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Google faces lawsuit for making phones more expensive with "monopoly" tactics

News by Andrew Kameka on Friday May 02, 2014.

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Google is accused of maintaining an illegal monopoly in the search market and causing that dominance and its ownership of Android to artificially inflate the cost of smartphones, according to CNET. A lawsuit seeking class action status has been filed against Google that alleges the company reaches agreements with most Android smartphone makers that requires companies to use Google as the default search engine on the app. The suit claims that the agreements make it unattractive for Google to improve search and artificially inflates prices.

The crux of the lawsuit is that Google forces Samsung, HTC, LG, and other manufacturers into agreements to run Google search as the default search engine in order to get access to other apps. It's hard to sell an Android phone without Google Play and Gmail, and companies must agree to use Google Search in order to get access to those apps. The lawsuit suggests that if companies didn't have to use Google as a default search engine, they could receive money from competitors and perhaps lower the costs of their phones. If Microsoft were willing to pay to have Bing be the default search engine, perhaps phone companies wouldn't charge so much.

The merits of the case are questionable. Microsoft has paid carriers to be the default search engine on Android devices and the phones were still expensive. Google paid Apple millions of dollars to be the default search engine on the iPhone and that has always been an expensive device. Furthermore, Google hasn't had any real competition in search for several years, but even the company's harshest critics would have a tough time suggesting that search has not improved in the past few years.

However, the consumer group that filed the lawsuit believes Google's anti-competitive actions harm the search and mobile industries, and are against the best interests of consumers. Steve Berman of 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."

source: CNET

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Andrew Kameka
Andrew is based in Miami, Florida.

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