Earlier in March, Google was fined one crore rupees by the Competition Commission of India (CCI) for not cooperating with the Director General’s (DG’s) investigations into its operations. The DG had served seven notices directing Google to provide certain information during its investigation, which Google did not fully comply with.
Background
Our readers may be aware that the CCI had received complaints against Google from two organisations, Matrimony.com (runs BharatMatrimony.com) and Consumer Unity & Trust Society (CUTS). While returning search, Google allegedly manipulated the order of relevant results to favour certain results and advertising content. Google’s services such as Google+, Google News, and YouTube tended to show up as the first results to a search. Thus, Google was promoting these business ‘verticals’ by mixing the results of the verticals with its generic web search. The complainants stated that this constituted discriminatory behaviour was by a dominant market player and caused harm to advertisers and consumers. Since the CCI was satisfied that there existed a prima facie case against Google, it transferred the case the DG in August, 2012. In October 2013, L. Gopika reported about the investigation taking an inordinate amount of time and that the CCI had granted the DG an extension to file the report. To read more about Google’s alleged antitrust violations, click here.
Penalising Google for partial non-disclosure of information
In the instant order, the CCI accused Google from not providing, broadly:
- Information related to algorithmic changes powering the search function
- Non-submission of copies of agreements
- Non-submission of documents relating to Octathorpe and Adsense Account (Octathorpe is an Indian web start-up)
- Non-submission of documents relating to termination/suspension of tech-support AdWord accounts
- Non-furnishing of information pursuant to depositions
This led to the CCI imposing a penalty under Section 43 of the Competition Act, 2002. These documents are crucial because Google has been accused of discriminatory behaviour, being a dominant market player and consequently causing harm to advertisers and consumers. The algorithmic changes would help in determining whether Google deliberately promoted certain adverts and results thereby impacting businesses and consumers directly. The agreements sought related to AdSense and AdWords policies. The DG also demanded the internal documents effecting the termination/suspension of AdWords accounts.
The Commission was in fact lenient to levy a fine of one crore rupees only. Google had not complied on several instances, and the maximum penalty for each instance is rupees one crore. The Commission observed that since Google had provided ‘some’ information sought, therefore only a fine of rupees one crore was imposed. The CCI also observed that Google had failed to comply with the notices without any reasonable cause and directed to it to cooperate with the investigations properly. Any non-compliance in the future will be punished strictly without concessions.
In response to the penalty order Google maintained that whilst it was disappointed with the decision, it remained committed to cooperating ‘fully’ with the CCI. Google may file an appeal against the order provided for under section 53B of the Competition Act. You may read the order here.
The reluctance to share information might be an attempt to protect crucial business information. As the emails to Octathorpe indicate (here and here), Google is highly protective of any data which might be competitively sensitive or help intentional violators circumvent their detection systems. For instance, Google filed a motion for greater protection of its documents under a protective order already set up in while intervening in antitrust proceedings against AT&T in the US. It subsequently withdrew the intervention bid when it was not comfortable with the notification period for disclosure of sensitive data. However, anything shared with the USFTC is protected by the FTC Act and the Commission’s Rules of Practice (All information submitted to the Commission in an investigation, a purpose of which is to determine whether any person may have violated the law, is treated as confidential and is exempt from disclosure under the Freedom of Information Act under Section 21(f) of the FTC Act). The European Commission also provides for methods to make a ‘confidentiality claim’ in respect of business secrets or commercially sensitive documents.
In comparison, the CCI also has a set of rules protecting confidential data – Regulation 35 of the Competition Commission of India (General) Regulations, 2009 read with Section 57 of theAct provide for the same. However, the CCI has been inconsistent in protecting sensitive data provided by parties. There is widespread fear amongst enterprises that the CCI will inadequately protect confidential information/business secrets shared with it. I distinctly recall a recent appeal against a CCI order [Ericsson SEP proceedings] wherein the Delhi High Court disregarded Ericsson’s application also to keep the submitted commercially sensitive information confidential. These determinations by Indian adjudicators may be a cause for concern for Google, which has since tried to ward off disclosures.
Young web start-ups contacted by CCI for the investigation
As a part of CCI’s probe into Google’s business practices in India, the CCI had sent questionnaires to various web entities to determine whether Google was abusing its dominant position. The CCI had also contacted Octathorpe, a young Indian start-up whose Google Ad-sense contract was terminated unfairly by Google last year. Prashant had carried the problems faced by the start-up here (he was privy to the communication between Octathorpe and Google) and found Google’s conduct to be extremely unfair and lacking in transparency.
Abuse of dominance by Google investigated in other jurisdictions
This is not the first time Google is being looked into by an antitrust regulator. The US and EU have investigated Google in the last three years, and in both cases it was narrowly let off the hook. The US Fair Trade Commission closed its investigations after Google agreed to make two changes to its search and AdWords business. In the EU, the European Commission had ordered Google to show results from at least three competitors each time it showed its own results for searches related to shopping and travel.
Google’s uncooperative behaviour is not an aberration. This strategy has been adopted by Google in many antitrust proceedings in other jurisdictions world. In the Indian investigation, Google faces a fine of rupees 31,000 crores if found guilty. Irking the CCI in such a high stakes matter can prove to be expensive in the long run because Google’s uncooperative behaviour may be deemed as an ‘aggravating factor’, and further get factored into the aggregate penalty. US and EU antitrust laws also provide for factoring ‘obstruction of antitrust proceedings’ into the aggregate penalty amount.
Googling “Google’s antitrust complaints” returns 15,900 results! And this is only on Google News. The latest to join the bandwagon are app developers who have sued Google for pre-loading its app suite onto Android devices. As far as India is concerned, the CCI fine is only a rap on the knuckle considering that Google reported revenues of Rs 1,162 crore, and a profit of Rs 150 crore in 2013. Strangely enough this evasive, lacking-in-transparency and uncooperative behaviour is at odds with a company which started off with its mantra as “Don’t be evil.”Only the DG’s final report will shed more light on Google’s practices in India. We shall keep our readers updated on the developments on this matter.
See Google’s ‘Global Antitrust Rap Sheet’ (updated till 2013) here.
I would like to thank to Sai Vinod and Prashant Reddy for their inputs.
