Case Analysis on Google Inc. & Other vs. Competition Commission of India

Authors: Abhinav Akash, DSNLU Mrunalini Srinivasan, Sastra University


Editor: Anoushka Chauhan, NALSAR

Introduction

A 190-page order from the Competition Commission of India (CCI) found Google using its dominant position in India by misusing its search engine in their favour for advertising and fined the Company with Rs. 136 crores. The order certainly reflects a coming of age for the regulator, which many were afraid would stifle innovation with its interventions, but seems to have evolved from 2012, from the first time the was filed.[1]


As we look at the aspects of Competition Law in India, enacted in the year 2003, it deals with anti-competitive agreements, abuse of a dominant position and a combination or an acquisition.[2] The Act was introduced as a replacement to the Monopolies and Restrictive Trade Practises (MRTP) Act under the provision in Section 55 of the Competition Act which states the repeal of MRTP and for the transfer of cases of related matters to the Competition Commission of India (CCI).[3]

The judgment came after the complaints were filed by ‘Matrimony.com’ and ‘Consumer Unity & Trust Society (CUTS)’ in two different instances which were later clubbed together. The major Complaint found against Google was for discrimination and search bias and harming market of its competitors by leveraging its dominance and strengthening its position in the online web search market.[4]

Facts of the Case

To summarize the facts of this landmark decision that has stretched over several years, Google provides a large number of vertical searches in the form of YouTube, Maps (Google Maps) and News (Google News) by being the most popular search engine throughout the World. Google started showing results related to the sites owned by itself and mixed the vertical search with organic results showing discrimination in its AdWords practice towards other sites irrespective of their popularity. It was also said that Google was favouring its partners and products while searching on google by manually manipulating the results in their favours and showing that these sites were better than the rest which gives another example of discriminatory behaviour.


Google also purchased various software to complete the vertical searching and increased its market share and resources, making itself the only popular search engine in India, and thus abused its dominant position in Indian market. This was in contravention of Section 4 of the Competition Law Act. The product market in question is simply that of online advertising where google has market share, i.e., where it is heads and shoulders above its competitors. An example of this would be such, where during the search of flights on google, the priority is given to the Google Flights which is one of Google's own services, instead of showing the competing ones[5]. It was also seen that the dominant position is used to such an extent that it denies the access to competing search engines and manipulates the consumer by imposing certain searches, automatically redirecting to one of its own search web pages.


Google also used different methods and online software techniques to purposely handle the search history of the consumer or the person using the Search engine which could lead to promotion of the Apps owned by Google, without the knowledge of the consumer. This led to a bias against other apps, without the user knowing anything.


The terms of the agreements kept with the publishers for any page were strictly limited and prevented the publisher from displaying their page on different competing search engine and most importantly demanded exclusivity of the web page and the nature of Google from “Online General Web Search Services” were changed to “Market for Online General Web Search Services in India” which means that the generality of the Search Engine was gone and it is left with just an advertising board[6].

The CCI’s Judgement and what it means

The Director General came to a conclusion that Google has been abusing its dominant position in the ‘Relevant Markets’. Until 2010, display of universal results was limited only for certain ‘fixed positions’ and it was not displayed according to their relevance. These practices were unfair because it created a misleading notion that the search results were responding only to the queries determined algorithmically based on the relevance. The CCI did not agree with Google’s argument that they lacked the technology to do so during the time of absence of evidence.


The CCI observed that with Commercial Units such as Google Flights, the link is qualified by a ‘sponsored’ label and Google could drive traffic to its own pages and earn higher revenues through advertisements. The CCI held that the behaviour of a user’s clicking is influenced by ranking results based on relevance. The search engine of Google places Commercial Units at a higher position on Search Engine Result Pages (SERP) and it allows the pushing down of vertical trying to gain market access. This conduct of Google was found to be anti-competitive as it was a discriminatory condition on purchase of services that contravenes section 4(2)(a)(i) of the Competition Act, 2002[7].


