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Antitrust Claims Google is Stagnating Competition and Driving Up Phone Prices

May 2, 2014 - Written By Cory McNutt

 

A class-action antitrust lawsuit filed against Google on Thursday in California is taking direct aim at their practices of having manufacturers sign their Android Mobile Application Distribution Agreements (MADA), allowing them to monopolize the internet and mobile searches.  By doing so, they are trampling on competition and therefore inflating the cost of smartphones that run their Android operating system.  They go on further to say that by ‘forcing’ users of Android to use the Google Search feature, it has caused a disadvantage to other search engines – the more a search engine is used, the better it will become and since Google prevents users from using other search engines, those search engines cannot become as good as Google’s.

Steve Berman, a partner of consumer right law firm Hagen Berman, said 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.”

Maybe Mr. Berman forgets that Google maintains the Android OS and does not charge a licensing fee to use their product like others do – they only require that certain Google applications are included, such as Google Search, Maps, YouTube, Google Play Store, etc. – applications most would load on their device on their own.  Google countered by saying in a statement:

“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.”  

You can buy a new Android device for under $200 off-contract –  compared that price to the iOS alternative.  There are numerous Android device manufacturers competing for your dollars – how much more competitive can you get. In answer to Google’s revelation that you can use Android without Google, Mr. Berman challenges our intelligence by saying:

“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.”

We would not go to the trouble of switching because there is no better search engine or maps service out there – period. The two plaintiffs in California that started this lawsuit are looking for damages to be awarded to consumers who purchased an Android device sold “at an artificially high price.”  Please let us know on our Google+ Page if you feel that Google has squashed competition in the mobile world – and if so, how.  Do you believe that prices of Android smartphones are higher than they need to be…as always, we would love to hear from you.