Google sued for pacts with manufacturers that drive up cost of devices

Google has been slapped with a lawsuit for allegedly forcing manufacturers into making its search engine the default on Android devices, thereby increasing the cost of those devices and hurting consumers.

According to the consumer class-action complaint, Google has been entering into secret agreements with manufacturers that also require applications such as YouTube and Google Play store to occupy prime real estate on the devices' screens.

The complaint has been filed in the US District Court for the Northern District of California.

According to the complaint, device manufacturers entered into such secret pacts with Google, called Mobile Application Distribution Agreements (MADA), as they knew consumers expected to see a full suite of Google apps when they bought a device.

The suit does not claim that manufacturers entered into the agreements involuntarily, rather the market power of Google compelled them to.

The suit, brought by Gary Feitelson of Louisville, Kentucky, and Daniel McKee of Des Moines, Iowa faults consumer preference for Google products due to the search engine company's power in the US market for general handheld search.

The lawsuit further argues that 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 existence of the Android ''mobile application distribution agreements,'' or MADAs, had gone unnoticed until now, when Harvard Business School professor Ben Edelman pointed to the agreements in his blog and voiced concerns about anticompetitive behaviour similar to the claims on the lines of the arguments in the lawsuit.

Globally, 78 per cent of smartphones ran on Android in 2013 Q4, IDC said. While Apple's iOS had 18 per cent of the market, Windows held 3 per cent with BlackBerry at 0.6 per cent.

Google has been able to extend its monopoly in search on smartphones, which helped search-related advertisements generate billions of dollars of profit a year, which was ''not merely a function of having built a better search engine,'' according to the complaint on behalf of consumers. Under the ''secret'' MADAs, each Android device maker ''pre-loads onto prime screen real estate all of the apps in the suite, whether the manufacturer wants them or not.''

''Anyone can use Android without Google and anyone can use Google without Android,'' Matt Kallman, a spokesman for Mountain View, California-based Google, said in an e-mail. ''Since Android's introduction, greater competition in smartphones has given consumers more choices at lower prices.''