Normally, if you download a free or paid app, the app would get downloaded onto your Android handset and, if the handset is connected to the Android Wear device via Bluetooth, the app would also be installed on the smartwatch. According to Android Police, the bug seems to specifically target paid apps, rather than free apps, with the problem lying in Google’s app encryption measures.
These measures encode paid apps with a device-specific key, which makes it more difficult for pirates to simply take the app and get them for free. Unfortunately, when trying to install the paid apps onto Android Wear, the system doesn’t know how to extract the file of the encrypted Android application package (APK). As such, the installer assumes there is nothing to install and aborts the process.
Since the first Android Wear smartwatches just launched today, it’s no surprise that Google has yet to release a comment on the issue. In the meantime, if you have either the G Watch or Gear Live, keep an eye out for an update in the very near future.