Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) is facing a nationwide antitrust class-action lawsuit in California. Consumer rights law firm Hagens Berman announced Thursday that it has filed a lawsuit against the search engine giant. The suit accused Google of “illegally monopolizing” the Internet and mobile search market in the U.S. It states that the Internet company’s purchase of Android OS allowed it to establish an illegal monopoly that has negatively affected the mobile search market.
Google asks Android vendors to pre-load its apps on devices
Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) signs an agreement with all the Android vendors to pre-load its applications onto mobile devices. The agreement called Mobile Application Distribution Agreement (MADA), was disclosed in 2012 during the company’s trial against Oracle Corporation (NYSE:ORCL). The lawsuit says that Google’s role in pre-loading its apps on Android devices has hurt the market and kept the prices of Android smartphones made by manufacturers such as Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and HTC Corp (TPE:2498) artificially high. Plaintiffs claimed that if rival search engines were given a chance to compete for the default status, the price of smartphones could be subsidized by makers.
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How did Google achieve its monopoly
Steve Berman, the attorney representing consumers, said it’s clear that Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) hasn’t achieved its monopoly in mobile search by offering a better search engine. Instead, it has done so through anti-competitive and strategic placement, which is an evidence of market manipulation. Berman says Google knows that consumers don’t know how to switch the default search engine on their devices, and they don’t take the trouble of switching. Therefore, its practice ensures that people use Google’s search rather than a competitor’s product.
According to research firm comScore, Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) has 67.5% share in search market. The company has provided technical assistance, support and even funding to Android handset makers facing lawsuits. A string of emails investigated last month revealed that Google is financially backing Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) in a case against Apple Inc. (NASDAQ:AAPL).
Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) shares were down 0.10% to $530.87 in pre-market trading Friday.