Competition Commission Searches and Fines Google Rs 136 Crore

Published on 09 Feb 2018 by Tushar

Competition Commission of India imposes Rs. 136 crore Penalty On Google For Search Bias.

Anti-competitive practises observed worldwide

In the past, Google has faced scrutiny from the respective antitrust watchdogs in the EU, Russia and the USA.

  1. In the EU there have been allegations of “systematic favourable treatment” to its own Google Shopping in its results while also keeping a check on Google’s online ad business policies as well as launching a separate probe against Android.
  2. The case proceedings were settled in the favour of Google although similar cases in the EU and Russia have not Google’s’ way.
  3. The anti-trust arm of the EU fined Google $2.7 billion for promoting its own products over others in what should have been a "universal" search.
  4. Google settled the anti-trust matter in Russia out of court. 

Case in India

  1. Back in 2011 CUTS (Consumer Unity & Trust Society), a consumer rights forum and subsequently in 2012 BharatMatrimony.com, a renowned matchmaking portal filed independent complaints with the CCI for similar concerns.
  2. The biggest concerns were regarding Googles’ primary revenue source which is the AdWords program where it sells keywords to advertisers looking to target niche and specific audiences in the form of ads appearing when the certain terms are searched.
  3. The CCI as per Competition Act has to authorise the Director-General to investigate the cases upon the filing of a complaint. During the probe as conducted by the DG, CCI sought comments from several third parties including Flipkart, MakeMyTrip.com, and Facebook.
  4. CCI has not held Google to have violated rules via its AdWord system but has come down hard on their design and other age-old practices which Google has already started rectifying.

The fine as given by CCI can be a big blow to the perception of Google’s image worldwide

  1. The penalty of Rs135.86 crore translates to 5% of the firm’s average total revenue generated from India operations from its different business segments for the financial years 2013, 2014 and 2015, according to the CCI order.

  2. The CCI has found Google to have abused its dominant position in online general web search and web search advertising services in India

  3. The commission has asked the company to deposit the amount within 60 days of receiving the order

The Issue is Google just cannot be done without!

Google is dominant in both-

  1. Online general web search services, as well as;

  2. Online search advertising services market in India.

The allegations against Google were as follows-

Abuse of dominant position- The CCI prima facie found the acts/ conduct of Google to be in contravention of the provisions of section 4 of the Act. This was in contention owing to one-sided contractual agreements -

  1. With clauses that restricted users from availing services of third-party search engines.
  2. one-sided clauses relating to termination, possible for only those players who are dominant

Indiscriminate advantages to certain advertisers and causing harm to others- Google runs its core business of online search and searches advertising in a discriminatory manner, causing harm to advertisers and indirectly to consumers and creating an uneven playing field by favouring its own services and of its vertical partners, by manipulating the search algorithms.

Favouring its own services indiscriminately- It was also alleged that Google provides a number of allied search services like YouTube, Google News, Google Maps etc.

  1. In order to promote its vertical search services, it mixes many of vertical results into organic search results.
  2. The effect of such manipulation of results was that Google’s vertical search partners will appear predominantly when an internet user searches for some information, irrespective of whether the search results are most popular or relevant.

Search Bias practices- Google has been alleged to be condoning practices related to inter alia- search bias, search manipulation, denial of access and creation of entry barriers for competing search engines.

Hitting the competition for a six! Google has been making it difficult for advertisers to use competing platforms by imposing prohibitive switching costs. Since Google is an essential trading partner because of its dominance, advertisers are forced to stay with it.

CCI Order

What stands out as precedent?

  1. CCI has laid down a clear precedent observing in its Order that Google is the gateway to the internet for a huge chunk of users across the country.
  2. The CCI has established that Google clearly occupies a dominant position in the online web search and advertising market and is therefore under an obligation to discharge its special responsibility without abusing its dominance.
  3. The order implies that there can now be cases and other complainants might be able to before the CCI with respect to such grievances.

Where the approach by CCI was conservative

  1. Amongst what is most noticeable in the Order is that the CCI did not find any contravention in respect of Google’s specialised search design, AdWords.
  2. The regulator’s decision is actually largely in Google’s favour and deviates significantly from adverse findings in the DG report.
  3. The levy of a fine of Rs. 136 crore is not significant for a global giant like Google.

Dissecting the CCI Order

1. Dealing with the anti-competitive one-sided agreements- CCI observed that prohibitions imposed under the ‘negotiated search intermediation agreements’ upon the publishers have been held to be unfair as they restricted the choice of these partners and prevented them from using the search services provided by competing search engines.

2. Google has abused its dominant position in online general web search and web search advertising services in India.

3. Questions over search design-

The Press Release stated the following:

“The CCI in its order noted that the allegations against Google in respect of search results essentially centred around the design of Search Engine Result Page (SERP). Exhibiting a self-imposed regulatory forbearance from scrutinizing product designs in ascertaining anti-trust violations, CCI noted in its order that product design is an important and integral dimension of competition, undue intervention in designs of SERP can affect legitimate product improvements.”

  1. Focusing on the Commercial flight searching options, the CCI has targeted the design of the search engine to effectively leave a user ‘devoid of additional choices of results’.
  2. Advertisers can pay to be featured and displayed prominently in Google’s search results when a user searches for a flight or airline through the main search engine.
  3. On selecting “search flights,” users are taken to the Google Flights search page which links to airline and other sites where bookings can be made.
  4. Here the CCI has noted that Google’s design does not have clear labelling and users are diverted to certain selected travel sites thereby pushing down other travel sites which desperately rely on search engines to reach travellers.

4.  Google has provided a further link in such commercial links which lead users to its specialised search result page, resulting in unfair imposition upon the users of general search services as well.

5. Denying competitors access to online search syndication services- Google has been in leveraging its dominance in the market for online general web search to strengthen its position in the market for online syndicate search services.

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