Uncategorized

Indian start-up complains about unfair Google Ad-Sense contracts


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.

Prashant Reddy

Prashant Reddy

T. Prashant Reddy graduated from the National Law School of India University, Bangalore, with a B.A.LLB (Hons.) degree in 2008. He later graduated with a LLM degree (Law, Science & Technology) from the Stanford Law School in 2013. Prashant has worked with law firms in Delhi and in academia in India and Singapore. He is also co-author of the book Create, Copy, Disrupt: India's Intellectual Property Dilemmas (OUP).

25 comments.

  1. Avatarkorak datta

    I was wondering if I was the only one on the planet to have problems like this with adsense. I used to write a small blog, and on learning about this adsense program, decided to enroll. Well the thought was “if i can get some money out of what i write, why not”. After enrolling, I got a vague response from google, which said due to some reason i couldn’t be part of the program. something about unorigical content or something. The only unoriginal bits I had were some external links. But aren’t those present on every blog out there. i tried to look again at my blog, went through everything. din’t find anything, and gave up trying to monetize my blog.

    Reply
  2. AvatarSpicyipreader

    Was this blog really started to disseminate information on IP and promote transparency in the IPO or create a propaganda machine to resolve personal and private issues?

    Reply
  3. AvatarSurbhi Mehta

    Their alleged unfair conduct is not limited to ad-words alobe. CCI is also investigating allegations of search data manipulation and unfair conduct in display advertising. There was another information filed before CCI by CUTS,Jaipur.

    Reply
  4. Avatarv

    Prashant,

    (a) Google India does not provide the service. The very first sentence of the terms of service states that the service is provided by Google Inc., USA. Hence the contract clearly not with Google India. Therefore the arbitration clause is not unfair or irregular.

    (b) Its absurd to claim a company’s service terms are UNFAIR. There is no legal requirement whatsoever that any private service provider must be fair. It should be more than sufficient if they comply with the law.

    (c) The service, its terms and conditions, including termination, would all be subject to the terms of the contract. Its the advertisers’ choice to sign up. I just do not understand this whining about unfair contracts. This is not a public service.

    (d) This is an example of the pot calling the kettle black. Hitwicket’s terms and conditions are not totally arbitrary too. At least Google refunds the subscription. Hitwicket makes it subscriptions will not be refunded! Regarding the Consim complaint, the less said the better.

    (e) Lets not turn every issue into a soap opera. The real question is: Is Google under any obligation to provide this service? if no, then they can be as arbitrary as they like (with some restrictions – anti-competition, etc.)

    (f) Finally, this is probably something all start ups, particularly Indian start ups, ought to learn: its not enough to have a brilliant idea. Figure out the legal aspects of every component of your business model. Read your contracts.

    Reply
  5. AvatarPrashant Reddy

    @ V,

    I’m am bloody tired of arrogant people such as yourself who presume they know everything under the sun and then proceed to leave comments under pseudonyms. If you are confident enough to take the tone that you have taken, you better have the guts to leave comments under your own name, otherwise, please don’t bother us with your drivel. I can guarantee you that if you were leaving comments under your name, you would be much more polite than you are otherwise.

    Turning to the substance of your comment.

    (a) I never claimed that the contract was with Google India – I don’t know where you got that from.

    (b)&(c) The only thing absurd on this entire page, is your comment – of course I can claim a company’s terms of contract are unfair. The entire idea behind consumer protection law is to correct the uneven negotiating power between a smaller party and a larger party, especially when standard form contracts are in play. So in case you don’t understand the “whining” about unfair contracts, its probably time you started reading up on consumer protection law.

    (d) Don’t make random allegations against Hitwicket – if Hitwicket’s users have complaints to make against the game – they will certainly do so – it is of no relevance to this post.

    (e) The only soap opera playing out here is your comment.

    (f) Perhaps you need to do some reading – there is no negotiating a standard form contract.

    Cold Regards,
    Prashant

    Reply
  6. AvatarRahul Jain

    I think its an E-Contract and even though one agreed to contract with Google Inc, USA as per the “Minimum Contact Rule” theory – since google has marketing offices in India – Hyderabad, Gurgaon, etc – its ‘purposefully availing itself to the public of india’ and ‘creating substantial connection with the public of India’.
    I am just arguing in case aggrieved party would like to bring suit in Indian Courts so prima facie its plea would not be dismissed on jurisdiction grounds. Further such suit could be fight on merits if violations would be against any such available laws of the land.

    Rahul Jain
    Advocate

    Reply
  7. AvatarAnonymous

    Further to what Adv Rahul Jain said, I may add that there are indeed several cases in Indian Courts where Google Inc, USA is a party (defendant). Some of these cases are related to Information Technology Act where Google India pleaded their way out as a non-party. See GIIS K12 PVT LTD vs Google Inc USA & ors. Yes, Adv Jain has stated a position worth exploring further.

