India Joins EU, Canada In Launching Antitrust Investigation Of Google's Business Practices


India Joins EU, Canada In Launching Antitrust Investigation Of Google's Business Practices

The Competition Commission of India (“CCI”), an agency equivalent to the United States Federal Trade Commission, is the latest such body to raise questions regarding the business practices of Google.

Specifically, the CCI has received complaints, corroborated by legitimate companies including Facebook, Flipkart and MakeMy-Trip.com, that Google has abused its extremely dominant market position by “rigging” its search results based on the amount of money paid by sponsors.

The CCI solicited responses from 30 businesses spanning a number of websites including social networks, travel and search sites. The companies’ responses led the CCI director-general to file an official report accusing Google of rigging search outcomes, both actual search results and the sponsored links. While other nations have discussed antitrust claims against Google, India’s formal action marks the first international case where an antitrust agency brought such claims against the company.

A few Indian companies, as well as Microsoft, made an extensive submission to the CCI regarding the Internet leading search engine’s alleged “abuse of power.” Thereafter the CCI filed its report.

As a result of the filing by the CCI, Google has until September 10th to file a response. Seven days following Google’s submission, a hearing will be held before the CCI’s seven members, led by Chairman Ashok Chawla. Like other cases, several hearings may be held before the CCI renders a decision, which is appealable to India’s Supreme Court.

According to CCI process and procedures, if it determines Google is guilty of the charges, it may request that the company changes its business practices. It may also impose a fine for up to 10% of Google’s net income. To put this in perspective, in 2014, Google earned a net income of greater than $14 billion on over $66 billion in revenue. The CCI may also impose personal penalties against head Google executives.

In response to these allegations, a Google spokesman issued a statement that, “[Google is] currently reviewing this report from the CCI’s ongoing investigation. [Google continues] to work closely with the CCI and remain confident that [it] compl[ies] fully with India’s competition laws. Regulators and courts around the world, including the US, Germany, Taiwan, Egypt and Brazil, have looked into and found no concerns on many of the issues raised in this report.”

The CCI’s report has alleged that Google is liable on two fronts: 1) that Google’s proprietary (i.e., sponsored) content supersedes the actual relevance of a user’s search; and 2) that Google’s sponsored links are essentially listed in order of the amount of money that a sponsor pays to Google. This means that sometimes the sponsored link appears higher up in the search results than the websites of the actual trademarks of a company.

As part of the CCI’s report, Google’s practice of modifying its search algorithms without informing the users searching for results violates fair trade regulations. The report states that, “As a result of Google’s policy, it is unavoidable for the trademark owners to participate and outbid third parties in the auction process for their ads to appear above others in response to search queries on their own trademark keywords.”

Around the globe, Google is dealing with similar, informal claims. In response to questions raised by the United States Fair Trade Commission, Google voluntarily changed some of its business practices. Similarly, Google changed some of its practices in response to inquiries raised by the European Commission (“EC”). However, the EC has raised some objections which will now need to be presented for hearing.

Depending of the findings reached by the CCI, it may affect the way trade commissions around the world deal with Google and certainly adds to the mounting set of litigation and inquiries faced by the search juggernaut.

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