Last month, a federal judge dismissed a lawsuit in which Google Inc. was accused of engaging in harmful behavior against owners of smartphones. The accusation was that handset manufacturers were forced to use the Android operating system, which also meant that Google apps were the default option at all times.
According to consumers, smartphone manufacturers like Samsung Electronics Co. were forced to favor apps offered by Google, such as YouTube. It also meant that they could not favor competitors to Google, such as Bing, which is owned by Microsoft Corp. The lawsuit claimed that the prices of smartphones were driven upwards, as it is not possible for a Google competitor to get their foot in the market over the Google apps.
However, Beth Labson Freemon, the U.S. District Judge presiding over the case in San Jose, CA, stated that consumers have not been able to demonstrate that the high prices were a direct result of illegal activities by Google, in which they were forcing handset manufacturers to enter into a restrictive contract. Furthermore, the judge did not feel able to determine just how many different levels there were in the supply chain between the producers of the handset, who had signed what were allegedly anticompetitive contracts, and the actual consumers.
Their alleged injuries – supracompetitive prices and threatened loss of innovation and consumer choice – are not the necessary means by which defendant is allegedly accomplishing its anticompetitive ends.
The judge has given the plaintiffs the opportunity to amend their claims, which they must do within three weeks. This is a legal requirement under Sherman Antitrust Law, a federal law, and the unfair competition law of California.
“The Sherman Antitrust Act of 1890 was the first measure passed by the U.S. Congress to prohibit trusts. The Sherman Act authorized the Federal Government to institute proceedings against trusts in order to dissolve them. Any combination “in the form of trust or otherwise that was in restraint of trade or commerce among the several states, or with foreign nations” was declared illegal.
One of the plaintiff’s lawyers, Robert Lopez, was not available to comment on the decision. Additionally, Google’s spokesperson Aaron Stein declined to comment at all. It is believed that this may be due to the fact that similar antitrust claims are being made against Google in Europe.
In November, the European Parliament urged their antitrust authorities to break up Google, which is based in Mountain View, CA. They also asked the European Commission to look into various proposals that would break the link between search engines and other services, thereby stopping them from dominating the market.
Because of these European antitrust issues, Google must at present be relieved that the case has been dismissed. They are still dealing with the Russian watchdog, who are actually making very similar claims. They have stated that forcing Android smartphone developers to run Google as the default search engine is against their anti-monopoly law. Yandex NV, which is the largest search engine in Russia, has asked the national watchdog to investigate these claims. They believe that Android users are forcefully limited into which services they are able to use.
Not only are the Russians fighting against Google on their own, the entire European Union is as well. Margrethe Vestager is the new antitrust chief, and she has taken the world by storm. Google is just one of her many victims, as she is also going after Amazon.com Inc, and Apple Inc. Plus, she is going after Gazprom, moving away from the online companies. She has taken over the case against Google, which has been going for nearly five years now, and she is committed to bringing it to a fair end. She has publicly claimed to be highly impressed by the evidence presented by the competitors who are starting an action against Google.
I have now met with a number of the complainants and been very impressed by their nuances, the complaints that they make, the way that they make it very fundamental, very basic.
She has claimed that the information that has been provided does indeed make her feel that Google is stifling competition, as they are able to control the data of individuals more easily. At the same time, however, although she understands this is a significant issue, she will not add it to the current investigations and case against Google. This is also due to the fact that the full investigation is still pending. A number of questionnaires have been sent out to market participants in order to identify just what the influence of Google is and whether or not this is in breach with antitrust laws.
The current EU case against Google goes together with four other cases. These are against Fiat, Apple, Amazon and Starbucks. It is hoped that steps forward will be identified within the next few weeks so that the case can, eventually, be wrapped up. The outcome of this may also influence the response by the plaintiffs in our own country.
Naturally, therefore, this initial dismissal by the U.S. Federal Judge is not the end of the case. Although Lopez was not available to comment, it is believed that he will present the necessary information within three weeks. Particularly, he will likely be resending a full analyses of the supply chain that exists between Google, smartphone manufacturers and consumers.
The lawsuit didn’t include an analysis of the number of supply-chain levels between the phone manufacturers who sign the agreements and consumers, the judge said. Without that information, it’s impossible to figure out if the agreements inflate consumer prices, Freeman wrote.
Naturally, Google has denied these claims. They have, on numerous occasions, explained that manufacturers have complete control over the apps they choose to install on their devices. Additionally, users have the ability to manually change the settings and run any applications they want. It is not clear what the next moves of either side are going to be, as neither have been available or willing to comment.