Google Checkout vs. Android

I wrote recently about some of the problems that Google is having with paid apps on the Android Market. Not much has changed except that at least one head has popped out of the Google foxhole to provide some assurance that the problems are being addressed. A number of the issues are due to limitations of Google Checkout, including poor geographic coverage, return policies, and currency for posted prices. The exclusive arrangement that Google Checkout has with Android is what I will look at in this post.

First, I need to say that what follows is purely speculation; I have no evidence that anything in the scenario I'm about to paint is factual. I am presenting this scenario since it appeals to me as one that has a strong likelihood as being at least a part of the truth. I base this on my experience of having worked in large corporations, and having experience first-hand conflicts between business units with incompatible needs. With that said, let's proceed.

Google Checkout is not very successful in comparison to its more-established competitors, especially PayPal. As Google continues to introduce products that are sold directly to consumers or that provide a market wherein consumers and businesses buy and sell among themselves, it is perfectly reasonable that Google would prefer to promote their own payment and settlement product. It is, after all, more profitable than using other, non-Google services, and they can better tune its features and operation to the needs of its own businesses.

One reason it is not gaining more market share is that its competitors are well established. It takes a lot to convince consumers to sign up for another payment service or to switch entirely from the ones they already patronize. First movers like PayPal had the advantage of no competitors when they first came on the scene. Provided they don't make any big mistakes, their continued dominance is assured.

If I were in a position of responsibility within Google Checkout I would be increasingly concerned by my inability to grow the business. Failure has a price, sometimes quite personal. I would therefore be looking for "friendly" clients to win over, the so-called low-hanging fruit. Other Google business units would fall into this category. Even though it is a bit incestuous it nevertheless does help to establish the credibility of Checkout in their attempts to win over more clients.

Imagine, if you will, a meeting where the head of Checkout meets with the CEO and makes the proposal that the Android Market use Checkout as its sole payment provider. There are already plans afoot to aggressively market Android and the Android Market, which have many inherent strengths, and with its supposedly strong momentum would not be overly burdened by carrying Checkout along for the ride. Or so it would be claimed. If the CEO finds this intriguing, the head of Android Market would be put on the defensive, having to prove why this is perhaps not such a good idea, and try to compromise by allowing a non-exclusive deal. After a series of meetings with some give and take among the parties there is a decision to go with Checkout in an exclusive arrangement for at least a trial period once the market is launched.

At this time, some weeks after launch of the Android Market, I can imagine that its head is gathering evidence to show how Checkout is performing, and perhaps to prove how it is holding back success of the new and promising Android business. At the same time the Checkout team is working hard to improve their product to show that they deserve to keep their exclusivity with the Android Market.

At some point a decision will be made based on the evidence and analysis of the contending parties, and possibly on internal corporate politics (Google is not immune to this). Android Market will attempt to show that Checkout is causing them to fail to meet objectives for revenue, user adoption, and developer commitment. Checkout will attempt to show that the faults are more with the missteps of the Android Market and would have occurred with any payment service.

How the matter is decided will come down in large part to whether it is Android or Checkout that Google most wants to succeed from the perspective of its overall corporate objectives. My bet is that Android is the priority and that after several months someone is going to be authorized to make a phone call to the folks at PayPal. Unfortunately this point has not yet been reached and so everyone must continue to suffer the deficiencies of Checkout, or abandon Android. I don't believe Google will let this latter outcome become reality. We'll have to wait to see if I'm right.