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On CCI on Google: the problem is when an intermediary also provides content & services


While the report from the Competition Commission of India investigating Google in India hasn’t yet been made public, the Economic Times reported yesterday that CCI has charged Google on two counts:

1. That Google’s proprietary content supersedes the relevance of search by an individual: The examples used include Google Finance getting priority over MoneyControl, just the same way that Google Hotels allegedly gets preference over other travel portals.

2. That Sponsored links thrown up after a search are dependent purely on the amount of advertising paid to Google, and sometimes even supersede the link of the actual trademarks being searched.

Google has issued a boilerplate statement in response, a copy of which MediaNama also received:

“We’re currently reviewing this report from the CCI’s ongoing investigation. We continue to work closely with the CCI and remain confident that we comply fully with India’s competition laws” and “Regulators and courts around the world, including in the U.S., Germany, Taiwan, Egypt and Brazil, have looked into and found no concerns on many of the issues raised in this report.”

MediaNama’s take

1. When is this relevant: Firstly, the investigation is only relevant if Google has a dominant position when it comes to search in India. As a private platform, they are free to be on-neutral, and it’s only when dependencies are inordinately high in the market, in a way that there is little room for competition to Google search, and its practices advantage its own services at the expense of others, should this matter. So, ask yourself: does Google search have any noteworthy competition in India?

2. Cross media ownership: Assuming that Google is disproportionately dominant, does it use its position of dominance to further its own competing services in a manner that it disadvantages others?

We do feel that the first point in the ET story is a legitimate concern, and one that crops up when Google goes from being a platform that generates search results (only an intermediary) to one that provides content and services (a content provider or an aggregator).

This applies to Google surfacing its own services like YouTube, Maps, Flight Search, Hotel Search, Finance and others in a manner that other competing services are not. It also applies to Google playing aggregator and compiling information in a manner that its own platform is sufficient: i.e. does Google go from being a platform that tells people where to go to find what they need, to a platform that also directly provides people with what they need. It’s rather evident that it does play both roles, and the integration between Google Search and Google owned services provides Google owned services with an advantage over others.

Google also integrates its own services along with search results for other services. A clear case in point:

Google’s typical response here that they’re trying to make it easier for users to discover the content most relevant to them, and the business was always about providing users with answers. With Google services being default on Google search, it is Google is doing the selecting, not the user: this encourages usage of Google services, which in turn can impact organic search results themselves.

As is evident from the screenshot by Deepinder Goyal, Founder of Zomato, Google has ability to integrate their own services into results while others don’t have the same ability. For example, MapMyIndia doesn’t have the same opportunity on Google’s platform that Google Maps does. Think about this from another perspective: if Google Maps results were being given preferential treatment by Google Maps, why aren’t they marked as ‘promoted’ or ‘sponsored’, the way any third party service would be treated?

This situation gets aggravated even further if Google launches ISP services or provides Internet access, or ties up with telecom operators to provide preferential speed, availability or pricing (say, by Zero Rating) their own services. In that case, it operates at both the network layer as well as owning the platform and the content. Please note that Google is believed to have been planning a Zero Rating* service in India, and actively opposed the IAMAI taking a stand against Zero Rating.

Therefore, there is a case for forcing Google to separate their search business from their content/service business, and for them to treat all businesses on their platform as equal clients with equal opportunities. This shouldn’t be difficult now that Google has split into many companies under alphabet.

We’d like to reiterate that this is only relevant if Google has disproportionate power in the market.

The ET story quotes MapMyIndia as pointing out to the CCI that Google subsidizes its Maps business with its advertising revenues. We don’t see anything wrong with that.

3. Impact of sponsorship on search results: There appear to be two separate issues conflated in the second point mentioned in the ET story: firstly, we see no issues with sponsored links being shown, dependent purely on the amount of money paid as advertising to Google. This is a legitimate business practice, and as long as these links are disclosed as sponsored, there should be no issue.

Flipkart’s reported observation (given that the report isn’t yet public), about (organic) search results having a direct correlation with amount of money spent on Google Advertising is an interesting one: It’s very difficult to prove this, because this might not be happening purely on the basis of money spent. For example, if you spend more money, your site performs better, and that can have an impact on organic rankings too. However, it’s not necessarily the only criteria for search results and high traffic, although whether it’s a direct function of spending money is something we cant be sure of, and Google’s ever changing algorithm is a trade secret, so we’ll never know what tweaks are made and why.

4. Android wasn’t considered for this investigation, and that might end up being an investigation by itself, in case anyone else complains. The EU is currently looking at Android from an anti-trust perspective.

4. This issue is similar to a net neutrality issue, where telecom operators are in a position to use their licensed oligopoly for exercising gain and control over others. In Google’s case, the Department of Telecommunications report referred to the situation as “Search Neutrality”, and declined to take a call on it; the difference between the telecom operator and Google cases is that while consumers have other search engines to go to, and theirs is a dominance that they have earned, not bought, telecom operators have exclusive access to limited spectrum because they’re buying exclusive access: there is significantly reduced space for competition. As a private company that doesn’t rely on licensed public resources, the case against Google isn’t as egregious.

*Disclosure: MediaNama has a strong stand against Zero Rating and Net Neutrality. I’m a volunteer with savetheinternet.in

Updates: Changed the headline. The earlier headline was not representative of the story

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