For several years now the Google Empire has been built on the fabulous success of its Ad-Sense program, which places relevant advertisements during the search results on the Google search engine and also on third-party websites. Google usually charges the advertiser only when a user clicks on the advertisement. Inevitably, as is always the case with Google, the program faced more than its share of legal challenges, especially multiple lawsuits for the infringement of trademarks.
Recently, Kashyap a school-friend of mine informed me of a different kind of dispute he had with Google over its Ad-Sense program. Kashyap is one of the founders of the start-up, Octathorpe, which runs the increasingly popular ‘Hitwicket’ online multiplayer cricket managementgame, where users manage and run their own cricket teams. I’m not much of a cricket fan (Yes, I’m still an Indian citizen) but I was one of the beta-testers of the game and I found it really fascinating. For those of you familiar with start-ups, you must know how difficult it is for most start-ups to just survive, especially in a country like India. One very small source of revenue for Octathorpe, the company which owns ‘Hitwicket’, was advertising revenue from Google Ad-Sense, i.e. they used to host Google-Adwords on their website, until Google terminated the contract for an alleged violation of the terms and conditions.
|Image from here|
I went through the emails sent by Google and I am very, very surprised that a company like Google would conduct its business in such an opaque and obviously unfair manner. The first email which Octathorpe received from Google alleging a violation of the terms and conditions can be accessed over here.
The email informs Octathorpe “In your case, we have detected invalid activity on your site and your account has been disabled.” But what was this invalid activity? Strangely Google does not inform Octathorpe of the activity which led to its account being disabled. Instead, it informs its users “We’re limited in the amount of information we can provide about your specific violation. We understand this can be frustrating for you, but we’ve taken these precautionary measures because intentional violators can use this information to circumvent our detection systems.” How is it fair to terminate a contract without informing the opposing party the reason for the termination?
At best, Google does provide a link to go through the most common reasons for termination of Ad-sense accounts but that still does not help its users understand why exactly their accounts have been terminated. Google then offers an appeals process to contest the closure of the account but then again how is one supposed to appeal without knowing the actual reason for terminating the account?
In any case, the guys at Octathrope filled in the appeal form. Unfortunately, they had not saved the final version because of which they reproduced the answers, to the best of their memory, in a separate email for me. You can access that email over here.
The most frequent reason for shutting down an “Ad-Sense” account, is “invalid clicks” where either the owner of the website or an automated bot or the same visitor keeps clicking on the advertisement to generate more revenue. In Octathrope’s case, the company is quite confident that they did not indulge in any such activity. As they explain in their appeal, most of the users of the game are in Universities and since all students in Universities use the same IP address, it was possible that Google’s program recognized all clicks from the same University as “irregular activity”. However it is not possible to confirm this because Google does not disclose the details of its irregular activity.
In response to this appeal process, Octathrope receives what appears to be a standard form response from Google, which can be accessed over here. The reply denies the appeal and informs Octathrope that they are forever barred from the Ad-sense program and that all money for the last month would be refunded to the advertisers. In ending the letter Google once again states “We understand that you may want more information about your account activity. However, because we have a need to protect our proprietary detection systems, we’re unable to provide our publishers with any details about their account activity.”
As a lawyer, I find this entire process to be extremely unfair and lacking in transparency. I tried examining the possible legal remedies available to Octathrope when I came across this incredible clause in Google’s contracts for Indian user of the Ad-Sense program:
“This Agreement shall be governed by the laws of California, except for its conflicts of laws principles. The parties specifically exclude from application to the Agreement the United Nations Convention on Contracts for the International Sale of Goods and the Uniform Computer Information Transactions Act. The parties agree that they will try in good faith to settle within thirty (30) days any dispute relating to this Agreement (“Dispute”). If the Dispute is not resolved within thirty (30) days after such Dispute arose, the Dispute must be resolved by arbitration. The arbitration will be submitted to the International Centre for Dispute Resolution of the American Arbitration Association (“AAA”) and conducted in accordance with the Expedited Commercial Rules of the AAA in force as of the date of this Agreement (“Rules”). There will be one arbitrator selected by mutual agreement of the parties. The arbitration will be conducted in English and the place of arbitration will be in Santa Clara County, California, USA.” (emphasis supplied)
Does Google Inc. actually expect Indian Ad-sense users to resolve their disputes with Google through arbitrators in Santa Clara County, U.S.A, using the laws of California? Does Google Inc. realistically expect Indian users to have the resources to fight Google in California especially since Indian users earn in rupees but have to pay in dollars to resolve a dispute with Google? Why can’t Google provide for country-wise dispute resolution process? A company situated in Hyderabad, India should not be expected to travel to California to resolve a $300 dispute. The mere cost of filing an arbitration proceeding in California would cost more than $300.
What makes this entire process even more unfair is the fact that Google’s Indian subsidiary has huge offices in Hyderabad and Gurgaon, Delhi and from what I’ve heard the main purpose of these offices is to provide marketing services for Google Inc.’s Ad-Sense program. Why then does Google not submit itself to Indian jurisdiction instead of dragging its users to California?
Unfortunately, I do not know of anybody in Google India’s legal team to ask them for their side of the story but I am in the process of contacting them for their side of the story.
In any case these are serious questions because over time Google will be looking at launching its ‘Google Wallet’ services in India and if it is going to have such contractual terms, the Indian consumer will be seriously disadvantaged.
Is there any remedy under Indian law against such unfair contracts? Do such contracts violate Indian competition law? Google Ad-words is already under investigation by the Competition Commission India(CCI) due to a complaint by Consim. Would Google really dare to have such unfair contracts if it had sufficient competition in the Indian market? Is it abusing its dominant position as a result?
All of these are interesting questions, which I hope to answer over the next few weeks.
Tags: Unfair Competition