Google Sued For Using Secret Android Deals For Illegal Mobile Search Monopoly

A class action complaint was filed against Google yesterday for using secret deals by exploiting their Android monopoly by forcing smartphone OEMs such as Samsung and others to make Google search engine the default choice on their mobile devices. The lawsuit claims that this move by Google harms consumers by making the devices cost more. Because, Apple receives over billion dollar from Google for making Google as the default search engine. If any Android OEM wants to make similar deal with Microsoft or Yahoo for making default search engine, they will lose access to Google Apps and Google Play Store in Android.

Under the secret MADA’s, device makers must allegedly include all of the following applications: Set-up Wizard, Google Phone-top Search, Gmail, Google Calendar, Google Talk, YouTube, Google Maps for Mobile, Google Street View, Contact Sync, Android Market Client (not products downloaded from Android Market), Google Voice Search, and Network Location Provider.

The theory of the case is that, under the MADA’s, Google requires any device maker who wants to include popular apps for YouTube and Google Play to also include Google as the default search tool — this, in turn, means that the device makers can’t realistically accept payments from other companies like Microsoft to feature their search engine instead. As a result, the devices cost more and search innovation is stagnating, the lawsuit claims.

Google has now responded the following,

“Anyone can use Android without Google and anyone can use Google without Android. Since Android’s introduction, greater competition in smartphones has given consumers more choices at lower prices.”

The case could become interesting if Microsoft and Yahoo joins the lawsuit. What do you think?

Source: Gigaom

Find full press release below,

SEATTLE – Hagens Berman, a consumer rights class-action law firm, today announced it has filed a nationwide antitrust class-action lawsuit against Google (NASDAQ:GOOG) claiming the search engine giant illegally monopolized, and financially and creatively stagnated the American market of internet  and mobile search.

The lawsuit, filed in the U.S. District Court for the Northern District of California, alleges that Google’s monopoly of these markets stems from the company’s purchasing of Android mobile operating system (Android OS) to maintain and expand its monopoly by pre-loading its own suite of applications onto the devices by way of secret Mobile Application Distribution Agreements (MADA). According to the suit, these agreements were hidden and marked to be viewed only by attorneys.

According to the suit, Google’s role in placing this suite of apps, including Google Play, and YouTube, among others, has hampered the market and kept the price of devices made by competing device manufactures like Samsung and HTC artificially high.

“It’s clear that Google has not achieved this monopoly through offering a better search engine, but through its strategic, anti-competitive placement, and it doesn’t take a forensic economist to see that this is evidence of market manipulation,” said Steve Berman, attorney representing consumers and founding partner of Hagens Berman. “Simply put, there is no lawful, pro-competitive reason for Google to condition licenses to pre-load popular Google apps like this.”

The complaint claims that if device manufacturers bound by Google’s distribution agreements were free to choose a default search engine other than Google, the overall quality of Internet search would improve.

“The more use an internet or mobile search engine gets, the better it performs based on that use,” Berman said. “Instead of finding a way to legitimately out-compete other internet and mobile search providers, they instead decided to choke off competition through this cynical, anti-consumer scheme.”

The complaint notes that Google’s monopoly not only suppresses its competition but also keeps the company itself from improving.

“This comes down to a combination of Google’s power in the U.S. general mobile search market and their power in the realm of tablet and smartphone manufacturers,” Berman said. “As a result of the pricing conspiracy, everyone loses. Google and its competitors face an uncompetitive, stagnant market, and consumers are forced into one option.”

According to the lawsuit, Google’s MADAs are contracts in restraint of trade that are designed to maintain and extend its monopolies in general search and handheld general search.

The lawsuit claims Google is in violation of a variety of federal and state antitrust laws, including the Sherman Act, the Clayton Antitrust Act, California Cartwright Act and California Unfair Competition Law.

