This article has been written by Devesh Sharma, a final year law student at UPES, Dehradun.
Background:
The contents of this case analysis has been derived from the order of CCI (Case Nos. 07 and 30 of 2012) accessible at CCI order.
In a decision dated February 8, 2018, the Competition Commission of India (CCI) fined Google INR 135.86 crores (about $1.36 billion) for abusing its dominant position in the relevant market. The CCI found that Google had shown bias in favour of its own Google Flights service in search results and had imposed unfair conditions in agreements with website owners who used Google’s search bar or ads.[1] This decision highlights CCI’s approach to regulating the digital market in India, aiming to strike a balance between addressing abuse of dominant practices and encouraging market innovation.
Facts of the case
In this case, the Informant accused Google of running its search and advertising business in a biased manner, claiming that it harmed advertisers and indirectly impacted consumers. The allegation was that Google gave itself an unfair advantage by favouring its own services and partners, manually altering search results to benefit its vertical partners.
The Informant pointed out that, aside from its popular search engine, Google also provides several specialized search services, such as YouTube for videos, Google News for news, and Google Maps for maps. It was claimed that Google started mixing results from these services into its regular search results to promote its own platforms. For example, when a user searches for a song, the results would show links to videos on YouTube or Google Video—both owned by Google—giving them higher visibility.
Additionally, the Informant argued that Google’s own websites were given a more prominent position in search results, regardless of whether they were the most relevant or popular options. Whereas, results from other specialized search engines were not displayed as prominently, further favouring Google’s services.
The Informant also claimed that Google’s acquisition of various software products strengthened its vertical integration, making its position in the market more monopolistic and reducing competition. Google’s dominance in algorithmic search made it a necessary partner for those involved in search advertising, as it controlled much of the market.
Moreover, Google’s search algorithm, which determines where websites rank in search results, and its algorithm for calculating an advertiser’s quality score, played a crucial role in deciding where advertisements would appear. The Informant alleged that changes in these algorithms, the reasons for prioritizing Google’s own services in search results, and the decline in Consim’s quality scores would only come to light if Google were ordered to provide this information during an investigation by the Commission or Director General.
Assessment by the commission regarding the relevant market and dominant position:
The Competition Commission of India (CCI) defined two key markets:
- The market for online search services in India
- The market for online search advertising in India
CCI rejected Google’s argument that using its search services didn’t involve a purchase of services. CCI explained that, in a two-sided market, the data Google collects from users during searches is valuable. This data helps Google analyse user behaviour (“big data”) and earn money from targeted ads, even though users aren’t paying directly.
CCI found Google to be dominant in these markets for several reasons. These included the large size of its business, high revenue, big market share, and the fact that it’s very hard for new companies to enter the market (entry barriers) because they need large scale and advanced technology.
For example, because Google has such a big presence and advanced technology in India, it’s difficult for smaller or new companies to compete in online search and advertising.
Establishing Abuse of dominant position
The Competition Commission of India (CCI) started its analysis by emphasizing the unique responsibilities Google carries due to its dominant position in the digital market, where innovation and network effects play a crucial role. CCI also stressed that any antitrust intervention in such a fast-evolving market should be carefully targeted and balanced to ensure both innovation and consumer protection.
Regarding the first allegation, CCI found Google guilty of abusing its dominance. Until October 2010, Google displayed certain “universal results”[2] (like videos or news) in fixed positions on its search engine results page (SERP), specifically in the 1st, 4th, or 10th spots, regardless of their relevance to the search. After October 2010, Google changed this policy and began displaying these results based on their actual relevance. However, CCI also discovered that Google was giving extra space and prominence to its flight comparison tool on the SERP. By placing a link to its flight service prominently, Google was driving users to its own site, diverting traffic from competitors and increasing its own ad revenue.
For the third allegation, CCI found Google guilty of unfair practices in the agreements it negotiated with website publishers that used Google’s search and advertising services. These agreements included a clause that restricted publishers from using search technologies that were “same or substantially similar” to Google’s. CCI ruled that this clause violated competition law as it limited the options for website publishers and effectively blocked competitors from accessing the market. This showed that Google was using its power in the online search market to strengthen its position in the syndicate search agreements market.
As a remedy, CCI issued a cease-and-desist order, prohibiting Google from reverting to its pre-October 2010 policy of fixed placements for universal results. CCI also directed Google to add a disclaimer on its flight comparison tool, making it clear that the link directs users to Google’s own service, not to a competitor’s page. Moreover, Google was required to remove the restrictive clause from its search intermediation agreements. Finally, CCI imposed a fine of INR 135.86 crores, which amounted to 5% of Google’s average revenue from its Indian operations over the relevant period.
Analysis
This decision signifies the start of the Competition Commission of India’s (CCI) role in overseeing the digital market. Going forward, it is anticipated that CCI will adopt a principle of measured and proportional antitrust intervention in cases, including those concerning big data.
CCI has not fully implemented this approach as several of its conclusions lack sufficient proof of consumer harm. For example, CCI’s findings on search bias are heavily based on public statements made by Google and reports from Microsoft regarding user behaviour. There was insufficient examination of Indian user interactions with search results or whether Google’s practices genuinely caused competitors to lose significant traffic.
The Competition Commission of India (CCI) did not specify online search syndication agreements as a separate market. However, it found that Google was using its strong position in the online search market to keep its control over online search syndication agreements. This need for better evidence is especially important as CCI looks into claims against Ericsson for abuse of dominance and patent hold-up.
The European Commission (EC) in its 2017 case against Google used detailed market studies and surveys to understand how users behave in the European Union (EU). For example, it discovered that moving the top search result to the third position resulted in nearly a 50% drop in clicks[3]. The EC also analysed how much more traffic Google’s shopping service received compared to its competitors in specific EU areas.
The remedies suggested by the EC were more focused on the market. Google was asked to propose solutions to the identified problems. Ultimately, the EC agreed to let Google display three non-Google options next to its shopping service in search results. In contrast, CCI’s order for Google to include a disclaimer in its flight service link might not be enough to truly help consumers. This suggests that the decision and the relatively small fine may not have a significant impact on Google’s operations and growth in India.
The CCI’s order is only a small relief for consumers and competitors since it neglected many of the claims against Google, including allegations about unfair conditions for advertisers using AdWords and problems for trademark owners due to Google’s keyword bidding policy. Despite its positive contributions and limitations, this decision shows the difficulties competition agencies worldwide face in figuring out how to handle antitrust issues in the digital market.
[1] Competition Commission of India, Cases Nos. 7 and 30 of 2012, Matrimony.com Limited v. Google, 8 February 2018
[2] Universal results are groups of search results for a specific category of information, such as news, images, or local businesses
[3] European Commission Memo, 5 February 2014, available at http://europa.eu/rapid/press-release_MEMO-14-87_en.htm.