    Reply
  8. AvatarAnonymous

    @v

    What an absolute bull of an argument.

    Absolutely nothing you said is either wrong and illegal. and yet, its totally so arrogant.

    except perhaps obviously some poor knowledge of law of torts.

    Google may have good reasons to have its policy the way it has. Good for it. But why is it showing so much arrogance ?
    if you belong to the google legal department or someone affiliated with google, then I strongly feel google should relook/ review its policies that lets it hire people who are so full of themselves as you.

    I have not been to hitwicket’s website, but what problem they may or may not have with a third party.. how does that matter ? does that in any way effect, change the way you would work with a client ?

    too, too arrogant a comment from a person who knows the law and more sadly is trying to defend google.

    Not expected.

    You should do a course in humility, my friend.

    Reply
  9. Avatarv

    Prashant,

    My name is Vineet Subramani.

    This is the first time i’ve posted a comment on a blog, and yes, mea culpa, but i did not know that my name would be reduced to a single letter. I logged in with my regular gmail id, which as you know has my full name on it. So i had absolutely no expectation of any anonymity.

    To your points:

    (a) You have not suggested that the Contract is with Google India. I did not say that you have suggested that either.

    You did however, state “I came across this incredible clause in Google’s contracts for Indian user of the Ad-Sense program”. My comment was a response to this statement. I was simply making the point that there is nothing irregular in having an International Arbitration Clause when contracting with a foreign entity. And more importantly that it should have been apparent from the very 1st line of the contract, and to expect anything else is mere whining.

    And by the way when you say that its unfair to expect an Indian company earning in Indian rupees to pay in Dollars for dispute resolution – its fairly standard practice. In this case more than others, its quite likely that the Customer being a web based service also earns in Dollars, and do they pay for AdWords in Dollars?

    Also please do check the fees schedule for the International Centre for Dispute Resolution of the American Arbitration Association at: http://www.adr.org/aaa/ShowPDF?doc=ADRSTG_004338. Its actually quite cheap, and they offer a refund too!

    (b) & (c) I dont claim to be an expert of any kind on any area of law. My knowledge is highly limited. But i do believe that Consumer Law protects only against a ‘deficiency’ of service – from your post it did not appear that the Consumer had any complaint about the quality of the service provided by Google.

    Standard form contracts are not just used by ‘big’ companies against the ‘little folks’. Even your laundry uses a standard form. There is nothing unfair, irregular or otherwise objectionable to a standard form, per se. If your concern is about an uneven playing field, thats really regulated by Competition / Unfair Trade Practices – in some countries by statute, in others by common law equivalents. In this case, it may be tough to suggest an unfair / anti competitive practice given there are a plethora of web advertising services available – Yahoo & Microsoft are direct competitors with their own AdWords type programs.

    (d) There was nothing random about my comment on Hitwicket’s T & Cs. Your post clearly said that Google would refund the money to Hitwicket. I checked Hitwicket’s website where it clearly says that if a user is terminated the subscription will not be refunded.

    (e) I love drama! So if my comments turn into soaps, … 🙂 But please do consider the query posed in the para.

    (f) I did not suggest that anyone can or should negotiate a standard form contract – which incidentally can be negotiated (i’ve done so before and would be happy to assist your friends). I only suggested that people should make the effort to understand the implications of the contracts they sign and not whine about the consequences later.

    Please do not hesitate to bash me simply because i’ve now revealed my identity. I do not apologise for my tone – it was quite necessary. I do not expect you to do so either. Bash away!

    Reply
  10. Avatarv

    @Rahul Jain,

    since you claim to be an advocate, do you offer your advice despite Sec.45 of the Arbitration and Conciliation Act, 1996?

    Reply
  11. Avatarv

    @anonymous

    I am not in any manner connected with Google and have no intention of defending anyone. My comments are purely in response to the post.

    I am always happy to learn something new, so please do enlighten me – what is the claim in tort?

    Humility, hmmmmmmm… its tough to be humble when faced with unrestrained idiocy.

    How arrogant are you to post a comment without reading the relevant materials? And disrespectful to all the readers?

    And please, do not aspire to my friendship. I don’t fraternize with the intellectually less abled.

    Reply
    1. AvatarAnonymous

      You are right, I don’t think there is a remedy available to a user of google adsense programme.

      its there for anyone to be a part of on totally google’s terms. And so yes, if anyone has a problem with it, google won’t do anything it doesn’t want to.
      it doesn’t make google wrong legally, but it is unfair. Not expected from google. That’s it.

      i am not arrogant. I read this blog regularly, and the comments there too. Most of the time the comments are relevant and proper.

      in your context, I found the comment, while relevant, displaying poor choice of the way it was conveyed.

      considering this is a very specific blog, i expected readers to be more open to others.

      the same could have been said without being so full of yourself.

      your reply shows the same attitude again.

      the interesting part is, when faced with idiocy which as you say I show, the better option would have been to show humility. I mean what’s your gain entering into a no holds barred argument with an idiot ?

