Lawsuit accuses Google of unfair requirements

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Lawsuit accuses Google of unfair requirements

Google was accused in a lawsuit of abusing its market power by forcing makers of handheld devices that use its Android operating system to provide an array of the search engine company’s applications.

Google’s requirements that manufacturers such as Samsung Electronics adopt less popular applications in order to use consumer favorites such as YouTube are “designed to maintain and extend its monopolies in general search and handheld general search,” according to a complaint filed today on behalf of consumers in a federal court in San Jose, California.

The existence of the Android “mobile application distribution agreements,” or MADAs, wasn’t widely known until this year, when Harvard Business School Professor Ben Edelman wrote about them on his blog and voiced concerns about anticompetitive behavior similar to the claims in the lawsuit.

Google’s expansion of its monopoly in search on smartphones is “not merely a function of having built a better search engine,” according to today’s complaint. The “secret” MADAs require that each Android device maker “pre-loads onto prime screen real estate all of the apps in the suite, whether the manufacturer wants them or not,” according to the complaint.

“Anyone can use Android without Google and anyone can use Google without Android,” Matt Kallman, a spokesman for Mountain View, California-based Google, said in an email. “Since Android’s introduction, greater competition in smartphones has given consumers more choices at lower prices.”

Worldwide, 78 percent of smartphones were run on Android in the fourth quarter of 2013, according to IDC. Apple’s iOS had 18 percent of the market, while Windows had 3 percent and BlackBerry had 0.6 percent.

Today’s lawsuit was filed by the owner of an HTC EVO 3D mobile phone made in 2011 that runs on Android. The consumer argued that Google’s restrictions on Android made the phone more expensive. Google’s MADAs with Samsung and HTC were included as exhibits in the lawsuit.

The lawsuit includes a claim that Google’s pressure tactics on manufacturers are currently under investigation by the European Union in response to a complaint by FairSearch.org, whose members include Microsoft and Oracle.

Edelman, who is a consultant to companies that compete with Google, said in a February blog post that copies of MADAs had been filed as exhibits in a 2012 trial between Google and Oracle over Android. He said today that the Android tie-ins foreclose competition and raise prices for both advertisers and consumers.

“Google did this through secret contract restrictions - documents that probably wouldn’t have become widely available to the public had I not presented them on my site in February,” he said in an email. “The secrecy is itself troubling - users see Google apps preinstalled and conclude that carriers and other users must think they’re the best, when in fact Google apps are preinstalled only because Google insists that they be there.”

Google has had previous run-ins over allegedly anticompetitive behavior relating to search. The company ended a 20-month federal probe in 2013 over whether it unfairly skewed search results. It avoided a potentially costly legal battle with U.S. regulators by pledging to change some business practices.

The firm said it would voluntarily remove restrictions on the use of its online search-advertising platform and offer companies the option of keeping their content out of Google’s search results.

Hagens Berman Sobol Shapiro, the Seattle-based law firm that filed today’s complaint, represents plaintiffs in other big antitrust cases.

Bloomberg

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