39 Comments

Summary:

A class action complaint says Google uses secret deals to force Samsung and others to make its search engine the default choice on mobile devices, which in turn harms consumers by making the devices cost more.

Google requires Samsung, HTC and other mobile device makers that use the Android operating system to reserve prime screen real estate for the search giant’s own applications, according to a new class action complaint filed this week in California.

The lawsuit, filed by the same lawyer who recently won a high profile price-fixing case against Apple and book publishers, claims Google harms consumers by forcing the device makers to sign secret deals known as “MADA’s” — for Mobile Application Distribution Agreements — in order to perpetuate a search engine monopoly.

This Android arrangement has allegedly helped Google achieve an 87 percent market share in the mobile search market (while Yahoo has under 8 percent), and in turn caused consumers to overpay for Android devices. The lawsuit claims this amounts to a violation of the Sherman Act and other antitrust laws, and seeks unspecified damages on behalf of everyone in the U.S. who owns an Android device.

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.

In an email statement, Google disputed the claims:

“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 lawsuit also claims that Google pays Apple “hundreds of millions if not billions” for default search engine status on the iPhone as part of its larger effort to maintain its illegal “tying” arrangements. It also alleges that Google bought the domain name “duck.com” as a way to divert traffic from rival search engine DuckDuckGo, and points to the following comments by Google VP Jonathan Rosenberg to argue that Google has created a self-perpetuating monopoly in search:

So more users more information, more information more users, more advertisers more users, it’s a beautiful thing, lather, rinse, repeat, that’s what I do for a living. So that’s what someone alluded to the engine that can’t be stopped.

Despite the MADA’s and Google’s commanding market share, the lawsuit’s chance of success is far from certain. Under U.S. antitrust law, it is not enough to show that a company has a monopoly — it is also necessary to show that it has abused that monopoly to the detriment of consumers, which is not readily apparent.

Meanwhile, it is also notable that the Federal Trade Commission pursued a lengthy investigation into Google’s search practices, but ultimately decided in early 2013 not to take Google to court. The investigation, however, focused primarily on what Google does with its search rankings, and not on Android and the mobile market.

Here’s a copy of the complaint with relevant parts underlined. It contains a purported copy of a “MADA” at the end.

Google Android Class Action

  1. This makes no sense. If you want to use Bing then use Android ASOP like Amazon did and you can get all of the payments from Microsoft you want. The existence of Amazon is clear proof that you are not forced to sign a MADA. Go check out China – most of the mobile devices there run ASOP Android and don’t have the Google apps.

    The difference here is that MIcrosoft made IE into a part of the OS that could not be removed. In this case the Google apps are easily replaceable and in fact they have been replaced by Amazon.

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    1. Thanks for the comment, jonsmirl. I agree that the legal theory here seems kind of tenuous. It’s possible that Hagens Berman, the class action firm, is feeling flush after its win against Apple and the publishers, and figures it won’t hurt to try a longshot against Google.

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      1. I believe the MADA prevents an OEM from making handsets using Google-Android on one hand, which also making handsets for Amazon-Android or Microsoft-Android (Nokia X platform.)

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        1. while also*

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          1. Nokia sells an Android phone

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            1. An OEM cannot sell both a CTS compliant phone and a CTS non-compliant phone. As I understand, this prevents, say HTC from making both “Google-Android” and “Amazon-Android” phones. Or Acer from making both “Google Android” and Aliyun-based phones.

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    2. completely concur

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    3. Spying and spy will, Google is a Trojan

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    4. Not exactly. The difference is that Amazon cannot use the Google Play store. They also cannot market it as an Android device. Sure, somebody can use ‘basic Android OS’ for their device, and not make payments to Google. Then they cannot market it as an Android phone and include many of the important apps expected in a phone.

      If they want to use the Apps listed in the article, they must agree to point to Google search.

      However, even that being the case, it seems that the legal aspect of this is still on shaky ground.

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    5. Basically if you want Google Play on your device, you are forced to bundle all of Google’s apps and even add the Google search bar and make Google the default search engine.

      Its that bundling that is the heart of the lawsuit. Not sure if it has legal legs but it would be nice just to take Google apps a la carte.

