Google is planning to release its own smartphone in an attempt to have a strong foothold on mobile software. The new handset, which is expected by the end of 2016, would be launched in direct competition with Apple's iPhone lineup.

This would allow Google to take more control over the design, manufacturing and software of the handset. The internet giant is already in discussion with the mobile operators about a Google-branded handset, extending its move into the hardware segment, sources familiar with the matter told the Telegraph.

Unlike its major market rival Apple, Google leaves the manufacturing part to other smartphone vendors, while putting more focus on the development of its Android mobile operating system that runs on 1.4 billion devices. It has developed several Nexus-branded devices in a partnership with manufacturers such as LG, Huawei, HTC and Samsung.

There have been rumours about Google releasing its own handset for a long time. In November 2015, the Information revealed the company was debating the idea of building an Android phone in a bid to make its Android OS more competitive with Apple.

Ben Wood, an analyst at CCS Insight said, "They are concerned that Android is fragmenting, that it needs to become a more controlled platform. I think they'll seek to control it more, more like Apple."

Sundar Pichai, Google's chief executive, in a recent interview said, "We are investing a lot more effort into [Nexus]" in response to a query whether the company is planning to launch its own smartphone. However, he made it clear the company would still continue the development of its Nexus devices with the manufacturing partners. Pichai said, "Our plan is still to work with hardware partners."

Google's new move might add an extra dimension to the claims made by the European Union that Google has abused its dominance position in the market.

Earlier in April Margrethe Vestager, the European commissioner for competition, expressed concerns over Google imposing restrictions on mobile vendors from reprogramming the software of Android apps such as Gmail or Maps it bundles onto the Android OS.

The Commission had received complaints from companies such as FairSearch, Disconnect and Aptoide, an app store for Android. If found guilty, Google could face fines of about 10% of its parent company Alphabet's annual revenue, estimated to be about $73.6bn (£53.8bn).