Update: CCI launches investigation against Google for allegedly blocking out competitor’s ads


google_logo_smallThe Competition Commission of India (CCI) has launched a fresh investigation (pdf) against Google for allegedly abusing its dominant position in online search advertising. The organisation had earlier fined Google Rs 1 Crore for not cooperating with the investigation into search and advertising practices of the company in India.

Earlier this year MediaNama had posted details of the issues that the CCI was looking into, as a part of their investigation, on the basis of information that the organisation had sought from Indian Internet companies. CCI had also directed Google to furnish relevant information and documents which may be required by the DG during the course of further investigations.

The complaint

The current probe is on the basis of a complaint by a businessman named Vishal Gupta, who runs a company that competes against Google Helpout.

Gupta’s family and associates own and manage Shyam Garment Group of Companies which includes M/s Shyam Garment Private Limited (SGL), M/s Delhi Call Centre Private Limited (DCL) and M/s Audney (Audney). Audney is a company registered in Delaware that offers remote technical support to individuals and companies. It is to be noted that DCL is mentioned as Audney’s Delhi office on its website. DCL does not have a website of its own.

The informant states that Audney has been placing its advertisements through Google Adwords ever since its account was opened in January 2013, until the date of termination of its account. During this period it had paid Google $310,000 for advertisement, while earning a revenue of $750,000.

The advertisement however, were blocked later by Google which said that Gupta had violated the company’s “user safety policy”. As par user safety policy ads displayed in Google’s search results should not have misleading claims; should promote acceptable business practice; and should promote transparency and accuracy. There is a complaint in Google’s Ad Words forum about Audney violating these guidelines. It is not clear if that was the reason for Google’s action.

The informant avers that Google India had promised that it would review the advertisement of Audney to see if they comply with the various policies of Google. However, before a response was received, the informant’s Google Adwords account was withdrawn on 22.10.2013 and through an email dated 30.10.2013 it was informed that the suspension of account was permanent.

What makes these dates relevant is the fact that Google launched Helpouts the very next week. 

The informant further alleges that several remote tech support companies have been suspended from Google Adwords programme and the reason for suspension of the informant’s adwords account has been to promote Google’s own activities in an unfair, discriminatory and uncompetitive manner.

CCI has asked the Director General to complete the investigation within 60 days. If found guilty of violating the competition rules, Google could be asked to pay a penalty of up to 10% of the average revenue of the preceding three financial years.

How much does Google India make?

In the first quarter of 2014, Google reported consolidated revenues of $15.42 billion, registering a 19% increase from $12.95 billion revenue in the same quarter last year. The company did not disclose the earnings of Google India Pvt Ltd (Google India) for the time frame.

Google India had reported revenues of Rs 2076.79 crore (around $331.77 million at current rates) for the 12 month period ended 31st March 2013 (FY13), up a substantial 78.7% from 1162.19 crore (around $185.66 million) from the previous financial year (FY12). The company reported a Profit after tax of Rs 137.4 crore ($21.95 million), down 9.7% from Rs 150.73 crore ($27.08 million) the previous fiscal.

The search giant said in a statement that it is reviewing the order and would extend its full cooperation to the probe.

CCI case against Google till now

In June 2012, CUTS filed a formal complaint against Google’s unethical and anti-competitive business practices with the CCI on June 6, 2012. This was the second formal complaint against Google.

- In February 2012, CCI ordered for a formal probe against Google in India for its Adwords service when Chennai based Consim Info, that runs Bharatmatrimony.com formally filed a complaint against Google, citing discriminatory trade practices. At that time, CUTS told MediaNama that the information filed by CUTS against Google is for violations of Section 3 and Section 4 of the Indian Competition Act, 2002 which covers acts on Anti-competitive agreements and Abuse of dominant position. The specifics of the complaint are not known.

In February 2011, CCI reviewed (PDF) a complaint filed by Eximorp India Pvt Ltd against Google India Pvt Ltd for alleging abuse of the dominant position by Google for its Adwords service. Eximorp filed complaint against Google  for:

  • Google’s Business practices are inappropriate and discriminatory in nature.
  • Bidding process introduced by Google to place advertisements on Adwords is non-transparent.
  • Google doesn’t provide information on visitors.
  • Google refused to accept payment via credit card, a discriminatory practice on Geographical location.

-  Bharatmatrimony in 2009, filed a complaint against Google at the Madras high court for displaying their competitors ads on Google search result page when someone searches for ‘bharatmatrimony’. They had taken Google, Shaadi.com and SimplyMarry.com to court.

- In February 2012, Bharatmatrimony again filed a complaint against Google, citing discriminatory trade practices related to its AdWords program.

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