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The Competition Commission of India (CCI) has issued an order dated 31.01.2018 against Google LLC and Google India Private Limited for abuse of its dominant position under Section 4 of the Competition Act 2002 (‘the Act’). In the year 2012, two companies, namely, Consim Info Private Limited (now, Matrimony.com Limited) and Consumer Unity & Trust Society (CUTS), (‘the Informants’) had filed two cases No. 07 and 30 of 2012 against Google Inc. (now, Google LLC) and Google India Private Limited, (‘Google’) alleging contravention of Section 4 of the Act.

The Informants had alleged that while conducting the core business of search and advertising, Google has been manipulating the search results and favoring its own services and partners, such as Google Video, YouTube, Google Maps, Google News, etc. Thus, pages in the search results do not appear according to their relevance, popularity, etc. For instance, when we search for a song in the Google Website, we primarily receive links to the videos of that song from Google Video or YouTube, etc. It was further averred that Google is widely recognized as enjoying a dominant status in the search advertisement market because of its market share, size, resources, reputation etc. Therefore, such practices of search bias, search manipulation, denial of access to competing search engines, creation of entry barriers etc amount to abuse of dominant position.

The CCI had directed the Director General (‘the DG’) appointed under the Act to investigate into the matter in 2012. Considering the Investigation Report submitted by the DG in 2015, the CCI made the following analysis:

  1. That online search falls within the ambit of Section 4 of the Act:

Online search engines like Google are a platform connecting advertiser/businesses, etc on one side and users/consumers on the other side. When a search request is made by a user, the platform seeks certain information from the users such as their IP address, device information, location, etc. Such huge volumes of data are used by the search platforms to attract advertisers, target relevant ads and conduct their search business. The platform also earns revenue when a user clicks on any ad displayed by the advertiser through the platform.

  1. Dominant position:

According to the explanation (a) to Section 4 of the Act, “dominant position” means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to— (i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its competitors or consumers or the relevant market in its favor.

Based on the DG Report, the CCI confirmed that Google is a dominant enterprise in both the relevant markets of Online General Web Search Services and Online Search Advertising in India (‘Markets’) based on factors like its size and resources, economic power and commercial advantages, entry barriers, etc.

It further noted that the market share of Google and its competitors show that none of the competitors of Google has so far been able to match Google’s market strength in either Market. The market share, consumers’ and advertisers’ dependence on Google, continuous innovation, etc indicate that the users and businesses are unlikely to switch to a competing search engine. Also, Google’s insurmountable scale advantage and high barriers of entry (as only online general web search market can compete in the search advertising market), etc effectively restrict entry into the search advertising market. Thus, all such market conditions clearly indicate Google’s dominance in the Markets.

  1. Abuse of Dominant Position:

i) The CCI held that Google was wrong and unfair in displaying the search results prior to 2010 in pre-determined/fixed positions instead of ranking them in order of relevance.

ii) The CCI further held that when a user clicks on ‘more results’, the link leads to Google’s specialized services and not any other vertical search service. For instance, the most relevant search result for maps was Google Maps, for flights it was Google Flights, and such others.

Moreover, by doing so Google could collect large volumes of user data but the other competing vertical search pages, which may be equally efficient, could not reap the same benefit, thereby deteriorating their ability to further innovate on their products and sustain and survive in the market.

Further, such practices of search bias cause harm to its competitors, as it adversely affects the competitive landscape in the Markets, as well as to its users, as they may not receive the most relevant results.

iii) Google also prevented partners with whom it entered into search agreements from implementing on their websites any search services which are the same or substantially similar to Google’s search service. This online search exclusivity condition was held to be unfair as it restricts the choice of the partners and denies its competitors access to the search business. Google also had agreements with publishers of ads which restricted the publishers from posting ads in any other search engine which were same as or substantially similar to the ads posted in Google. The other restrictive conditions imposed on such publishers and partners included prohibition from using competing services, or restrictions relating to the manner of placement of ads of competitors, etc.

The aforesaid restrictive conditions imposed by Google on such publishers and partners prevented the competing service providers from achieving necessary scale resulting in creation of entry barriers for them.

Thus the CCI held that the aforesaid conduct of extending and preserving Google’s dominance in the Markets has been held to be violative of Section 4 of the Act. The CCI has, therefore, imposed a penalty of Rs. 135.86 Crores on Google, which is to be deposited within 60 days of the receipt of this Order.

 

Harini Daliparthy

Senior Legal Associate

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