The named plaintiffs include Gary Feitelson, a resident of Louisville, Kentucky and owner of an HTC EVO 3D mobile phone, and Daniel McKee, a resident of Des Moines, Iowa and owner of a Samsung Galaxy S III mobile phone. According to the complaint, in both situations, the owner’s phones should have cost less and had better search capabilities as the result of competition that would have ensued, had Google’s MADA restraints not existed.

The lawsuit seeks to represent all U.S. purchasers of any Android OS mobile telephone or tablet as to which Google and the manufacturer of such device has entered into a contract or contracts, including the MADA, by which Google has conditioned the right to pre-load any application from a suite of Google applications on to manufacturer’s mandatory acceptance.

The lawsuit seeks damages for individuals who have purchased these devices at an artificially high price due to Google’s alleged price-fixing, anticompetitive restrictions.

About the author  ⁄ pradeep

Pradeep, a Computer Science & Engineering graduate.

  • http://yourig.livejournal.com/ ZloiYuri

    Yeah, “Don’t be evil” might to follow by “It’s our prerogative”

  • http://memento.postach.io/ KshaH

    kill ‘em all

  • smity smiter

    Does it say who filed the lawsuit, anywhere in the article?

    • donzebe

      We did. Lol

      • smity smiter

        We? :-/
        I’m confused. People got together and signed a petition to file this or something?

  • Jeff D

    Is it possible to buy a Windows Phone that comes with a default search engine that is not Bing?

    • GR

      Slightly different. Microsoft do not state that if you want to use MS Office or One Drive on Android, then you have to use Bing, which is effectively what Google are saying with You Tube and Google Play.

      • Jeff D

        How would Microsoft enforce what I install an Android phone?
        If I install You Tube on my iPhone do I have to install all of Google’s other apps? How does Google prevent you from using Bing if you have Youtube installed?

        • Grim San

          I think the problem is when it is demanded and if the OEM does not, they stop supporting OEM products (such as tech support with HW of OEM applications). MS did this type of behavior in the 90’s. Also, when MS allowed to have google ads in there MS Youtube but refused to send user data back to Google. Google demanded that they remove the MS Youtube. Google does not hide the fact that user data (not personal) is important. They make tons of money selling user stats (not personal info more like trends) to 3 parties. I am over simplifying and it is more complex.

          • Jeff D

            How much support from Microsoft do you think an OEM would get if they released a Windows Phone with Bing removed?

          • Grim San

            You are mixing the points. Google has not achieved this monopoly through offering a better search engine, but through its strategic positions through demands. Apple and Microsoft welcomes there applications. Apple has issues with how they do it and Microsoft issue is more deeper of data collection. Google is having issues in Europe already it was just about time it came here. If you remember Microsoft and IE you could easy see this coming a mile away.

          • Bugbog

            I’ve seen Google getting “away” with it for the last three years since I realised what their true business model was.

            For all Microsoft’s ‘crimes’ of the ’90’s, they never, ever devalued software to the point that the only way to compete in any business category/sector with them was to give your product away for free.

            Consider, if Google is getting away with all they are doing now for just a third of the profits that Microsoft makes per quarter, Imagine what they’ll be doing when their profits reach the level of Microsoft’s!?

        • donzebe

          This question here is not referring to what apps consumer install, it’s talking about manufacturers and the default applications on the phone right out of the box. what is the difficult search engine when you open your phone from day one? Stats show that majority of consumers will go with what comes with the phone out of box. So this gives Google an advantage because manufacturers of phones can not strike a deal with Bing or Yahoo to have it as default search on their phones since doing that going will not allow them to use the google play store on their products.

          • big_Stefano

            You wrote “what is the default search engine when you open your phone from day one? Stats show that majority of consumers will go with what comes with the phone out of box. So this gives Google an advantage..”

            I don’t really see the problem with this. What is the default search engine that comes with Windows Phone out of the box? Does it not give Microsoft an advantage too? We can’t complain about that.

            However, if the lawsuit is because of “manufacturers of phones can not strike a deal with Bing or Yahoo to have it as default search on their phones since doing so Google will not allow them to use the google play store on their products”, then I can completely understand how unfair it is to the consumer. And if the class-action lawsuit is about that, then I completely agree with it.

