Google fined in India for search bias

Google Headquarters in US. Image: Shutterstock

New Delhi: The Competition Commission of India has slapped a fine of Rs 135.86 crore on Google, the world's largest web search engine, for abusing its dominant position by preventing its Indian partners who sign negotiation search intermediation agreements from using similar services provided by competing search engines.

The commission ordered Google not to impose restrictive clauses with immediate effect in these agreements.

The penalty was calculated at the rate of 5 per cent of the average total revenue that Google generated from the different business segments that make up its India operations in the financial years of 2013, 2014 and 2015.

The split 4-1 verdict directed Google, which had reported revenues of $77.78 billion worldwide in 2017, to pay the penalty of $21.2 million within 60 days.

In July last year, the European Union had slapped a record-breaking fine of $2.7 billion on Google for manipulating search results in a manner that gave it illegal advantage.

Thursday's verdict stems from two cases filed in 2012 by Consim Info Private Ltd (now known as Matrimony.com Ltd) and the NGO Consumer Unity and Trust Society which charged Google with contravening provisions of the Competition Act.

The appellants had said Google also provided a large number of vertical search services including video (YouTube), news (Google News) and maps (Google Maps).

They claimed that Google's own sites would appear on search result pages irrespective of whether they were the most popular or relevant sites.

The charge against Google was that its algorithm calculates an advertiser's quality score which forms the basis of where an advertisement appears.

But that is not all. The charge was that the quality score was the basis for "placing Google's vertical properties towards the top of the search results page."

The appelants - Consim Info Private Ltd (now known as Matrimony.com Ltd) and the non-profit, non-government organisation Consumer Unity and Trust Society (CUTS) - contended that Google's dominance in the algorithmic search market "leads to its status as an unavoidable partner in the search advertisement partner".

CUTS's charge against Google was that it was abusing its dominant position in the market for online search. It was accused of indulging in abusive practices leading to "search bias, search manipulation, denial of access to competing search engines, refusal to license content to competing search engines and creation of entry barriers".

The commission had directed an investigation into Google's practices in India which was later extended to Google Ireland since "it was playing an important role in the operations of Google in India". However, the charges against Google Ireland did not stick.

The director-general for investigation determined that Google operated in two distinct markets - online general web search services, and relevant market of online search advertising. It enjoyed a dominant position in both markets and was able to establish itself as a "critical platform for all stakeholders".

The investigation showed that Google integrates or blends its own specialised/vertical search services in its online general web search services in the form of "universal results and commercial units" using mechanisms that do not apply in an equivalent manner to non-Google websites or web content.

Moreover, it offered its own specialised search features (commercial units and universal results) at prominent ranks or positions in the Search Engine Results Page (SERP). The top results receive higher user attention and are critical for online visibility.

While Google steered users to its own products and services, it was found that users might not receive the most relevant results. This was found to be anti-competitive behaviour.

The DG also recorded that Google was not required to pay any monetary consideration for its house ads which gave it an additional competitive edge.

It was determined that by leveraging its strengths, Google was causing direct harm to other websites which were moved down the SERP, which meant they received fewer clicks as a result of lessened traffic.

Google's search service is based on a two-sided business model: the search service is free to users. But this service is funded through the display of paid results - that is advertisements - for which Google receives compensation.

Google shows two types of commercial units in India: shopping units which display ads for product offers of merchants; and flight units which identify flight offers for a given destination.

The commission found only three areas where Google was in violation of the Competition Act - and that too only for the period between May 2009 and October 2010 because it has since started displaying results on a "free floating basis".

The three areas were: universal results prior to 2010 where rankings of websites or content were pre-determined to trigger at the first, fourth or tenth position on the SERP.

Second, display and placement of the commercial flight unit with links to Google's specialised search options deprived users of additional choices.

Third, the search intermediation agreements prevented publishers from using search services of competing search engines.

The commission directed Google to display a disclaimer in the commercial flight box unit that clearly indicated that the "search flights" link leads to Google's Flights page and that the results are not aggregated by any other third party service provider. This will ensure that users are not misled.

Parts of the commission's 190-page order were blanked out in the public version to prevent rivals from gleaning confidential information about Google's Indian operations.


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