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Posted at: Feb 26, 2018, 12:03 AM; last updated: Feb 26, 2018, 12:03 AM (IST)GOOGLE UNDER ANTI-TRUST SCANNER

No-ball Googley

Google is the curator of huge private data involving billions of users, hence it is essential for it to follow rules. The Indian antitrust regulator has imposed a small fine on the online company, but not without a strong message — dominant players must behave more responsibly, says Sanjeeb Panigrahi
The competition watchdog assumes greater regulatory responsibilities in the complex business environment that has been increasingly influenced by anticompetitive practices of big corporate under the guise of technology. The Competition Commission of India (CCI) recently imposed a penalty of Rs 135.86 crore on Google for abusing its dominance and biased search practices in India. The fine was imposed by the antitrust regulator after thoroughly investigating complaints filed by Bharat Matrimony and Consumer Unity & Trust Society (CUTS) for almost six years. 

Before the Indian antitrust regulator, the European Commission (EC) had imposed a record 2.4 billion euro ($2.7 billion) fine on the company for favouring its own shopping services and demoting rival offerings. The EC has accused Google of abusing its position as market leader by prioritising its own services in search results. 

With 450 million internet users and about 35 million online shoppers, India has a huge e-commerce potential. Almost all companies are present in this web space. Multinational Google enjoys a dominant position in the online search market as the gateway for majority of internet users. It is also a curator of all kinds of private data of the users across the globe. That is why it is obligatory for Google to be fair. In view of the dominant position of Google, the CCI decision appears to be a trend setter in the domain of online marketing.

Google made a whopping $28 billion from AdWords (Google makes most of its money from search advertising - a product it calls AdWords) in 2010 alone. It enjoys almost 85 per cent share in the online search engine market. Despite allegations of antitrust and trademark violations against Google was writ large, it cleverly revised its trademark policy in 2010 with a view to allow larger pool of keywords for advertising, leading to abusing its dominant position which attracts Section-4 of the competition Act, 2002. The Commission was saddled with the task of examining as to whether this sort of policy triggers an anti-competitive behaviour or not. 

After an in depth analysis, the CCI found a prima facie abuse of dominant position by Google in its online advertising. The Director General explored the taxonomy of the dominant behaviour through  reports received from a number of other companies including Microsoft, Yahoo, Rediff, Facebook, MakeMyTrip, TripAdvisor, Yatra, Cleartrip, Flipkart, Times Internet, JustDial, Info Edge, Network18 including major ad agencies. Thus the investigator demonstrated a stronger case against Google. The global firm was found to be favouring its own services and that of its partners by manually manipulating its search results and search algorithm to suppress results of competition. It was unfairly promoting its own services like Google News, YouTube, Google Maps etc that reduced traffic to competing specialised search services, prohibiting advertisers from advertising on words that might be confused with Google's trademarked words, making it difficult for advertisers to use competing platforms by imposing prohibitive switching costs.

Competition law guards the market against companies that grow too large and powerful with monopolistic ambition. As Google is an essential trading partner because of its dominance. Advertisers are forced to stay with it. Google has the advantage of leveraging its dominance for online web search and to strengthen its position in the market for online syndicate search services. Many competitors have been denied access to the online search syndication services leading to sufficient positive externalities for Google.

According to the investigation report, Google has been abusing its dominant position in online general web search and web search advertising services in India by conducting its business in a discriminatory manner. However, the CCI failed to find any contravention in respect of Google's specialised search design, AdWords, online intermediation and distribution agreements. Even the quantum of penalty has been a pittance as the company apparently showed only "direct sales" figures to the watchdog without disclosing indirect revenue earned in India. 

The ruling is, however, significant for technology-driven multinational companies expanding their services in the country. It will also embolden the anti-trust watchdog to deal with big technology-driven corporates. The competition law jurisprudence is, however, nascent in India. It is imperative that the regulator needs to be extra cautious while dealing with technology companies because of technical complexities. 

— The writer is an advocate, Supreme Court of India


GOOGLE FINED

Dominance is not considered bad per se but its abuse is. Abuse is stated to occur when an enterprise or a group of enterprises uses its dominant position in the relevant market in an exclusionary or/and an exploitative manner.

Complainants 

  • Matrimony.com Ltd (promotes BharatMatrimony)
  • Consumer Unity & Trust Society (CUTS)
Defendants 

  • Google LLC  n Google India Private Ltd  n Google Ireland Ltd alleged abuse of dominance by Google 
  • Google runs search & ad. in a discriminatory manner 
  • Favouring own  services by manipulating search results
  • Advantage to its own verticals  - YouTube, Google Flights
  • Search bias/manipulation, denial of access to competitors
  • Imposition of unfair & discriminatory conditions on customers
Investigation by DG 

  • CCI ordered investigation in April 2012
  • DG submitted investigation report in 2015
  • DG concluded Google enjoys a position of strength
  • Google's conduct was found to be anti-competitive 
  • It followed non-transparent procedure
CCI on the matter

  • CCI heard the matter in January 2017 
  • Defined online search and advertising services in India as relevant markets
  • Market strength acquired by Google over a period of time
  • Google is dominant in both the relevant markets
  • CCI held that the dominant position was abused
The Jan 31, 2018 order

  • Directed Google not to fix ranking of universal results in future
  • Display a disclaimer regarding Google's Flights page
  • Do not enforce restrictive clauses with immediate effect
  • Imposed a penalty of Rs 135.86 crore
GOOGLE'S INDIA TURNOVER* (in Rs crore) 

FY - 2013 FY - 2014 FY - 2015 Fine#

1,722.93 2,680.31 3,748.57 135.86

*Direct sales in India. Google didn't disclose revenues earned 

indirectly from India #5% of average turnover

European commission fined Google

  • Penalty amount €2.42 billion ($2.7 billion)
  • Place Brussels
  • Date June 27, 2017
  • Global turnover About $80 billion 
  • People affected 418 million
  • Countries affected Germany, UK, France, Italy , Spain, Austria, Belgium, Denmark, Norway, Poland etc 
Charges

  • Google abused its market dominance as a search engine
  • Denied other companies the chance to compete on merits 
  • Denied European consumers benefits of competition n EC notes
  • In 2004, it launched comparison shopping 'Froogle' 
  • To push Google Shopping, it manipulated search results
  • Google implemented illegal practices in early 2008
Sources: cci.gov.in, europa.eu & internet 

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