The Guardian published an article this morning claiming that Google is charging handset makers (OEMs) for their Google Mobile Services (GMS) license. The report has proven controversial with Google denying that it seeks payments. I am not prepared to critique the Guardian’s comments, but I do have some strong opinions about how Google grants access to the various pieces of its service.

I covered this topic when I got back from China last month when I relayed the story of one small OEM in China who lamented that “No one at Google is returning our calls.”

I think all of this reflects that there is still a lot of murkiness around how Android and Google operate. Anyone can download the code for Android, but that alone is not enough to build a phone. In particular, downloading Android does not grant you access to other Google services like G-Mail, Maps and crucially the Google Play App Store. Collectively, this bundle is known as the G-Suite. To get access to this, OEMs need to sign a hefty contract with Google and comply with a set of compatibility criteria. The exact nature of those criteria is not clear, and became a key factor in a lawsuit against Google. Other important terms of the contract include “non-fragmentation” clauses which prevent licensees from building their own Android variants, and arguably from helping others to do so (i.e. Amazon).

The problem is that OEMs need access to the G-Suite because consumers and, more importantly, carriers demand it in their Android phones. But Google is clearly resource-constrained when it comes to granting this access. I understand that they have a single test engineer for all of China’s OEMs.

This leads to a supply and demand problem. The supply of G-Suite licenses is limited by Google’s ability or willingness to grant more, but the demand is very large given the number of handset vendors out there. Moreover, the compatibility tests require some testing and that is not free.

Economics 101 should make it pretty clear what will happen when supply and demand get out of balance.

Turning back to my small OEM in China. When I spoke with him in December he added that “I need the G-Suite. I would be fine with paying Google for it, but if they do not provide it, I will pay someone else.”

So the Guardian’s report rings somewhat true to me. Google may not be charging directly, but there are real costs associated with obtaining a G-Suite license. It is not surprising that third party test and compatibility ‘consultants’ enter this fray. Some of them may be legitimate G-Suite licencees, but also equally clear, there are others out there providing cracked codes that allow ‘grey’ access to the G-Suite API.

For what it is worth, I do not think Google charging for access to the G-Suite is a bad thing. There is a clear cost and plenty of demand. But as with much around Android, they are bumping up against their own past marketing. They said Android would be free, so the industry gets riled up if they start charging. I think the best approach they should take is to make all of this explicit and open. Raw Android downloads should be free. Further integration requires following specific steps and paying specific fees. Google should charge for those but only enough to free up their own resources to fulfill the demand. The concern is that OEMs will be scared by any such moves. For handset vendors dependent on Android the notion that they could someday have to pay for it is a big concern. A dose of openness on this front could solve a lot of problems for Android and Google.