Alphabet’s Inc.’s (GOOGL) Google is negotiating with Samsung Electronics Co. (GB:SMSD) for a more prominent role on Samsung devices through its apps.
According to a July 29 Bloomberg report, the tech giant is positioning for its apps, including Play Store and Google Assistant to serve as the promoted method for accessing games, apps, and search. Samsung dominates the smartphone market, with over 300 million devices sold last year.
A Samsung spokesperson said to Bloomberg, “Samsung remains committed to our own ecosystem and services. At the same time, Samsung closely works with Google and other partners to offer the best mobile experiences for our users.”
Estimates for a deal with the device maker would be consistent with Google’s current arrangement with Apple (AAPL). Google currently has a multi-billion dollar per year agreement with Apple to use its search engine as the primary means of internet search on Apple’s devices.
Despite Google’s Android operating system powering all of its devices, Samsung has previously resisted Google’s attempts for expansion on its platforms. Samsung allows Google apps like YouTube and Play Store to be downloaded by users, but the company retains its own apps as the main alternative. However, Google is allowed preinstalled apps like Search and Gmail because a portion of its revenue and sales goes to Samsung.
A Google spokesperson said in an emailed statement to Bloomberg, “Like all Android device makers, Samsung is free to create its own app store and digital assistant. That’s one of the great features of the Android platform. And while we regularly talk with partners about ways to improve the user experience, we have no plans to change that.”
Google’s stock is up 12% year-to-date with a Strong Buy analyst consensus that breaks down into 24 Buy ratings versus 2 Hold ratings and no Sell ratings. The $1,661.83 average price target suggests 11% upside potential for the shares in the coming 12 months. (See Google’s stock analysis on TipRanks).
MKM Partners analyst Rohit Kulkarni said that on July 27, Google’s Q2 online advertising trends were better in the quarter with YouTube CPMs “recovering” faster than expected. However, he noted that he anticipates significant declines in Google ad revenue. He reiterated a Buy rating on the stock and raised his price target from $1500 to $1700, which implies 13% upside potential.
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