16 March, 2018
After an inquiry spanning over six years, Competition Commission of India (‘CCI’ ) has examined a number of Google products offered in India ranging from its search designs and ads platform to its syndication agreements and trademark policies, and issued its decision pursuant to such examination on February 8, 2018. Continuing with its recent enforcement trend in the technological sector, CCI has acknowledged that intervention in technological markets should be limited, and recognized that Google has been instrumental in revolutionizing the manner in which users access information on the internet. In its decision, CCI has endorsed most of Google’s products and practices in India that it reviewed – including some of Google’s popular products like Google maps, ad platforms, OneBox, etc.
On three counts, however, majority composition of CCI (i.e. four out of six commissioners who examined the case) (‘Majority Commissioners ’) has identified certain concerns with three components of Google’s services in India – (a) Google’s historic (i.e. pre-2010) display of universal results; (b) labeling of Google’s flight units; and (c) one clause in Google’s direct search intermediation agreement which Google negotiates with publishers who wish to have Google’s search functionality on their website. The two dissenting commissioners (‘Minority Commissioners ’) did not agree with the Majority Commissioner’s views on the three infringement counts noted above, observing that much of what the Majority Commissioners had held was entirely hypothetical and called for an effects-based analysis in abuse of dominance cases rather than applying the per se rule. The key findings of CCI are summarized below.
Search designs
On examining Google’s internet search products, CCI defined two separate relevant markets, i.e. the market for ‘Online General Web Search Services in India ’ and for ‘Online Search Advertising in India ’. On the former, which relates to the display of free search results, CCI noted that users offer ‘indirect consideration ’ to Google in the form of their attention and personal information.
CCI then departed from the findings of contravention of the Director General (‘DG ’), and held that: (a) it was not necessary for the ‘More Results’ link on Google’s universal results1 to lead to third-party service providers since doing so would confuse users, rather than serve any useful purpose; (b) the display of Google Maps alongside a search query enhances user-experience; and (c) the information contained in Google OneBox are focused on providing the most relevant result to a user.
Although CCI found no concerns with Google’s existing search results designs, the Majority Commissioners found that prior to October 2010 (i.e. well before the commencement of CCI ’s investigation against Google), Google’s search design displayed universal results at certain ‘fixed ’ positions on its search page. Despite noting Google’s submission that it did not have requisite technology at the time to carry out relevant comparison for positions on the result page, CCI held that the display of ‘fixed positions’ back in October 2010, on account of these ‘fixed positions’ raised concerns as to its relevance. The Minority Commissioners disagreed with the Majority Commissioners and noted that the conduct itself was historical and the harm caused purely speculative, since limiting the display of universal results to fixed positions did not, by itself, mean that they were any less relevant. The Minority Commissioners further noted that Google’s voluntary transition to the fully-floating regime well before the initiation of CCI ’s inquiry obviates the need for any regulatory intervention.
Commercial units
Commercial Units are result types that Google sets apart in ad space and distinguishes from search results with a “Sponsored” label. CCI considered whether Google’s display of commercial units in India (i.e. for shopping and flights) misled users. Majority Commissioners observed that Google’s flight unit (but not shopping), which allows users to compare flights from various airlines, mislead users. Finding that flight units were appropriately labelled as being ‘Sponsored’, the Majority Commissioners nevertheless found that flight units are prominently placed on Google’s results page, take up a disproportionate space, and contain a link which leads to a ‘Google’s Flights page’ as opposed to a third-party website. Accordingly, the Majority Commissioners found the flights unit to be ‘misleading’ and directed Google to indicate that the ‘Search Flights’ link leads to Google’s Flights page and not that of a third-party service provider.
The Minority Commissioners pointed out that an examination into Google’s flight unit and the apprehension that it was misleading users, ought to have been carried out after analyzing actual user behavior, user preferences, flow of user traffic, etc . The Minority Commissioners noted from review of data on file that: (i) Google’s users are able to distinguish between free and paid results (as Google’s top-ads do not attract maximum clicks, but generic search results do); (ii) users clicked far less on the Google Flights results page as compared to clicks that went through to leading travel and flight comparison sites such as Makemytrip, Goibibio, Cleartrip, etc. Absent evidence of foreclosure or users being misled, the Minority Commissioners did not find Google flights unit to be anti-competitive. Google’s advertising platform and policies Google’s AdWords enables advertisers to bid for ads that appear alongside search results. The primary complaint of Bharat Matrimony.com, one of the complainants in this case, was against Google’s AdWords platform and policies, alleging them to be anti-competitive. However, after examining Google’s AdWords platform in the market for ‘Online Search Advertising in India ’, CCI held AdWords Platform (and related policies) to be fully compliant with the Competition Act, 2002 (‘Competition Act ’). In doing so, CCI noted that Google’s keyword bidding policy that permits advertisers to bid on keywords, including those that may be trademarked, along with its trademark policy, do not infringe provisions of the Competition Act. CCI also found no fault with Google’s terms and conditions for the use of its ‘AdWords Application Programming Interface’ (which allows advertisers and third-party developers to use automatic ad campaign management tools). CCI noted that advertisers had several tools that allow them to export their AdWords campaign data.
Google’s distribution and syndication agreements
CCI also examined a range of clauses in Google’s agreements with its distribution and syndication partners. Google’s distribution agreements allow web browser providers to incorporate ‘Google search’ functionality into their web browsers. CCI found that Google being the ‘default search engine’ on web browsers such as Apple’s Safari and Mozilla Firefox does not result in exclusivity since partners were free to provide their users with other search options. Further, Google’s intermediation agreements permitted website owners to incorporate Google’s search and ad technologies on their websites. CCI found no exclusivity concerns with a range of clauses that it examined in (a) Google’s online intermediation agreements; and (b) Google’s search ad intermediation agreements. It also rejected other allegations against Google’s agreements in relation to disclosure of revenue share and providing arbitration outside India, as they presented no antitrust concerns.
CCI did however find exclusivity concerns with one template clause in Google’s online direct search intermediation agreement as per which publishers were not to implement search technologies on their sites that are “same or substantially similar” to Google’s. On this finding too, the Minority Commissioners pointed out inter alia that the Majority Commissioners had not defined a relevant market for search syndication services, and therefore a finding of anticompetitive leveraging was not sustainable. Minority Commissioners also noted the lack of any testimony or evidence that suggests that this clause hindered competition or was “imposed” by Google on any partner.
1 Universal Results group results for a specific type of information such as news, images, local businesses etc.
For further information, please contact:
Zia Mody, Partner, AZB & Partners
zia.mody@azbpartners.com
