Consumer Unity & Trust Society (CUTS), a non profit consumer advocacy group, has filed a Preliminary Information Report with the Competition Commission of India (CCI), urging the agency to investigate “the potential anticompetitive conduct of Google in the Indian internet, e-commerce market, online advertising and related markets.” This follows a recent complaint with the CCI to look into the retailing of Apple’s iPad and iPhone, and the limiting of downloads to the iStore, according to a report in The Times of India.
In the PIR, a copy of which you can download here, CUTS makes the following points:
1. Google has been under investigation from antitrust authorities: the PIR cites four kinds of activities which are also relevant to India: its core business of Internet search and advertising (cases brought by European Union and the Attorney General of the State of Texas and the very recent review started in June, 2011 by the FTC); acquisitions of Doubleclick, ITA (both cleared), Admob and Motorola; (c) Unfair business practices, trademark and patent infringement (Skyhook), and; (d) FTC’s investigation of Android
2. Google is under investigation in the EU, and three issues are being looked at:
– Whether Google has manipulated its unpaid or Algorithmic search results to penalize Google competitors or promote Google products?
– Whether Google forced exclusivity contracts with advertising partners? The allegation is that Google bars the placement of ads from competing companies on a partner website
– The portability restrictions of online advertising campaign data. Does Google restrict the way that campaign data can be migrated to a competing platform?
3. Android and the acquisition of Motorola: It adds that more than a third of all smartphones are powered by Google’s Android, and this is a potential way to lock in customers, and among handset manufactures, “withholding the systems latest version from handset makers that favour rivals services could be a potent stick for Google to wield.” Pointing towards Google’s acquisition of Motorola, “there may be some issues of foreclosure relating to the use of Android by other smartphone manufacturers”, potential patent issues because Motorola has 17000 patents.”
The PIL asks that acquisitions made by Google in India (ED: there are none so far) “need to be monitored particularly closely because Google may try and enter these fast growing markets by buying an existing online shopping portal like Shopzilla or Ugenie among others and may thereby undertake anticompetitive activities on two fronts, mergers and abuse of dominance.”
Is There A Need To Investigate Google? Our Take
As such, there is no proof of any anti-competitive activity from Google in India in the PIR, only pointers towards the potential for such activity. In response to a query from MediaNama, Madhav Dhar, Senior Policy Analyst at CUTS said, via email:
As stated very clearly in the PIR, we are only sensitising the CCI to something of the activities that Google is being investigated for in other jurisdictions in order to check “ potential” anticompetitive activities in India , we are not accusing them of “any” actual anticompetitive activity. Principally there are two reasons for doing this as explained in the PIR; firstly, we believe that the Internet and all related markets in India may be set for explosive growth in the near future ; secondly we believe that it is better to check problems in their incipiency as also the deterrent effects of such an investigation by the CCI. I hope this answers your queries.
On the face of it, that’s a fair request: Google is probably the largest Internet company in India, dominating online advertising, not just search. As we had reported earlier, “Google India Private Ltd” reported revenues of Rs. 779.34 crore over a 15 month period ending 31st March 2010, and a Profit After Tax of Rs 97.96 crore. Guruji.com and Raftaar.com haven’t been able to compete against this dominance, and Android will help Google dominate the market. What the commissions are going to probably look into is whether this has been done in an unfair manner, or has Google earned its dominance?
The question that I’m grappling with is – has Google’s dominance prevented others from competing or developing products? Maybe in case of Android? Perhaps, some time in the future, when you start your Android phone for the first time, you’ll be asked to choose your search engine and use any email address; not asked sign in using your only gmail address. That said, you can install android apps from other sources. On the the advertising front, as I’ve said before, Google’s push to grow its business in India can help grow the advertising market for everyone.
Google India, on being requested for a response by MediaNama said in an email that “We have received no communication to this effect yet and thereby cannot comment on this specific development.” In addition, they sent the following boilerplate statement
On Monopoly in Search and Advertising:
On the Internet, competition is one click away. Users aren’t locked in to using Google search, and the cost of switching to a different search engine is zero. Traditional search engines also compete against many ways of accessing information, including specialized search sites (Amazon or eBay for products; WebMD for health; Zillow for real estate, etc.); social networks (LinkedIn, Facebook and Twitter are an important way of learning about information or receiving recommendations); mobile applications (which allow you to bypass search engines completely); and, of course, direct navigation to websites.There’s no doubt that we’ve been very successful in search advertising, but we know that most large advertisers tend to advertise in lots of different places. Furthermore, advertisers are constantly shifting their ad dollars among different types of media – print, TV, radio, and online – and Google is only responsible for about 3% of all ad revenue. In fact, the shift of ad spending from newspapers to the Internet is evidence that advertisers see different forms of advertising as competing with one another.
What’s your take?