A difficult case

Questions about Competition Commission's investigation of Google

The Competition Commission of India (CCI) is investigating the search engine giant, Google, which has been accused of abusing its dominant position in India's online search and advertising markets. Google is expected to respond to the charges next week and the CCI's final ruling is due on September 17. The CCI fined Google Rs 1 crore in May 2014, for not cooperating with this inquiry. If the CCI does find Google guilty, it could impose a fine amounting to $6.6 billion (or about Rs 43,700 crore), 10 per cent of the turnover of Google's parent company Alphabet. Google could appeal rulings at the Competition Appellate Tribunal, or go to the Supreme Court. The CCI's director general of investigations has reportedly submitted an adverse report after inquiring into complaints from multiple companies and advertising agencies. The inquiry began in 2011-12, when matchmaker Bharat Matrimony and Consumer Unity and Trust Society (CUTS), a non-governmental organisation, made complaints. Other complainants include Microsoft, Yahoo!, Rediff, Facebook, MakeMyTrip, TripAdvisor, Cleartrip, Nokia Maps, Flipkart and JustDial.

"Search neutrality" is a new and debatable concept. Google is the search engine of choice for most; but the search engine market is highly competitive, offering many choices to users. Surfers are always free to compare results across multiple search engines. Microsoft's Bing holds a significant market-share, and is the default on browsers like Mozilla and Internet Explorer. There are many other cash-rich competitors. Google's dominance arises thus from the quality of its top-secret search algorithm and its efficient indexing of web content. It also offers free services that compete with some of the complainants. Much of its revenue is from related advertising. Advertisers can bid for "AdWords", which are natural search terms like "second-hand cellphone". When AdWords are used in search, the advertiser's goods and services pop up in labelled ad-boxes.

One charge CCI is investigating is that Google's search results are skewed to favour advertisers, and its own services. When keywords are entered, it is claimed that companies favoured by Google and Google's own services show up high in natural results, as well as being prominently boxed. There are also accusations that Google allowed companies to bid for AdWords like brands and slogans copyrighted by rivals. This was part of Bharat Matrimony's original complaint. If true, it would lead to other issues centred on the protection of intellectual property. The CCI report is also said to claim that Google's contractual clauses are one-sided and make it hard for advertisers to place ads on other web platforms. Obviously the truth of such claims must be proved. Google says that it has an internal wall separating advertising (and house ads) from its search algorithm in order to prevent this preferential skew. In fact, it is debatable in the first place if preferential treatment for advertisers, or for its own services, is anti-competition, so long as this is disclosed. Consider the analogy: a supermarket or mall has every right to preferentially display its own or partnered products. This is true even for the US' highly dominant Walmart. The CCI rulings will therefore be scrutinised carefully.