Why an Indian start-up lobby has filed an antitrust complaint against Google

What is the ADIF’s antitrust challenge against Google?

“ADIF contends that Google’s control over major online platforms, coupled with the fact that it derives 97 per cent of its revenue from advertising, has led to practices that stifle competition and adversely affect Indian businesses,” the organisation’s statement said.

Google’s ad-ranking system includes advertisers to set a bid for the amount of money they want to spend on a particular advertisement. This is the maximum amount an advertiser has to shell out to Google, when a person clicks on their advertisement.

Calling the system a “black-box,” ADIF said, “Google’s practices regarding trademark usage in keyword bidding create an artificial inflation of advertisement prices. Google allows competitors to bid on trademarked keywords, leading to a bidding war that ultimately benefits Google at the expense of advertisers and trademark owners”.

The organisation has also accused Google of self-preferencing its own services over other similar offerings, which restricts market access for competitors and negatively impacts start-ups that rely on these services.

“ADIF is particularly concerned over Google’s Privacy Sandbox initiative, which aims to remove third-party cookies from websites accessed via the Google Chrome browser. This move could significantly hamper non-Google Demand Side Platforms’ ability to serve advertisers effectively,” it said.

Earlier this year, Google started phasing out third-party cookies on the Chrome browser, which had till then been a significant tool in the digital advertising industry for at least two decades. Cookies are used by websites and internet applications to remember information about a user.

What is India’s draft digital competition law?

Taking a leaf out of the European regulatory handbook, India has proposed a new digital competition law that could stop tech giants like Google, Facebook, and Amazon from self-preferencing their own services, or using data gathered from one company to benefit another group company.

The draft law, called the Digital Competition Bill, 2024, also has provisions to set presumptive norms to curb anti-competitive practices before they actually take place. It further promises to impose heavy penalties — which could amount to billions of dollars — for violations. If this were to go in force, it could require big tech companies to make fundamental changes to their various platforms.

Understanding the role that data collected by one company of a major technology group can play in benefitting other group companies, the Bill proposes to designate Associate Digital Enterprises (ADEs).

If an entity of a group is determined to be an associate entity, they would have the same obligations as Systemically Significant Digital Enterprises (SSDEs). Essentially, SSDEs have a significant presence in any given core digital service and are identified on the basis of parameters like their turnover, market influence, etc.

The obligations on ADEs will depend on the level of their involvement with the core digital service offered by the main company. Illustratively, if one were to look at Google Search and how it steers direction data to Google Maps, the latter can theoretically be deemed an ADE. Same would apply to YouTube too, depending on the level of data sharing that happens between the core Google Search and how that plays out in the recommendations that YouTube makes to users.