Google deals made Android phones more expensive, lawsuit claims

A class-action complaint contends Android devices are pricier because of secret agreements Google makes with device manufacturers

A lawsuit filed Thursday accuses Google of strong-arming device manufacturers into making its search engine the default on Android devices, driving up the cost of those devices and hurting consumers.

The consumer class-action complaint, filed in U.S. District Court for the Northern District of California, alleges Google does that by making secret agreements with manufacturers that also require applications such as YouTube and Google Play store to occupy prime real estate on the devices' screens.

It argues device manufacturers enter such secret pacts with Google, called Mobile Application Distribution Agreements (MADA), because they know consumers expect to see a full suite of Google apps when they buy a device.

The suit does not argue that device manufacturers entered MADAs involuntarily, but that the market power of Google compels them to.

"Because consumers want access to Google's products, and due to Google's power in the U.S. market for general handheld search, Google has unrivaled market power over smartphone and tablet manufacturers," says the suit, brought by Gary Feitelson of Louisville, Kentucky, and Daniel McKee of Des Moines, Iowa.

Android devices would be cheaper if Google's rivals could compete for the same status on devices by paying device manufacturers for such positioning, the lawsuit argues.

The lawsuit includes two exhibits of MADAs, one with Samsung Electronics and the other with HTC, both dated as effective Jan. 1, 2011. Both documents were trial exhibits made public during litigation between Oracle and Google, the lawsuit says.

In an emailed statement, a Google spokesman said "Anyone can use Android without Google and anyone can use Google without Android. Since Androids introduction, greater competition in smartphones has given consumers more choices at lower prices."

The suit, which seeks class-action status, argues that the two consumers overpaid for both an HTC EVO 3D mobile phone and a Samsung Galaxy SIII device because of MADAs.

It also says the plaintiffs would have experienced better search options without such agreements. Consumers, the lawsuit contends, "do not know how to switch, nor will they go to the trouble of switching, the default search engine on their devices."

Google has faced scrutiny from regulators in the European Union and United States over how it promotes its own services.

In February, Google settled an antitrust case with the European Commission, agreeing to give greater visibility to search results of services that rival its own and make images associated with rival links more prominent.

In January 2013, Google resolved an antitrust complaint filed with the U.S. Federal Trade Commission.

Google agreed to make some changes to how advertisers could manage their campaigns across competing platforms. It also agreed to refrain from misappropriating content from vertical services, such as shopping and travel, that compete with its own offerings.

Send news tips and comments to jeremy_kirk@idg.com. Follow me on Twitter: @jeremy_kirk

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