India fines Google

India fines Google
The Competition Commission of India (CCI) has fined Google $21 million for alleged unfair business practices. The antitrust regulator has accused the tech giant of..

The Competition Commission of India (CCI) has fined Google $21 million for alleged unfair business practices. The antitrust regulator has accused the tech giant of busing its market dominance.

CCI is among other regulators across the world cracking down on Google’s handling of online search queries.

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 statement further read, “The Commission is dismayed at such disclaimers and caveats in respect of a figure which should have presented no difficulty in collecting and collating after availing sufficient time and certified by an internal auditor.”

A Google spokesman said the company was reviewing the “narrow concerns” identified by the Commission and will assess its next steps. “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.”

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.

Naval Chopra, a partner at law firm ShardulAmarchand who represented Bharat Matrimony in the case, said, “Whilst finding Google to have abused its dominant position, the CCI has nonetheless exercised restraint in recognising the dynamic nature of online markets and not found Google guilty of every allegation.”

Assessment

Our assessment is that regulatory bodies across the world are cracking down on Google and its revenue generating model. Much of Google’s revenue comes from two advertising programs called AdWords and AdSense (Google’s annual revenue stands at $90 billion). Both programs have been under the European Commission’s scanner since 2010. Could this be the undoing of the tech giant?

Comments