A consumer rights legal firm that lately hit Apple with an $840 million claim to damages for e-book price fixing has now found its next target - Google.
Hagens Berman announced Thursday, May 1, that it filed a nationwide class-action antitrust lawsuit against Google, alleging that the company maintains an illegal monopoly on Internet and mobile search, which hampers the innovation of search and artificially inflates smartphone prices.
The lawsuit, which was filed in the US District Court of Northern California, alleges that Google harms the state of search by forcing smartphone manufacturers using Google's Android operating system to preload Google's suite of applications, including Google Search, by way of secret Mobile Application Distribution Agreements (MADA).
As per the MADAs, makers of Android smartphones are forced to include Google's applications, including: Search, Gmail, Calendar, YouTube, Google Talk, Google Maps, Google Street View, Google Voice Search, Android Market Client, Contact Sync and Set-up Wizard.
The MADAs, and not innovation, is what the lawsuit claims allowed Google to corner the search market. Year-end reports by comScore in 2013 reveals that Google owns majority of the market share with 67.3%, while its biggest competitors Bing and Yahoo! fall far behind with 18.2% and 11.2% respectively.
Based on research firm IDC, about 78% of all smartphones all over the globe run on Android, while only 18% use Apple's iOS. What little is left of the market is shared by Windows, which owns 3%, and BlackBerry which has 0.6%.
"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," writes [pdf] Steve Berman, founder of Hagens Berman and representative of consumers. "Simply put, there is no lawful, pro-competitive reason for Google to condition licenses to pre-load popular Google apps like this."
The arrangement between Google and smartphone makers such as Samsung and HTC, says Berman, is tantamount to violating the Sherman Act and a slew of other antitrust laws.
The lawsuit also alleges that, without the MADAs, smartphone makers can subsidize the price of their handsets and drive down costs for consumers.
It also accuses Google of paying Apple "hundreds of millions, if not billions" of dollars to keep Google Search the default search app in Apple devices.
Google denies the lawsuit's allegations.
"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," says Google spokesperson Matt Kallman in an email to Re/code.
Those following the case are not expecting Google to admit defeat, saying plaintiffs carry the burden of proving that Google has abused its hold over the market to the point of harming smartphone users.
"Under US antitrust law, it is not enough to show that a company has a monopoly - it is also necessary to show it has abused that monopoly to the detriment of consumers, which is not readily apparent," writes Jeff John Roberts of GigaOM.
