Google’s antitrust problems

Google has revealed that is has appealed against a $21 million fine that had been levied against it by Indian authorities.

The Competition Commission of India in February 2018 accused Google of "search bias" and using tactics to suppress its competitors.

Background

Google LLC is an American multinational technology company that was founded in 1998 by Larry Page and Sergey Brin while they were Ph.D. students at Stanford University, in California. It specializes in Internet-related services and products. These include online advertising technologies, search, cloud computing, software, and hardware. In August 2015, Google announced plans to reorganize its various interests as a conglomerate called Alphabet Inc.

In June 2017, the European Union antitrust regulators slapped Alphabet with a record $2.7 billion fine. The verdict was for the first of three investigations currently being conducted on the search giant. The European regulator accused the company of using its dominance in the industry for pushing its own advertising business. Google, the EC has noted, uses its considerable clout to promote its own services at the cost of other businesses. In September 2017, Google appealed the record fine levied against it. In the same month, Google also introduced a slew of changes in how it displays search results for products in Europe. In 2016, the EU commission issued two “statements of objection”, claiming the company attaches onerous requirements to the Android operating system, and that it ties websites that use AdSense to exclusivity arrangements that throttle competitors.

The Competition Commission of India (CCI) is a statutory body of the Government of India responsible for enforcing The Competition Act, 2002 throughout India and to prevent activities that have an appreciable adverse effect on competition in India.

Analysis

In February 2018, the Competition Commission of India fined Google $21 million for abusing its dominance in online web search market. The CCI accused Google of "search bias" and using tactics to suppress its competitors.

"Google was found to be indulging in practices of search bias and by doing so, it causes harm to its competitors as well as to users," the CCI said in a 190-page order. "Google was leveraging its dominance in the market for online general web search, to strengthen its position in the market for online syndicate search services," the CCI said.

The complaint

The CCI was investigating Google after complaints filed by Matrimony.com and Consumer Unity & Trust Society (CUTS) in 2012 against Google LLC, Google India Pvt Ltd and Google Ireland Ltd. The fine levied by the Indian regulator is relatively small because it constitutes to 5% of the company’s average total revenue that was generated from India for the financial years 2013, 2014, and 2015.

Appeal

It has since been reported that the tech giant has filed an appeal against CCI’s decision. “We disagree with aspects of the CCI’s decision, so we have filed an appeal and sought a stay on those findings,” a Google spokesman told Reuters.

In February 2018, a Google spokesman noted that the Indian authorities had “narrow concerns” regarding Google activities. A statement read, “We have always focused on innovating to support the evolving needs of our users. The Competition Commission of India has confirmed that, on the majority of issues it examined, our conduct complies with Indian competition laws. We are reviewing the narrow concerns identified by the Commission and will assess our next steps.”

Global implications

After it was levied landmark fine by European Union, Google agreed to make some changes to its format It has conceded that it would allow competitors to bid for ads at the top of a search page, giving them the chance to compete on equal terms. Due to the European ruling, competing shopping sites can now also sue Google in European civil court, and potentially for other companies and this makes Google vulnerable in future litigation.

"Google has come up with many innovative products and services that have made a difference to our lives," EU Commissioner Margrethe Vestager said in a statement in 2017. "That's a good thing. But Google's strategy for its comparison shopping service wasn't just about attracting customers by making its product better than those of its rivals. Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors."

Antitrust litigation is not an exclusive problem just for Google. Across the world companies have been complaining about the monopoly held by companies like Amazon, Facebook and Google. All these tech giants are currently battling antitrust complaints levied against them.

Assessment

Our assessment is that antitrust issues among tech companies should be a problem that has to be addressed universally in the immediate future. There are varied opinions on whether or not tech giants like Google and Amazon are at fault for their tactics to generate more revenue. This will be a problem that will be discussed by lawmakers across the world including India. Antitrust intervention is capable of changing entire industry structures. It has the power to reorient economic trajectories and generates outcomes that do not resemble what market competition would have delivered.

With regards to Google itself, the company now faces a slew of anti-trust complaints around the world and this could derail the company’s ambitions and new ventures.