Did your last phone cost too much? Do you hate, hate the fact that Google Search is included in Google's Android operating system? Does the sight of a pre-loaded Gmail app fill you with scorn? Then call the offices of Hagens Berman, a consumer rights class-action law firm. They want to sue the pants off of Google, Because it's easier to get the money out of someone's wallet that way.
Attorney Steve Berman of Hagens Berman. Photo credit: Seattle Pi
A lawsuit filed in the U.S. District Court of Northern California claims that Google is using its position as the juggernaut of American Internet search to artificially inflate the prices of Android phones. According to Hagens Berman, arguing on behalf of two clients in Kentucky and Iowa, Google's Mobile Application Distribution Agreement has the specific intention of maintaining Google's search monopoly, and the side-effects include more expensive smartphones for consumers. The plaintiffs claim that their phones (an HTC EVO 3D and a Galaxy S III) should have cost less and had better search capabilities. The lawyers want damages based on price-fixing for these phones.
Let's pick this apart, shall we? One, attorney Steve Berman spends a lot of time talking about how Google's default search engine and insistence on Google apps on Android phones is a manipulative conspiracy to maintain its search monopoly. And you know what? That's a valid argument. I'm not saying it's correct, but you could certainly lay out points and make a case. Have a gander at some choice quotes from the Hagens Berman press release:
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.
The more use an internet or mobile search engine gets, the better it performs based on that use... Instead of finding a way to legitimately out-compete other internet and mobile search providers, they instead decided to choke off competition through this cynical, anti-consumer scheme.
Is Google using its position as the search leader to further Android as a smartphone platform? Of course. Is Google also using its relationship with Android phone manufacturers to further its search dominance and capabilities? You betcha. But this lawsuit isn't only about search, and it isn't being filed on behalf of Google's search competitors. It's claiming that because Google is the dominant search engine, and because its terms for using Google Apps on Android phones includes using Google as the default search engine, phone prices are unfairly high to American consumers. Allegations of "market manipulation" and "conspiracy" are included, with non-specific references to the Sherman Anti-Trust Act and the California Unfair Competition Law.
This comes down to a combination of Google’s power in the U.S. general mobile search market and their power in the realm of tablet and smartphone manufacturers... As a result of the pricing conspiracy, everyone loses. Google and its competitors face an uncompetitive, stagnant market, and consumers are forced into one option.
One: even though people are buying more Android phones than any other smartphone platform, smartphone buyers (and particularly American smartphone buyers) are hardly without options. You can walk into any Wal-Mart in the country and buy an iPhone, and Windows Phones running software made by Google's biggest search competitor are available as well. You can even buy a brand new Blackberry if you're a glutton for punishment.
Two: I don't think Hagens Berman understands the relationship between Google and phone manufacturers, or for that matter, Google and Android. HTC, Samsung, ASUS, and Huawei all make or have made phones running on competing operating systems, and those phones aren't influenced in any way by Google's Android policies. True, Google's license for Search and the Play Store restricts what a manufacturer can do with Android, but only in relation to their own Android products. And if the terms of Google's app certification and inclusion process aren't conducive to a company's bottom line or market strategy, they can take Android and do what they like with the open-source code, as Amazon, Barnes & Noble, and innumerable manufacturers in China have already done.
Three: Google is the default search engine on Android phones with Google apps. That's irrefutable. But there's nothing stopping anyone from going to the Play Store and installing search apps from Microsoft, Yahoo, or any other Google competitor. In fact, Google allows competing services for any and all of its built-in apps on the Play Store. If that's not enough, any Android user can side-load apps that are published on competing stores, or even without a centralized distribution. Still not enough? You can actually disable Google's apps on Android 4.0 or later (which both plaintiffs have access to). All of this is possible without rooting or modification - it is, in fact, standard.
Four: Google doesn't control pricing on any hardware except the phones sold in the Play Store. If HTC and Samsung want to keep the $600-700 status quo of new flagship phones, there's nothing Google can do about it. And in fact, there are plenty of alternatives, even among high-end phones, that would seem to rebut the complaint that they should be cheaper. Google's own Nexus 5 and the Moto X are good examples, and smaller manufacturers like Blu are making great, cheap hardware that conforms to Google's standards. The only two plaintiffs named thus far are complaining about phones from 2011 and 2012, but even then, there were Android and non-Android smartphones available at every price point. The fact that the Android platform as consumers imagine it is shared between Google and dozens of phone manufacturers would seem to be the opposite of anti-competitive behavior. One might be able to claim collusion, but it would be pretty difficult to prove it.