      Reply
    2. Avatarv

      Even idiots have opinions. Im simply doing my good deed for the day and shining a light on yours. It may help the slightly less inept.

      Reply
  12. AvatarUnknown

    Hi

    First things :

    (1) Consumer Protection Act is not applicable here as this is purely commercially driven and revenue generating contract between two corporate entities . The definition of consumer is not attracted even if the owner of the start up has signed/executed the contract .

    (2) Disputes resolution in a foreign country is accepted as law of the land , please refer to long list of supreme court judgements and Delhi high court judgements for foreign arbitrations . Most recently the Constitution Bench Judgement on Bharat Aluminium would be helpful.

    (3)Entire process of the termination is fair and above board . financial loss that was anticipated is also not part of the original contract . Hence any other relief goes away if at all they are present under the Contract Act .

    (4) Full remibursement is also made to the party to the extent permissible under the contract .

    (5) Anti-competitive practices have nothing to do with this termination and current complaint to CCI is outside the context of this termination .

    (6)Google is not obliged to reply to this post , but upon a official representation same may be considered as per merit and existing policy .

    Regards ,

    Suvro .

    Reply
  13. AvatarPrashant Reddy

    Hi Vineet,

    Should have guessed it was you! 😉

    I don’t expect any apologies for your tone – I don’t mind the tone but I think its rude to leave comments in that tone without mentioning your name but now that you’ve clarified the issue with your full profile not showing, lets leave the drama behind us.

    Getting back to our discussion, I did not make any assertion that Google’s contracts were ‘legally’ unfair or anti-competitive. I’ve left the question open because honetly I don’t have the answers. But as a matter of policy, I think contracts such as Google’s ad-sense contracts are extremely unfair and Parliament should intervene whether it is Google or Yahoo ads.

    If these companies can have offices in India for marketing there is no reason for not making life a little simpler for their Indian clients.

    Consumer protection laws are meant to correct the imbalance between the negotiating power of two differently situated parties. There is no reason not to extend that logic to companies like Google. Its not just about the fee schedule for arbitration, it is also about the legal fees – you studied in Stanford – I’m sure you know how expensive lawyers are in this country – how difficult is it for Google to provide for a same dispute resolution process in India.

    As for the ‘whining’, I disagree with you – Google’s conduct is blatantly unfair – Hitwicket has every right to complain – not all of us have the luxury to be cynical enough to accept such behaviour and not do anything.

    Regarding your offer to negotiate for Hitwicket, I would gladly put them in touch with you but I doubt whether they can afford you! 😉

    Cheers,
    Prashant

    Reply
  14. Avatarv

    Prashant,

    All fair points.

    But what if the situation were reversed?

    Hitwicket is an online service, presumably they want cricket fans across the globe to subscribe.

    If a subscriber in USA is unhappy with the service, would Hitwicket agree to a US court’s jurisdiction? That would be terrible for their business for the very reasons you cite. But it would be great for their subscribers.

    My point is that someone always losses.

    If every country’s legislature mandated liability would be subject to local law, how would a start up or any international business survive?

    Google makes huge profits but should we penalise them for that? If we do, what will happen to all the free stuff – gmail, blogger, maps, search, android?

    Sometimes the only fair solution is to do nothing at all but let it just play out.

    Reply
  15. AvatarPrashant Reddy

    Hi Vineet,

    I don’t think it is fair to compare Hitwicket and Google. I don’t expect start-ups to have the resources to be able to fight such disputes around the world but yes, over the time if we can work out a cost effective online arbitration or meditation process, then even companies like Hitwicket should be made accountable to their customers.

    Like I had mentioned in my earlier comment, companies like Google have the resources to provide an affordable dispute resolution policy in India – all we need to do is collapse the corporate veil between Google Inc. and Goolge India.

    Cheers,
    Prashant

    Reply
  16. AvatarKashyap Reddy

    Hello Vineet,

    Read through your posts, just thought I would clarify a few things.

    Google pays all it’s publishers (like us) at the end of the month based on the traffic and click rates.
    Google has not and will not be paying us our due amount for the ad space that we allotted for AdSense the previous month, this is in addition to blocking us permanently for the alleged T&C violation.

    We were fully aware that this action would be taken if they find something wrong with our account. We accepted that. The main issue here is the manner with which they dealt with the case.

    Let me paint a picture:
    It’s a wonderful Saturday night, I goto the Taj Hotel for a nice candlelight dinner. There is a sign outside that says ‘Management reservers right of admission’. Fair enough, you think. You order your food and wait 30 min for it.