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  2. BTW – it is AOSP not ASOP. https://source.android.com/

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  3. don’t be evil?

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  4. James Spader Thursday, May 1, 2014

    Not true. This makes no sense. The lawsuit will get tossed. I know of Android based tablets that do not use any of the default Android App’s. This is purely up to the Cell Phone Manufacture. Hence why its called Open Source.

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    1. Henry 3 Dogg Friday, May 2, 2014

      Not true.

      The open source version is incomplete.

      If you want the whole of Android including the none open source parts then you have to bow to Google’s control.

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      1. “The open source version is incomplete”

        How it is incomplete?

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        1. While virtually complete, it is far from all that’s needed for a modern handset to compete in today’s market. Most handset makers have to license software to make the handset operate with newer feature sets and newer hardware. There are almost no computers of any size, shape or form sold today that doesn’t have a slew of cross licensing and cost before it reaches the store shelves. The World is much more complicated than you give it credit for.

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          1. Thanks for agreeing that it is a complete OS, the other things you say are totally irrelevant to the OS being complete or not

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      2. How is AOSP incomplete?

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  5. God, then the manufactrers can use their own operating system. They get Android and all the improvements for FREE. So ridiculous.

    Perhaps this Google SWOT analysis should be updated to include this http://obvious-stock-picks.blogspot.com/2013/11/google-swot-analysis-strengths-and.html new info as a risk.

    Really don;t understand all lawsuits, THAT is what stifles innovation.

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  6. jnffarrell1 Thursday, May 1, 2014

    It is no secret that Google will not tolerate OEMs or Telcos that want to fork the Apps that Google is unbundling so that each and every one of them can exist behind an unbroken wall of encryption. Contact thieves and other malefactors have innovative ideas on how to penetrate the wall of secrecy. Thank the upstanding advocates that file class action suits, 3/4 dollars in class action going to the lawyers with no chance for Google or other innovative companies to collect court costs.

    Time to test the garbage of Class Action Trial laws in the same Supreme Court that ruled patent trolls in losing cases can bear the cost of the winning sides’ defense.

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  7. Jack N Fran Farrell Thursday, May 1, 2014

    Why not cost shifting to class action lawyers, who like patent trolls, abuse the system for personal enrichment.

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  8. Lawsuit paid for by Microsoft.

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  9. Kishor Gurtu Thursday, May 1, 2014

    While you can choose not to bundle Google with AOSP, you can also not call it Android if you do so – that in turn, discourages buyers looking for an “Android” device. So yeah, it’s complicated.

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    1. No, you don’t need to license Google services to call it Android, you just have to pass Android Compatibility Test

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      1. Um… try again. You need a LOT of licenses. Android is no quite as open source as they’d like you to think. Android lies never cease to amaze me. Don’t forget you also need a Microsoft license too. Plus licenses for hardware drivers for the hardware that’s in the phone depending on the OEM for that part. The “Free” in Android is a 100% lie.

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        1. “Try again” and the only thing you have posted is a bunch of nonsense?

          AOSP is free to use, AOSP can be called Android without licensing Google Services.

          Do you have anything to back your claims or it is just FUD?

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        2. What does Android being “free” have to do with the bases of this lawsuit. Even if Google did all the things this lawsuit is claiming Google doesn’t do, there’s nothing stopping everyone under the sun from trying to extract licenses from AOSP users. From my understanding, Oletros is right, in that, all that is required to use the Android branding is passing the Android compatibility test; else, AOSP would be meaningless otherwise. Yes, in this day and age, AOSP cannot compete as a platform without the Google goodness it lacks, but since when does Google have to do all the heavy lifting? Someone could quite easily create an Android distro (similar to Amazon’s flavor) that replaces all the missing Google components and charge for it. At the end of the day, I think this lawsuit is dumb because there is no law against monopolies; only monopolies that use their position to adversely impact the competitive landscape. And this usually only happens from a point of weakness.

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  10. Ah Gigaom the second biggest apple mouthpiece after BGR. Anything to slag Android.

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    1. BenjaminGilead Friday, May 2, 2014

      it because om malik has a big beef on Google.

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