US internet search giant Google has recently been accused by India's competition authority of abusing its dominance in the Indian market.
What is the complaint about?
A preliminary report from the Competition Commission of India (CCI), a quasi-judicial regulatory body, has said that Google has allegedly abused its dominant market position by including clauses in its user agreements that restricted users from using services of third party search engines, states a report in The Indian Express.
The allegations have reportedly been corroborated by 30 major companies including Flipkart, Facebook, Make My Trip, Microsoft, Yahoo, Rediff, TripAdvisor, Yatra, Cleartrip, Nokia’s Here Maps, Times Internet, JustDial, Info Edge and Network18. They have accused Google of manipulating search results and some have also found that search results are directly linked to the amount of money companies spend on advertising with Google.
A report by The Economic Times breaks down the accusations against Google by the CCI.
“First, Google's proprietary content supersedes relevance of the search by an individual. This means, for example, even though Moneycontrol.com may have a higher hit rate for a stock market search in India, Google Finance links are given priority. Similarly, Google Hotels gets preference over other travel portals that may have higher traffic and therefore mathematically more appropriate as first results of a search.
The second is that the sponsored links thrown up after a search are dependent purely on the amount of advertising paid to Google, and sometimes even supersede the link of the actual trademarks being searched.”
The DG’s report held that Google’s practices were counter-productive to innovation as listed websites had to continuously advertise, which is expensive, to be visible on the search results.
Google also tried to argue that its nature of search is similar to that of Facebook and Twitter. However, the commission dismissed it saying Google was not a social networking site but a search engine.
The Original complaint
In 2012, Bharat Matrimony along with Jaipur-based not-for-profit Consumer Unity and Trust Society (CUTS) filed complaints with the CCI against Google.
What the commission said
The report of the probe conducted by the Director General, Investigation, runs into over 6,000 pages including annexures and over 2,000 pages of responses submitted by Google alone, reports Live Mint.
Live Mint quotes part of the report which states,
"The director general’s report states: “Google is found to be indulging in practices of search bias and by doing so it causes harm to its competitors as well as users. Investigation has revealed that Google integrates/blends its own specialised/vertical search services, options, features in its online general web search services in universal results and commercial units using mechanisms that do not apply in an equivalent manner to non-Google websites/web content.”
“Therefore, Google’s conduct is found to be anti-competitive in terms of section 4(2)(a)(i), 4(2)(b)(ii), 4(2)(c) and 4(2)(e) of the Act.”
Tech2 has published a document released by CCI on the issue.
In a response via email to ET, a Google representative said "We're currently reviewing this report from the CCI's ongoing investigation. We continue to work closely with the CCI and remain confident that we comply fully with India's competition laws. Regulators and courts around the world, including in the US, Germany, Taiwan, Egypt and Brazil, have looked into and found no concerns on many of the issues raised in this report."
Google has also asked CCI to maintain “confidentiality of the probe and ensure that the findings are not leaked to third party including media”.
Google will have to respond to CCI by September 10. If it does not agree to the ruling of the CCI, it can file an appeal with the Competition Appellate Tribunal or challenge it in Supreme Court.
Last year, the company had been fined Rs 1 crore for failing to provide information, that the CCI had sought, on time.
What happens if Google is found guilty of abusing its dominant position in the market?
It can be made to pay a significant amount in fines or might be asked to change their current practices which the CCI deems "unfair".
As per the Competition Act, a penalty of up to 10 per cent of the company’s three-year annual average turnover can be imposed on Google if found guilty, states The Indian Express.
According to Live Mint, "Google’s dominant position would open it up to a potentially huge liability under Section 4 of the Competition Act, 2002, for certain behaviour that smaller companies that are not in a dominant position normally get away with as good-old-fashioned aggressive competitive business practices."
Google has faced similar accusations in the US and Europe.