          • minhin

            According to the article, in order to have Google play store which is essential in bringing usability out of the phone, Samsung has to agree to make Google search. However, in WP case AT&T can factory install their phone to include apps and users can still access the MS store or Xbox services.

        • Vương Vi-Nhuyễn – 王微軟

          The same way Microsoft prevents you from using Scroogle if you have Internet Explorer installed, that aside, there is no way to ever remove the Scroogle Search Bar above your screen.

          This is the problem…

        • Sean D.

          You’re misunderstanding the whole thing

          • Jeff D

            No I’m not, I was responding to GR’s comment.

    • Duk3togo

      Actually you can go into the IE settings you can change your default search provider from Bing to Google. So the option is there, plus any OEM can pin Google search, maps, etc at the start screen but Google doesn’t support WP with its services.

      • Jeff D

        You can also go into Chrome on Android and change the default search engine from Google to Bing. What does that have to do with anything?
        Google has a search app for Windows Phone. How many OEMs ship phones with it pinned on the start screen?

        • donzebe

          All Android phones supported by Google services must have the key Google services pre installed before ship: google map, google search etc. And they are right there at the start when you open your new android phone.

          • Jeff D

            How many OEMs ship Windows phones without Microsoft’s apps for search, maps, etc.? Do they have a choice to do so?

          • Jaqen Hghar

            Actually nokia doesn’t ship with ms maps preinstalled. It uses its own solution here maps. And also any such Ms apps like maps and such can be uninstalled. Whereas google apps are gonna be there till you root your phone.

          • Jeff D

            You’re right, I remembered uninstalling a terrible Map app on my 1020 but it must have been the AT&T app.
            You can’t uninstall Google apps from an Android phone without root but you can disable them. You don’t have to see or interact with them but they still take up space on your phone.

          • Jeff D

            Although now that Microsoft bought Nokia’s Devices and Services division Lumias come with a Microsoft maps app pre-installed.

        • Sean D.

          Yeah, but if you ship an android phone without ALL google apps, you don’t get access to the “play store” (or whatever it’s called).
          MS doesn’t do that. If you use google on a WP you still have access to everything.
          It’s a huge difference.

        • Duk3togo

          See what you don’t understand because you don’t own one(assuming) is that everything’s integrated on WP. So changing it there would probably change it throughout the OS. I say this because IE does not have search bar attached to the web address bar.

          Also, Just because they don’t doesn’t mean they can’t, besides since Google never really focused on WP it practically sux. MS doesn’t ban the OEMs from the windows store if they did ship it pinned. That’s what it has to do.

          • Jeff D

            That’s a poor assumption. I have a Lumia 1020. I use my Nexus 5 more but 8.1 addresses a lot of the things I didn’t like about Windows Phone. 6 columns instead of 4 is a huge step forward because WP doesn’t have a pagenated start screen. With 6 columns I can have everything in either the top or bottom of the start screen so I don’t have to hunt around for things in the middle. The Action Center is also a major step in the right direction for usability but it still needs some work.

            What do you mean when you say “IE does not have search bar attached to the web address bar”? When I type a search term in the web address bar without a .com it performs a Bing search.

          • Jeff D

            When you change the default search in IE it definitely does not change the default search you get when you use the Search button. That remains Bing. The example you gave to demonstrate how “everything’s integrated on WP” is wrong.

          • Duk3togo

            Many valid points but again it goes down to MS allowing the search to be changed directly within the OS. Google doesn’t allow this hence the lawsuit.

          • Jeff D

            How do you know Microsoft allows OEMs to change the default search in Windows Phone to something other than Bing? Can you come up with a single example of a Windows Phone where the OEM has done so?

          • Duk3togo

            I didn’t say the OEMs, I said they do… What I said OEMs are allowed to put any app or tiles so they could add Google if they feel.