    The bouncer comes up to you and says, “Sir, you have violated our hotel rules, you will have to leave immediately.”
    Me: “Huh? what did I do?”
    Bouncer: “You have not fully complied with the hotel rules as mentioned on that notice board.”
    Me: “Hey, I read those and I’m sure I’ve not broken any of them. Which rule are you referring to?”
    Bouncer: “Sorry Sir, I can’t tell you. Hotel policy.”
    Me: “But I just drove an hour to get here and I’m in the middle of my meal. Tell me what the issue is and I’l try my best to resolve this. Is it my voice? should I keep it low?”
    Bouncer: “Sorry Sir, I can’t tell you. Please leave immediately, thank you for your co-operation.”

    Well thats exactly how we feel right now. Were they within their rights? sure, no doubt. But is that how anyone should operate?
    If it happened in a roadside chai shop it’s one thing, but if it happens with one of the world’s top companies that prides itself in ‘Do no evil’ mantra does it not look out of place?
    I doubt that a company that was so quick to slam the door would have any interest at all in negotiating a contract with a small startup like ours.

    ps: ‘..gmail, blogger, maps, search, android’, Google makes money on all those apps that you’ve mentioned. They are free to use, but run ads to sustain. Just like Hitwicket.

    Cheers,
    Kashyap
    Co-founder Hitwicket.com

    Reply
  17. Avatarv

    Dear Kashyap,

    “But Is that how anyone should operate?”

    Let me paint a picture for you – your cook works hard, you eat the food and then refuse to pay the salary on some basis that you didnt tell him about when he started work.

    Thats what your T&C’s effectively mean. You have not bothered to set clear parameters for deletion of an account – the phrase ‘or any other reason’ is blissfully vague. At least Google is upfront about its lack of transparency and gives a good reason for it – the protection of their system to avoid people finding work arounds. Why shouldn’t Google protect its millions of users from the few bad apples?

    Your T&C’s say that you will not refund the subscription if an account is deleted. Google offers a refund – partial but its better than nothing.

    And Google does not encourage cheats to return. Your T&Cs however, directly encourage cheats by offering to adjust the remaining subscription against a new account set up by the person expelled for cheating or ‘for any other reason’!

    In addition to the appeal, Google offers a third party, neutral, affordable, quick, adjudication mechanism. You dont offer any dispute resolution mechanism at all. You just say that cases will be handled “with the sole discretion of the Hitwicket team”. That condition is wonderfully arbitrary. Google, may slam shut the door, but you offer none at all.

    By your own standard you dont treat your subscribers fairly – why point a finger at Google?

    You make money through the advertising. Admittedly, the same as Gmail, blogger, etc. Google provides these services free of charge. Do you charge your subscribers or provide a free for life service? You’re making money from both sides.

    Essentially, you’re doing all the evil that you dont want Google to do.

    So I can only conclude that you are a whiner!

    Reply
  18. AvatarKashyap Reddy

    Dear Vineet,

    I appreciate the time you have spent on this issue.

    “your cook works hard, you eat the food and then refuse to pay the salary on some basis that you didnt tell him about when he started work. “
    hmmm this is exactly the reason we don’t offer refunds. Ours is a digital subscription, you pay us money to access premium content. We ofc can’t offer a refund after users use them.
    Did I misunderstand what you were trying to say?

    “And Google does not encourage cheats to return. Your T&Cs however, directly encourage cheats by offering to adjust the remaining subscription against a new account set up by the person expelled for cheating or ‘for any other reason’!”

    Please spend some time understanding what we do instead of comparing Hitwicket to AdSense based on T&C. Apples and Elephants, mate.

    You are comparing those that cheat in a game to gain a few extra points to those that run click fraud scams to swindle thousands of dollars? There are NO monetary rewards at all in our game!

    I think we are drifting here, if there are issues with our T&C, it is really upto our users (who understand what we do and why we do) to raise objections. Sign up is free, you are welcome to post your insights on our Forum and encourage our users to revolt against our draconian rules.

    Thanks,
    Kashyap

    Reply
  19. Avatarv

    Kashyap,

    Lets not be silly. You’re not curing cancer.

    You’re making money off an online service.

    So, the T&Cs is precisely the point in contention.

    Stop whining. Get some professional business advice.

    Reply
  20. AvatarPrashant Reddy

    Vineet: Great job at evading every relevant point made by Kashyap and deviating completely from the main issue.

    And please stop whining about Hitwicket’s T&C – the topic of discussion on this post is Google ad-words – I hope you can stick to the discussion at hand instead of discussing everything else but Google’s conduct in this regard.

    Cheers,
    Prashant

    Reply

Leave a Reply

Your email address will not be published.