The Competition Commission of India today imposed a fine of Rs 136 crore on Google for unfair business practices in the Indian market for online search. After a detailed probe on the complaints filed in 2012, the regulator through a majority order said the penalty is being imposed on Google for “infringing anti-trust conduct”.
Google’s specialised search options that lead to its commercial flight unit, prohibitions imposed under the negotiated search intermediation agreements and ranking of universal results prior to 2010 were found to be violating competition norms. On the CCI ruling, a Google spokesperson said the company is “reviewing the narrow concerns identified by the Commission and will assess our next steps”.
It was alleged that Google is indulging in abuse of dominant position in the market for online search through practices leading to search bias and search manipulation, among others. For this case, the Competition Commission of India (CCI) considered markets in India for online general web search services and for online search advertising services as the relevant ones.
The penalty amount of Rs 135.86 crore translates to 5 per cent of the company’s average total revenue generated from India operations from its different business segments for the financial years 2013, 2014 and 2015, according to the CCI order.
In a release, the CCI said that Google through its search design has not only placed its commercial flight unit at a prominent position on SERP, it has also allocated disproportionate real estate thereof to such units to the disadvantage of verticals trying to gain market access. With respect to contravention by the flight commercial unit, the CCI has directed the company to “display a disclaimer in the commercial flight unit box indicating clearly that the ‘search flights’ link placed at the bottom leads to Google’s Flights page,” so that users are not misled.
The watchdog has also ordered Google to not enforce the restrictive clauses with immediate effect in its negotiated direct search intermediation agreements with Indian partners. The CCI said it has given thoughtful consideration on the submissions made by Google on issue of penalty and found it appropriate to impose a fine.
The ruling has come on complaints filed by Matrimony.com and Consumer Unity & Trust Society (CUTS) — back in 2012 — against Google LLC, Google India Pvt Ltd and Google Ireland Ltd. While the majority order is by chairperson D K Sikri and three members, two members have issued a dissent order saying that they don’t find Google in violation of Section 4 of the Competition Act. This section pertains to abuse of dominant position.
The Google spokesperson said the company has always focused on innovating to support the evolving needs of users. “The Competition Commission of India has confirmed that, on the majority of issues it examined, our conduct complies with Indian competition laws. We are reviewing the narrow concerns identified by the Commission and will assess our next steps,” the spokesperson said in a statement.
On the basis of the probe report submitted by the Director General, the CCI broadly looked at four aspects — whether Google biases its search results, whether it imposes unfair conditions on advertisers, whether the company’s distribution and intermediation agreements restrict competition.
“The Commission is cognizant of the fact that any intervention in technology markets has to be carefully crafted lest it stifles innovation and denies consumers the benefits that such innovation can offer. This can have a detrimental effect on economic welfare and economic growth, particularly in countries relying on high growth such as India,” the order said.
The regulator also noted that product design is an important and integral dimension of competition and any undue intervention in designs of SERP (Search Engine Results Page) may affect legitimate product improvements resulting in consumer harm.
“Having said that, it is made clear that such regulatory forbearance from interfering with search design is only by way of self-imposed restraint but if in a given case the Commission finds the conduct to be egregious, appropriate remedies and directions shall be issued to correct such a distortion,” the order said. Further, the CCI said it has examined the issues within the permissible parameters in technology markets.