  • Ben Chia

    Well, no users should be penalized for choosing either android or apple or windows phones or any mobile platform for that matter. They should have the freedom.

    • donzebe

      I think users have the choice to use any search engine on their devices, however, how many users ever bother to change the default search that comes with their device? So technically users are forced to use what ever Google tells the device manufacturer to install as default.

      • Ben Chia

        Good point.

      • Vương Vi-Nhuyễn – 王微軟

        Though on Windows Phone I read somewhere that more than 40% have altered their search engine to Scroogle, so people might alter it, on Android I really want to use Bing, but there is now way how. :-( I cannot remove the Scroogle Search Bar Widget above the screen and replace it with a Bing Search Bar Widget, I can only place a Bing Search Bar Widget bellow it, and it’s only visible on one of my start-screen ”pages”…

  • NGM123

    One can only hope that the monopolistic anti consumer ways that Google employ worldwide on a daily basis finally comes back and bites them fair on the ass. If ever a large company needed their arrogant tails pulled its these pricks.

    • Grim San

      I agree

    • Vương Vi-Nhuyễn – 王微軟

      Exactly, Scroogle always looks ”nice” in front of the camera’s, the founders praised Bing for ”competing”, yet they don’t allow users to change their default search engine to Bing, Yandex (Russian: Яндекс), Yahoo!, WolframAlpha, or various others. :-

  • Asgard

    “Anyone can use Android without Google and anyone can use Google without Android. Since Android’s introduction, greater competition in smartphones has given consumers more choices at lower prices.”
    Google didn’t even answer to the problem. Which is that anyone cannot use SOME Google. It is all or nothing.

  • Grim San

    What makes me laugh about the situation is how the Google founders bitched about how Microsoft strong armed there competitive dominance. Now Google goes about it even worse and uses the Open Source concept to legitimize their activities. You have all those open source developers (contributors) in the arena following what they say and thinking it must be OK because it is OPEN to everyone. I wished I save the article link. Maybe I should Yahoo.

  • Vương Vi-Nhuyễn – 王微軟

    Microsoft has been sued for less, including Internet Explorer on Windows devices didn’t even limit the ability to set the default browser, if I want I can make Netscape Navigator or Scroogle Chrome my default browser, but I choose to keep Microsoft’s Internet Explorer, and I own ½ a dozen Android devices, and when I want to use Bing I should download the official application (which can’t be downloaded in my country for some reason), so I end up using Bing through Scroogle’s browser(s), even on Windows Phone I can choose to alter the browser to Scroogle, I bet that if Microsoft didn’t do that that the E.U. would’ve sued ‘em for pre-loading Bing or something, Scroogle pre-loads 2 browsers in Android, Crapple pre-loads Safari in iO.S. and O.S. X, Scroogle also pre-loads Scroogle Chrome in their Scroogle Chrome O.S. and Microsoft pre-loads the Nokia Xpress Browser in S30, S40, and Asha, Internet Explorer Mobile in Windows Phone, and a 3rd party browser (Opera) in Nokia X.

    Only Microsoft has ever been sued over how they pre-load their browser, Yandex (Russian: Яндекс) has been losing market-share in Russia to Scroogle because it pre-loads Scroogle Search as their default search engine in Scroogle Chrome (though this can be changed, though you should know how, which may not be hard, but plenty of people don’t know how, I could use the same logic with Microsoft Windows & Microsoft’s Internet Explorer). Microsoft lost more than $ 1.000.000.000,- to us because we (the European Union) sued them, I never got how ”Mobile” was somehow ”special”. (–_–)

  • minhin

    Now I know why Google does not want to make YouTube apps for window phone.

  • Bugbog

    It’s called “bundling!” It’s what Microsoft was penalized for by the EU back in the early ’00’s.

    When the inclusion of certain apps cannot be made ‘one-without-the-other’ then simply stating that OEM’s can “take it or leave it” simply doesn’t wash. If Microsoft was penalized for it when they had a 70 – 80% marketshare, then Google should be subject to the same laws.