Amazon and Flipkart found violating Competition law in India-DG investigation report out
Google invites yet another Antitrust investigation by the Indian Fair Market watchdog, the Competition Commission of India (CCI) for its market behaviour in online general web search and advertising services.
This most recent order against Google in India is clearly a consequential effect of the Australian Competition and Consumer Commission (ACCC) June 2019 Digital Platform Inquiry Report which ultimately led to the decision by the Australian government to impose a mandatory code on the digital giants, Google and Facebook to pay for the news content to newspapers in December 2020.
CCI vide its order dated 07.01.2022 has directed yet another investigation against Alphabet Inc., Google LLC, Google India Private Limited and Google Ireland Limited (collectively referred to as ‘Google’)for the alleged abuse of its dominant position in the Market for Online General Web Search Services in India and Market for Online Search Advertising Services in India.
The information was filed by Digital News Publishers Association (Informant) a private non profit company, engaged in to promote, aid, help, encourage, develop, protect and secure the interest of digital news publishers. It was been stated that Google specializes in internet related services and products that include online advertising technologies, a search engine, cloud computing, software and hardware solutions, along with various other services and Alphabet Inc.’s revenue as of September 2019 was USD 116 billion, of which almost 84% came from advertising.
The newspaper industry sustains itself by a business model in which two-third of its revenue comes from advertisement and with the increasing influence of digital media, the revenue of the newspaper industry has seen a steady decline over the past decade.
Relevant markets suggested and specific allegations
The informant delineated four relevant markets and averred that Google enjoys a dominant position in each of these relevant markets:
- Market for online search advertising services in India,
- Market for online general web search services in India,
- Market for publishing of news content in India and
- Market for online advertisement in India.
The informant had made specific allegations under the following heads:
Section 4(2)(a)(i) Imposing unfair and arbitrary conditions
It has been alleged that Google impose direct/indirect unfair conditions on the members of the Informant, while allowing website links of the members of the Informant on their search engine results. Further it has been alleged that members of the Informant are not informed of or given any data pertaining to the amount of revenue earned by the Google by providing advertisements on the websites/links of the members of the Informant and only a small chunk of revenue generated from the advertisements on the websites/links of the members of the Informant in an arbitrary manner, without disclosing any basis for calculation of such revenue.
Further it is also alleged that while Google use snippets of the content created by members of the Informant, they do not fairly compensate use of the content. The agreements entered between the members of the Informant and the OPs for sharing the advertisement revenues are unilaterally and arbitrarily dictated by the Google, and the members of the Informant have no other option but to accept the terms, as they are, with no bargaining power whatsoever.
Section 4(2)(b)(ii)
It is alleged that the Google, by depriving the members of the Informant of the fair value of the content, discourage innovation and technical development of the services provided by the members of the Informant and other media companies, to the detriment of consumers.
Section 4(2)(c) Denial of market access
The Informant has alleged that Google holds a dominant position in the relevant markets and have used such position to restrict the members of the Informant in the market of news content and advertising and further because of the unilateral, arbitrary and unfair decisions of the Google, the members of the Informant have to suffer a loss of advertising revenues and the inability to bargain a fair share in the value chain of news dissemination, despite working and generating credible news. Therefore, Google is guilty of using their dominant position in the relevant market(s) to deny market access to members of the Informant in the digital advertising space.
Section 4(2)(e) Leveraging
The Informant has averred that the Google have entered into the news aggregation genre by launching Google News, Google News Showcase, etc. It is further averred that Google do not produce any news of their own; however, they have steadily grown their influence in the news space by effectively using their dominance in the relevant markets. This has been enabled by Google’s ability to dictate what a viewer sees first, thereafter using advanced algorithmic tools to cater tailormade news as per the viewing history of each viewer.
Further it is averred that there has been a surge in zero-click searches from 50% in June 2019 to 65% between January and December 2020 and by displaying its own advertisements, Google is stated to extract value from zero-click searches, while publishers lose out on traffic.
Further it has been alleged that Google gives publishers no choice but to implement Accelerated Mobile Pages (AMP) standard or lose critical placement in mobile search, resulting in reduced traffic therefore, publishers were forced to build mirror-image websites using this format, with Google caching all articles in the AMP format and serving the content directly to mobile users.
Based on the above conduct of Google informant alleged that it amounts to violation of Section 4(2)(e) of the Act.
CCI Analysis
Relevant market
For the purpose of investigation CCI delineated two relevant markets;
- Market for Online General Web Search Services in India
- Market for Online Search Advertising Services in India.
