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Android Antitrust Lawsuit Given Another Chance

Judge expressed concern about the plaintiffs' case, but didn't altogether dismiss lawsuit alleging Google antitrust violations.
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Two people in California have accused Google of violating antitrust laws because Android handsets favor Google-made apps and services over those made by competing companies. The lawsuit, filed earlier this year, reached a San Jose, Calif., courtroom Thursday. Rather than dismiss the case, which was what Google hoped would happen, the judge asked the plaintiffs to refile with more factual information. If the lawsuit proceeds, it could open a large can of worms.

Gary Feitelson and Daniel McKee claim injury because apps such as Chrome, Google Search, and Gmail are the default services installed on the majority of Android smartphones and tablets. They allege Google strong-arms its handset partners into placing Google apps in prominent positions on home screens and simultaneously restricts apps made by rival firms. They further allege this practice artificially inflates the cost of Android handsets, thereby hurting consumers. Feitelson and McKee are seeking class action status for the lawsuit.

"It’s clear that Google has not achieved [its] 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 lawyers supporting the plaintiffs. "Simply put, there is no lawful, pro-competitive reason for Google to condition licenses to pre-load popular Google apps like this." That's one way to look at it, perhaps, but Google doesn't see it that way at all.

[Looking for your OS update? See Android 5.0 Lollipop: Smartphone OS Arrival Guide.]

During Thursday's hearing, Google argued that consumers are free to use whichever apps they want. People who don't like Gmail can freely choose competitive email apps instead. (Lest we forget, there are about 1.25 million apps available in the Google Play Store.) There are some good ones, too, such as Mailbox from Dropbox. Don't like Google Search? Microsoft's Bing Search app is free to use. Not interested in Chrome? A search in the Play Store turned up 100 alternative browsers, including Firefox, Opera, and Dolphin.

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The plaintiffs dismissed Google's argument and said most people don't know how to change the default apps on their devices. Those who do know how to change default apps often won't bother, they claim.

The claims appear to be specious at best, and US District Judge Beth Labson Freeman cast doubt on their validity. "The speculative nature of the damages is really quite concerning to me," said Freeman. However, Freeman is going to allow the plaintiffs to refile. She wants them to resubmit their claims backed up with more factual evidence detailing the damage Google inflicted on them and other members of the class.

If the revised complaint is strong enough and the case moves forward, the resulting trial could produce an unprecedented look at how Google negotiates with its handset partners. The discovery process stands to unearth troves of data from Google, such as contracts, emails, and executive testimony. Surely Google will do everything it can to avoid such exposure. Judge Freeman even said she is hesitant to "open the floodgates."

What do you think? Is it unfair of Google to place its own apps and services on devices that run its operating system? Should Google's handset partners have more freedom to install their own apps (inferior or not) in lieu of Google's? Moreover, doesn't Microsoft do the same thing with Windows Phone? Windows Phone owners are stuck with Bing Search by default. Google Search is only available from the Windows Phone Store. There's no end to such speculation. Whether or not it's worth a class-action lawsuit, however, is highly questionable.

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