Google’s Android Generates $31 Billion Revenue, Oracle Says

Google Inc.’s Android operating system has generated revenue of $31 billion and $22 billion in profit, a lawyer for Oracle Corp. said in court while disclosing figures Google says shouldn’t have been made public.

An analysis of the search engine giant’s tightly held financial information was disclosed Jan. 14 by an Oracle attorney in the database maker’s lawsuit accusing Google of using its Java software without paying for it to develop Android. Google said in a court filing that the lawyer based her statement on information derived from its confidential internal financial documents.

“Look at the extraordinary magnitude of commerciality here,” the Oracle attorney, Annette Hurst, told a federal magistrate judge as she discussed Android revenue and profit, which have never been publicly disclosed.

Android, which was launched in 2008, makes money for Google in two ways: advertisements supplied by Google shown on Android phones, and revenue Google takes from its mobile app store, Google Play.

The figure is based on an methodology not outlined by Oracle, said a person familiar with the matter who was not authorized to speak publicly.

‘Extremely Sensitive’

Google urged a San Francisco federal judge on Jan. 20 to redact and seal portions of the public transcript of last week’s hearing, saying the Oracle attorney improperly disclosed “extremely sensitive information” from documents that were marked “Attorney’s Eyes Only.”

“Google does not publicly allocate revenues or profits to Android separate and apart from Google’s general business,” the company said in the filing. “That non-public financial data is highly sensitive, and public disclosure could have significant negative effects on Google’s business.”

Deborah Hellinger, a spokeswoman for Oracle, declined to comment on the disclosures in court.

The transcript vanished without a trace from electronic court records at about 3 p.m. Pacific standard time with no indication that the court ruled on Google’s request to seal it.

The five-year-old showdown between Google and Oracle has returned to U.S. District Judge William Alsup in San Francisco after a pit stop at the U.S. Supreme Court, where Google lost a bid to derail the case. The damages Oracle now seeks may exceed $1 billion since it expanded its claims to cover newer Android versions.

Java Software

Oracle wants to use financial information from Google to show that the search engine company was in a rush to use Java software to create Android and reap profits from it. The database maker also wants to peg its damages demand to how much Google has earned from Android — the higher the revenue, the more that Oracle can claim it’s owed for copyright infringement when the case goes to trial.

Hurst argued at the Jan. 14 hearing that during the time Android was developed, timing was critical because Google was in a “space race” with Apple and “neck-in-neck” with the iPhone maker’s iOS platform just as consumers were first becoming acquainted with the competing operating systems. The attorney cited testimony from a Google engineer that the alternatives to Oracle’s software “all suck.”

An analyst said there’s not enough granularity around the revenue figures cited by Oracle, such as what percentage came from emerging versus established markets, and how the figure changes with time, to warrant a major re-evaluation of the business.

“The margin isn’t that much of a surprise,” said James Cakmak, an analyst at Monness Crespi Hardt & Co.

“It provides a framework on how to think about the monetization prospects on mobile for Google,” he added. “It makes Android much more tangible.” He has a buy rating on the stock.

The case is Oracle America Inc. v. Google Inc., 10-cv-03561, U.S. District Court, Northern District of California (San Francisco).

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SOURCE: Bloomberg Business