India Economy

Googly for Google under Indian anti-competition laws

Shailesh Kumar | Updated on February 25, 2018 Published on February 25, 2018

The CCI’s ruling against the online search giant has far-reaching implications

In this era of IT revolution, online search engines play the pivotal role of bringing sellers/service providers and consumers across the world on a common platform.

Google has become a household name, rather, a substitute for online search across the world, including India. When a person refers to online search, he simply says “Google it”! Given this wide acceptability, popularity and presence in the market, many questions arise — whether such a situation creates a ‘dominance’ in the market; whether the person/party who enjoys such dominance is in a position to abuse it and whether such person/party has actually abused such position to their benefit, resulting in hardship/damage/exploitation to the other parties and to the public at large.

Broadly with similar questions, and Consumer Unity & Trust Society, had, in 2012, approached the Competition Commission of India (CCI). They alleged that Google had used its dominant position to place its own products and service offerings such as Google News, Google Maps, Google+, YouTube, etc., in more prominent positions in search results over other similar product/service offerings. This had caused loss to advertisers as, despite paying necessary charges for advertisement on Google Search Program, the advertisers were not aware at what position and in which sequence their name would appear in search results.

Also, many restrictive covenants were imposed on advertisers if they wanted to advertise on Google. Due to dominant market position and wide popularity and user base of Google vis-a-vis other search engines, advertisers had to advertise on Google despite such restrictive clauses and covenants. This had not only caused undue damage and loss to the advertisers, but also to consumers at large, as it impacted the quality of their search, they alleged.

After a prolonged and detailed investigation carried out by designated officials, the CCI finally passed its order recently, finding Google guilty of abusing its dominant position to its benefit. The CCI imposed a fine of ₹136 crore (approximately), equivalent to 5 per cent of Google’s average Indian revenues for three years for infringing anti-trust conduct.

Implications of ruling

Apart from the financial implications for Google from this penalty, this decision of CCI may be very important in the present scenario, for many reasons. For one, this order acknowledges the dominant position of a player in the virtual space/marketplace and has also found the same guilty of abusing such dominant position.

Proving a dominant position in the market may be relatively easier, as it can be traced via user preferences, search histories, data traffic, etc. However, in a business model like Google’s, search results are displayed based on confidential algorithms. Hence, substantiation of any alleged manipulation by providing evidence is difficult. Despite this, four of the six judges of the CCI panel found adequate evidence to prove Google guilty while two dissenting judges did not find the evidence adequate.

As this decision passes through further judicial scrutiny, if Google appeals against the order to the NCLAT (National Company Law Appellate Tribunal) and subsequently to the Supreme Court, this case may lay down landmark principles in the law of evidence in the virtual space/marketplace.

From internet users and buyers’ perspective, this decision highlights the importance of ‘caveat emptor’ in the virtual space, especially when the end user receives such information free of cost.

With a search engine, more so from a trusted one like Google, an individual generally believes that the information displayed on the screen is completely based on technology, is authentic and free from human biases and human errors. Accordingly, many decisions are taken based on this presumption.

However, in the light of this CCI ruling, users may have to be more careful in selecting and filtering information available free of cost, acknowledging that the search results may be unduly influenced.

We are not commenting on the correctness of this decision or the facts of this specific case but this case will lead to online service providers and search engines being more careful when publishing information and about pushing their vested interests (such as sponsored ads, etc.) while throwing up search results. This decision re-emphasises that in any business transaction, for real or virtual consideration, consumer trust is of paramount importance; the sense of ‘fair play’ and ‘best practices’ must prevail.

The writer is Director, Direct Taxation, Nangia &Co LLP

Published on February 25, 2018

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