What the Competition Commission wants to know about Google in India


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The Competition Commission of India, as a part of its investigation of Google’s dominance in the Indian market, has asked many Indian Internet companies to share their views on Google’s operations in the country. A company which received the CCI’s questionnaire has shared its details with MediaNama. Note that the CCI is yet to respond to our questions for clarification on its investigation, and Google in response our queries has said: “We’re confident that our products are compliant with competition law in India and we continue to cooperate with the Competition Commission of India and are responding to all their queries.”

The questionnaire, sent late last year to Internet companies, points towards the aspects of Google’s business that the CCI is investigating:

- Vertical search advertising: The CCI has asked Indian Internet companies to elaborate on whether there are any barriers to entry or expansion, in terms of investments, scale and technology, in the vertical search advertising space. It needs to be noted that Google is a horizontal search engine, and vertical searches like JustDial do get significant searches online. However, bear in mind that Google’s vertical search results (Video, Maps etc) are also integrated with its horizontal search, which might give it a competitive advantage. The CCI wants to know whether Google has leveraged its generic search to give undue benefit to services like YouTube, Google Maps, Google Finance, Google Flight, Google+ etc, or it’s business partner websites by displaying them at the top of the search results as natural results etc.

The CCI has also sought information on discrimination by Google in India, in terms of systemic exclusion or downgrading of competing websites from search results, which then receive less clicks, as well as whether Google has entered into any exclusive vertical agreements to create entry barriers for competition.

- Impact of algorithm changes on search results: From a publisher’s perspective, the CCI has sought information on whether there has been an adverse impact on publishers, in terms of display of search results due to the algorithmic changes undertaken by Google. Frankly, the CCI might find many complaints about this, because Google’s search updates tend to impact content owners, and changes in algorithm are never transparent. We saw the advent of content farms in the past, and Google’s Panda & Penguin updates impact some publishers adversely, while other benefited. The question is: is it unfair? Google’s approach has been to provide the user with search results that matter to them, and publishers are constantly trying to game this system. It’s a battle where Google is trying to stay relevant to a user, and it’s questionable whether being transparent about algorithm changes will have an adverse impact, in terms of quality of search results, because it might allow some one to game search results.

The CCI also wants to know whether there are been any abuse of a dominant position by Google, which have resulted in a bias or manipulation of search results, whether through manual or algorithmic changes.

- AdWords Policies: The CCI has sought copies of agreements with Google for AdWords (the online advertising program which allows companies to bid and spend on advertising on Google search and other publications via Google’s AdSense advertising), apart from details of their advertising spends. In addition, it has asked companies to share their concerns regarding Google’s policies and procedures for AdWords, and the determination & display of results. The query regarding display of results is interesting, since Google does tend to provide sponsored results in the same column as regular results, and even though these are clearly demarcated, there can be users who don’t realize the distinction between organic and paid search results when they’re in the same stream.

The CCI has also sought information on whether Google has used predatory pricing to maintain its advertising search dominance, apart from information on whether Indian Internet companies have noticed any unfair or discriminatory conditions, ambiguity, non-transparent in bidding mechanism, results, deceptive display (of advertising), apart from issues of manipulation such as escalation of costs, downgrading of websites in search results in the bidding process.

- AdSense policies: AdSense is Google’s advertising service for publishers, which allows them to monetize their inventory using Google’s advertising platform. The CCI has asked companies for details of revenue generated from AdSense, details of the agreement, and a breakup of revenue shared with Google. Publishers will struggle to provide the CCI with details of how much of the revenue is shared with Google, unless they have preferential deals with the company. Remember that Rediff is a key publisher that doesn’t have Google AdSense enabled, choosing, instead, to sell its inventory itself. The CCI has also asked publishers about whether Google imposes any restrictions on Publishers using advertising programs from any other search engine. In our opinion, the question should have been about other ad networks, not just ad networks belonging to other search engines.

- Google API: There isn’t much in the questionnaire on Android and Google API: the CCI has asked Internet companies to clarify whether they have any issues related to the terms and conditions of Google API.

The Competition Commission had begun a probe against Google in 2012, following complaints by CUTS and Bharatmatrimony. You may download a copy of CUTS’ preliminary information report here.  In October, the Competition Commission had granted an extension to its Director General to complete its investigation into Google’s dominance in India.

Our Take

In FY13 (financial year ending 31st March 2013), Google reported revenues of Rs 1,162 crore, and a profit of Rs 150 crore, which probably makes it the largest Internet company in the country. It has earned its dominance in India, but we wonder if this dominance has a negative impact on the Internet ecosystem: it isn’t beneficial from an advertising ecosystem perspective, if one company takes a majority of the advertising, and might be receiving better terms than other publishers (read this). Google’s products are among the best in the world, if not the best, but remember that search results can be viewed as a form of distribution: preferential treatment for its own products (YouTube and Maps, for example), can give them undue advantage over others.

There is also an inordinate lack of transparency regarding Google’s advertising and products: accounts can be closed without adequate information, and redressal systems are typically opaque and vague. All is not right with the way Google operates, and while one might argue that it is Google’s prerogative as a privately owned business, the Indian consumers and business’ dependency on Google for services means that public interest also needs to be taken into account. The CCI investigation is not unwarranted, and might yield results that end up making the company more transparent and responsive.

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