fees from Google depending on the company’s advertisement earnings from the preinstalled app. According to JoongAng Ilbo, a daily newspaper in South Korea, Samsung could receive fees up to $3.5 billion.

This follows news on Monday that Google will pay Apple AAPL $3 billion this year to remain the default search engine on Apple devices. This payment has increased threefold from the $1 billion Google paid Apple in 2014.

Samsung’s licensing revenue has also increased in recent years thanks to its strong smartphone sales.

However, much like its relationship with Apple, Google’s large payment to Samsung will most likely pay off in the long run. Remaining the default search engine on both Apple and Samsung smart phones, two of the most popular brands, contributes significantly to Google’s mobile search revenue.

Related talks are currently underway and are led by David Eun, president of Samsung Next, Samsung’s startup in Silicon Valley, who previously served as vice president of content partnership at Google.

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