Google's next cash cow - The iPhone

Google wants 2.25% for every iPhone sale

We've discussed before how Microsoft looks at the Android mobile platform as a cash cow, squeezing about $444 million from handset makers in licensing agreements last year. But now it's Google's turn to look for a cash cow, and it's eyeing the iPhone.

In a letter to the IEEE, a non-profit standard-setting organization, Google has outlined that it is preparing to ask companies such as Apple and Microsoft for a "maximum per-unit royalty of 2.25% of the net selling price for the relevant end product," in exchange for the "fair, reasonable and non-discriminatory" (FRAND) licensing terms that IEEE members promise to adhere to when they put forward patented technology for consideration as an industry standard.

Interestingly, that's the same figure that Motorola wanted from Apple for every iPhone sold. Apple, in turn, complained to the European courts that the demand was unfair, unreasonable and totally discriminatory. Either way you split it, that's a massive chunk of change for each handset sold.

FOSS Patents' Florian Mueller says that "2.25% of the selling price of the product as a whole is absolutely out of step with the concept of FRAND and with industry practice." He also comes up with a car analogy that demonstrates how unreasonable this demand is.

"If a BMW car implements H.264 or UMTS," writes Mueller, "they will want 2.25% of the price of the car, even if it means a per-unit royalty in the thousands of euros."

It seems that Google supports Motorola's demands for the 2.25% license fee, and will continue to pursue for this outcome via litigation.

This could get interesting.