Bottom line: in Hans Berman's 600-word press release, I don't see any way that Google's control of search on Android or on the web in general results in more expensive smartphones. There are allegations of secret deals and price-fixing, but allegations are all that they are.
There's a place for class-action lawsuits in a country dominated by giant corporations. But all too often, they're little more than an attempt to cash in on some minor controversy - and the lawyers are the ones who get the lion's share of said cash. This suit is ostensibly on behalf of American consumers, but all the claims it's making seem to be more suited to the web search industry at large. There are issues with Google's dominance of the search industry, and indeed, with the way that Google restricts manufacturers who want access to the Play Store and built-in Google Search. But price-fixing hardware conspiracies are not among them.
These suits tend to either go nowhere, or result in a tiny payout to thousands of people (and a huge paycheck for the lawyers who file the case). If you'd like one of those tiny checks for this perceived injustice, give Hagens Berman a call at the number in the press release below.
SEATTLE--(BUSINESS WIRE)--Hagens Berman, a consumer rights class-action law firm, today announced it has filed a nationwide antitrust class-action lawsuit against Google (NASDAQ:GOOG) claiming the search engine giant illegally monopolized, and financially and creatively stagnated the American market of internet and mobile search.
The lawsuit, filed in the U.S. District Court for the Northern District of California, alleges that Google’s monopoly of these markets stems from the company’s purchasing of Android mobile operating system (Android OS) to maintain and expand its monopoly by pre-loading its own suite of applications onto the devices by way of secret Mobile Application Distribution Agreements (MADA). According to the suit, these agreements were hidden and marked to be viewed only by attorneys.
According to the suit, Google’s role in placing this suite of apps, including Google Play, and YouTube, among others, has hampered the market and kept the price of devices made by competing device manufactures like Samsung and HTC artificially high.
“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,” said Steve Berman, attorney representing consumers and founding partner of Hagens Berman. “Simply put, there is no lawful, pro-competitive reason for Google to condition licenses to pre-load popular Google apps like this.”
The complaint claims that if device manufacturers bound by Google’s distribution agreements were free to choose a default search engine other than Google, the overall quality of Internet search would improve.
“The more use an internet or mobile search engine gets, the better it performs based on that use,” Berman said. “Instead of finding a way to legitimately out-compete other internet and mobile search providers, they instead decided to choke off competition through this cynical, anti-consumer scheme.”
The complaint notes that Google’s monopoly not only suppresses its competition but also keeps the company itself from improving.
“This comes down to a combination of Google’s power in the U.S. general mobile search market and their power in the realm of tablet and smartphone manufacturers,” Berman said. “As a result of the pricing conspiracy, everyone loses. Google and its competitors face an uncompetitive, stagnant market, and consumers are forced into one option.”
According to the lawsuit, Google’s MADAs are contracts in restraint of trade that are designed to maintain and extend its monopolies in general search and handheld general search.
The lawsuit claims Google is in violation of a variety of federal and state antitrust laws, including the Sherman Act, the Clayton Antitrust Act, California Cartwright Act and California Unfair Competition Law.
The named plaintiffs include Gary Feitelson, a resident of Louisville, Kentucky and owner of an HTC EVO 3D mobile phone, and Daniel McKee, a resident of Des Moines, Iowa and owner of a Samsung Galaxy S III mobile phone. According to the complaint, in both situations, the owners’ phones should have cost less and had better search capabilities as the result of competition that would have ensued, had Google’s MADA restraints not existed.
The lawsuit seeks to represent all U.S. purchasers of any Android OS mobile telephone or tablet as to which Google and the manufacturer of such device has entered into a contract or contracts, including the MADA, by which Google has conditioned the right to pre-load any application from a suite of Google applications on to manufacturer’s mandatory acceptance.
The lawsuit seeks damages for individuals who have purchased these devices at an artificially high price due to Google’s alleged price-fixing, anticompetitive restrictions.
Concerned consumers are encouraged to contact a Hagens Berman attorney by emailing [email protected] or calling (206) 623-7292.
Additional information about the investigation is available at http://www.hbsslaw.com/cases-and-investigations/cases/Google.