Assessment of Dominance
The Commission considered its previous Google Search Bias case wherein it had the chance to consider both relevant markets and CCI had held Google to be Dominant in both the markets. Further CCI considered the data from gs.statcounter.com, which indicate that Google holds a market share of 98.83% in the search engine market in India and 99.59% in the mobile search engine market in India. Further as per data available on www.statista.com, Google’s market share ranged from 98% to 99% in the mobile search engine market during the period April 2019 to July 2021and held that the said market share appears to be stable over a period of time, indicating the entrenched position of Google in the said market.
Further CCI also considered other factors and noted that relevant markets appear to be characterised by entry barriers resulting from significant investment required to develop sophisticated algorithm as well as to reach a sufficient scale of search queries. Further, these markets exhibit network effects wherein the online general web search and online search advertising are interdependent and the increase in the number of users on the search engine increases the value of search advertising offered by Google for the advertisers.
Based on the above the Commission was of the prima facie view that Google is dominant in both the relevant markets, i.e., market for online general web search services and market for online search advertising services in India.
Abuse of Dominance
CCI firstly noted that Google displays news content in a variety of ways through hyperlinks, thumbnails, extracts, etc and through this links user get the access to the publishers original website which allows news publishers to monetize their content by offering advertising space on their websites to potential advertisers. Further in this digital advertising ecosystem news publishers operate as sellers of advertising space on their websites and, in the process, interact with various intermediaries in the digital advertising value chain (ad-tech) to reach out to the demand side of the market, i.e., advertisers. CCI further noted that Google occupies a significant position in the ad-tech intermediary services globally.
CCI noted that news publishers are dependent on Google for the majority of the traffic, which makes Google an indispensable trading partner for news publishers. This is exacerbated by the significant role played by Google in the ad-tech value chain and makes considering the vertical integration of Google, news publishers have no choice but to accept the terms and conditions imposed by Google. CCI also noted that with increasing access to news content online, advertiser expenditure on digital advertising has grown significantly, which can be seen from the growing share of digital ad revenues in total ad revenues earned by news publishers. Further considering Google’s market position in the online digital advertising intermediation services, the alleged unilateral and non-transparent determination and sharing of ad revenues appears to be an imposition of unfair condition on publishers. The alleged opacity on critical aspects such as data and audience management practices, or generation and sharing of revenue with publishers, exacerbates the information asymmetry and is prima facie prejudicial to the interest of publishers, which, in turn, may affect the quality of their services and innovation, to consumer detriment which is prima facie violation of Section 4(2)(a) of the Act
On the allegation that that Google has unilaterally decided not to pay the publishers of news for the snippets used by them in search engine results CCI noted that Google continues to earn revenue directly/indirectly in such cases even though news publishers may not be able to do so until the user clicks on the search links. It needs to be examined whether the use of snippets by Google is a result of bargaining power imbalance between Google on the one hand and news publishers on the other, and whether it affects the referral traffic to news publisher websites, and thus, their monetization abilities and the alleged conduct of Google appears to be an imposition of unfair conditions and price which, prima facie, is a violation of Section 4(2)(a) of the Act.
Further on the allegation that publishers are being forced to build mirror-image websites using the AMP format, with Google caching all articles and serving the content directly to mobile users, can have revenue implications for the publishers also needs to be investigated.
CCI also held that it need to be investigation whether Google imposes any discriminatory condition or price on various news publishers, which would violate Section 4(2)(a) of the Act.
Based on the above, the CCI was of prima facie view that Google has violated the provisions of Section 4(2)(a) of the Act, which merits investigation. Further, the allegation that abovementioned conduct of Google results in violation of the provisions of Section 4(2)(b)(ii) as well as Section 4(2)(c) of the Act also needs to be investigated.
Lastly CCI held that, it appears that Google is using its dominant position in the relevant markets to enter/protect its position in the market for news aggregation services in violation of Section 4(2)(e) of the Act, which again merits detailed investigation.
COMMENT -This would be the fourth investigation ordered against Google, the previous three being already covered in my blogs as under:
- CCI orders probe into alleged abusive conduct of Google in imposing conditions for use of its android OS on smartphone manufacturers in India
- CCI orders another investigation against Google’s alleged abuse of dominance by google pay in the market for online app-based payments
- CCI orders another investigation against google for agreements with OEMs of smart TVS
As stated earlier , the present investigation is a fallout of the bold decision taken by the ACCC and the Australian government in 2020 in framing a pioneering legislation in the form a digital media code which mandated the sharing of revenue between digital media gatekeepers such as Google and Facebook and the traditional online and offline media channels including Newspapers and TV channels etc. The outcome of this investigation is likely to be on expected lines unless Google can pull out some maverick tricks!!
#Google #Digitalmedia #Newscontent #abuseofdominance
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