According to a new antitrust lawsuit that was filed yesterday, Google is said to be violating antitrust laws by maintaining an illegal monopoly — not only on Internet search but mobile search as well. This has supposedly affected the search market adversely while inflating the cost of devices of competing companies.
The lawsuit was filed in the US District Court for Northern California. It accuses the Mountain View company of using Android as a way to maintain the monopoly through secret agreements with device makers. These agreements require companies to load Google’s suite of apps onto their devices. Known as Mobile Application Distribution Agreements or MADAs, the agreements have been made with mostly all Android vendors. These agreements essentially help partners facing lawsuits of their own in funding, technical support and other assistance.
The complaint seeks class action status and claims that these secret agreement restraints on trade are designed to allow Google to maintain its control of Internet and mobile search. This is done by requiring companies to set Google search as the default. As the lawsuit puts it:
“As Google well knows, consumers do not know how to switch, nor will they go to the trouble of switching, the default search engine on their devices, so this practice is a highly effective means of ensuring that consumers will use Google search to conduct general Internet queries rather than one of its competitors’ search products.”
Essentially, the lawsuit suggests that if companies — bound by these MADAs — were able to use other search engines, Google’s search competitiors would be able to refine their search processes making them more effective, in turn, making Google work harder at improving its own search process. Plaintiffs also claim that if rival search engines were able to compete for default status, device prices could be subsidized by OEMs, thus lowering the cost to the end consumer. Steve Berman, a partner in consumer right law firm Hagen Berman had this to say in a statement.
“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. Simply put, there is no lawful, pro-competitive reason for Google to condition licenses to pre-load popular Google apps like this.”
According to Google, however, search and Android are, in fact, not mutually exclusive:
“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.”
It will be interesting to see how this plays out in the court system. We’ll keep you updated as it does. Stay tuned!