Google (NASDAQ:GOOG) is facing yet another lawsuit in California. This time the issue at stake is the Mobile Application Distribution Agreement (MADA), that Google forces Android device makers to sign. The contents of this agreement are a closely guarded secret, but one of the key elements is well known. The agreement allows an Android manufacturer the right to include popular apps such as YouTube on its device. In return for this, the maker has to preload a set of Google apps and give them prime placement. Another part of the agreement requires that Google search is the default search engine.
The antitrust lawsuit contends that by restricting the search engine to just one possibility, it is stifling competition. The key to the argument is that since Google gets the default every time there is no incentive for it to improve. If Google was required to compete with other search engines for the coveted default position, it would have to continuously improve in line with the competition.
There is a financial element to the lawsuit, as well. The suit maintains that if there was normal competition for the default search status, the competing search engine companies would pay the manufacturers for the right to be the default engine for their device. These payments would be increased by the fierce competition and would reduce the cost of producing each Android phone, allowing them to be sold at a cheaper price.
The lawsuit also addresses Google’s deal with Apple for the default search engine status on all Apple operating system devices. Right now, the lawsuit is seeking to be awarded class action status as well as a jury trial.
