Google Consumer Smartphone Litigation and the Future of Virtual Real Estate

By Peter Bernstein July 18, 2014

In the course of my daily scanning of tech news, a headline on Reuters caught my eye. It reads, “Smartphone suit against Google plays into rivals' hands.”  Remembering that the suit was filed back in May, I figured this was a great time to see if something major was brewing in the case. Interestingly, after reviewing the posting by Dan Levine, the answer is both yes and no. The reason for this not being an instance for a definitive answer is based on whether the context is a short or long-term perspective.  Let me explain.

First, as the Reuters piece sums up, a California federal court this past week heard from Google’s attorneys that the proposed class action suit should be tossed because the grievance cited—that device manufactures are forced to make Google apps defaults thereby limiting customer choice— is a non-starter. Google contends everyone is free to change the defaults and download alternative apps.

Whether the court sides with Google and dismisses the case, or sides with plaintiffs who say that most consumers do not know how to change their default settings and/or would likely not bother to learn or execute their knowledge will be interesting on its own. While not a perfect analogy it harkens back the problems Microsoft encountered years ago when its Internet Explorer (IE) browser’s default status on Windows PCs became a major issue. And, we all know how that one worked out, including the demise of IE’s browser market supremacy at the hands mainly of Google Chrome.

More interesting will be, if the case is allowed to go forward is what the Reuters headline posting is getting at, i.e., how documents in this case could really help the cause of rivals (which ironically include Microsoft) in their pending antitrust case on the subject of anti-competitive tie-ins now in front of European regulators.  For those keeping score at home, you do have to like how the tables have turned. In fact, read the short bio of plaintiffs’ attorney Steve Berman in the posting for even a bit more irony.

It is important to emphasize that the issue being addressed by the suit and by the EU is very significant. Who has “first look” when it comes to all things online really matters. In fact, just ask anyone about how important it is to be on the first page of a search engine. Just as in the physical real estate world, in the virtual real estate world it is all about location

I have been unable to find statistics (if anyone has them send them along) about the difference in traffic between apps that are on a smartphone home screen vs. other screens vs. can only be accessed via the app list because there is no screen room left for the icon. Common sense says that what I will call the “see me use me” rule applies here. In fact, to the plaintiff argument in the California case, location translates into easier to use and thus will be used and used to the detriment of alternatives. 

The problem is that Google makes a good point as well. We all have tens if not hundreds of apps which we rely on as witnessed by the billions of downloads from Google Play.  In addition, we know what we want or would like to try, know how to place it on our device and access it if it becomes something that pleases us. In short, user interactions with personal devices seem to point to most of us being attuned to our alternatives and not shy about using them.

Predicting what the court will do regarding allowing the case to proceed or not is certainly problematic. To be honest, the industry observer in me is rooting for the suit to move forward not only because it will make for great copy, but because what happens in the potential governance of virtual real estate is going to have serious competitive impacts as well as how we experience the world. This is one to keep up on. 

 
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