The CCI held that Google’s conduct with reference to the terms within the agreement for its negotiated intermediary search services (that enable publishers to display a Google search option for the users on their page) demanded exclusivity because the agreements contained terms that prevented publishers from displaying search options from rival search engines. This violated section 4 of the Act[8].


The CCI held that Google had abused its dominant position, and passed a suspension order, directing the company in not fixing positions for universal results. The CCI ordered Google to show a disclaimer against the commercial flight unit box that indicates the link that results to Google’s Flight page. It further ordered the search engine company not to carry out the restrictive clauses in the intermediate agreements with instant effect. CCI imposed a penalty of Rs. 135.86 crore on Google, which amounts to approximately 5% of the average total revenue generated by Google in India from different business segments between the years of 2013 and 2015[9].

What does this judgement entail in the market?

After taking 7 years to complete the investigation against Google, there were a lot of procedures and issues that pertained to technology and procedure. The CCI found that if there was any disruption in the technology, markets should carefully craft it so that it does not deny any consumer the benefits that the technology offers. Many complaints have been filed against major e-commerce platforms like Amazon and Flipkart. These companies were alleged of anti-competitive and abusive conduct too. The CCI did not take up any complaint and refused to conduct investigations against the online marketplace platforms that have pretty much monopolized their relevant markets. In All India Vendors Association v. Flipkart Pvt Ltd & Another, the CCI held that online marketplace platforms that does not have an inventory of their own are a distinct category when compared with online retail stores running on an inventory model[10]. The CCI was of the view that the services provided through the online and offline marketplace should be substitutable by the consumers. The CCI took a different approach and came to a conclusion that online and offline retailers are different channels of distribution but not two different markets.


The CCI should concentrate on issues of competition in digital markets in India. As there are many start- ups emerging, CCI should know that the consumers have choices and the market will remain competitive while following the guidelines of competition law. The enforcement of CCI is evolving slowly and its stance will progress in digital markets[11].

[1] Madhulika Srikumar, CCI vs Google: All the Right Questions but Few Meaningful Answers, The Wire (Feb 12, 2018) https://thewire.in/business/cci-google-questions-few-answers. [2] Sunipun, Development of Competition Law in India, iPleaders (Feb 17, 2017). https://blog.ipleaders.in/competition-law-india/. [3] Indian Competition Act, 2003, No. 12, § 55. [4] CCI Fines Google: Issues order against Google for Search bias, The Economic Times (Feb 09, 2018). https://economictimes.indiatimes.com/tech/internet/cci-issues-order-against-google-for-search-bias/articleshow/62838992.cms. [5] Supra note 1. [6] Pallavi Panigrahi, CCI’s Decision on Abuse of Dominant Position by Google, India Corp Law (March 10, 2018), https://indiacorplaw.in/2018/03/ccis-decision-abuse-dominant-position-google.html. [7] Atikant Kaur, CCI Intervention to Achieve a Level Playing Field in the Digital Space, Nishith Desai () http://www.nishithdesai.com/information/research-and-articles/nda-hotline/nda-hotline-single-view/article/competition-commission-of-india-takes-on-the-global-virtual-hegemon-abuse-of-dominance-by-google.html?no_cache=1&cHash=50d14bad93890808f4fa577fe0c4c00. [8] Supra note 6.

[9]Nisha Uberoi, Akshay Nanda & Tanveer Verma, E-Commerce Competition Enforcement Guide: Second Edition, Global Competition Review, (15 October 2019) https://globalcompetitionreview.com/insight/e-commerce-competition-enforcement-guide-second-edition/1209657/india [10]All India Online Vendors Association v. Flipkart India Private Limited and Others, Case No. 20 of 2018. [11]Payaswini Upadhyay, Explained: Why CCI Found Google Guilty of Search Bias, The Quint (10 February 2018) https://www.thequint.com/news/business/explained-why-cci-found-google-guilty-of-search-bias

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