The Competition Commission of India (CCI) on January 7 ordered a detailed investigation into Google for its alleged abuse of dominance in the market for news aggregation.
The order was prompted by a complaint filed by the Digital News Publishers Association (DNPA), which argues that Google takes advantage of their members’ news content in search results but denies them fair advertising revenue. DNPA counts leading news publications including the India Today, NDTV, Hindustan Times, Indian Express, and The Times of India as its members.
“In a well-functioning democracy, the critical role played by news media cannot be undermined, and it needs to be ensured that digital gatekeeper firms do not abuse their dominant position to harm the competitive process of determining a fair distribution of revenue amongst all stakeholders. Therefore, the alleged conduct of Google appears to be an imposition of unfair conditions and price which, prima facie, is a violation of Section 4(2)(a) of the Act.” – CCI order
What are the relevant markets for this investigation?
DNPA delineated the following relevant markets in which it believes Google has a dominant position because of the barriers to entry, lack of competitors, and high-switching costs:
- The market for online search advertising services in India: CCI accepted this as a relevant market and one in which Google has dominance based on the precedent set in the Google Search Bias case and after observing that “that online and offline advertising services are not comparable, and the characteristics, intended use and price of search and non-search advertising are different from one another.”
- The market for online general web search services in India: CCI accepted this as a relevant market and one in which Google has dominance based on the precedent set in the Google Search Bias case. The Commission noted that “online general web search services cannot be substituted with direct search option by typing the URL of websites in internet browsers, and accordingly, search engines become the first port of call for a user looking for information online.” Google has a 98 to 99 percent share in both, the search engine and mobile search engine markets, in India, CCI said. Furthermore, there are entry barriers “resulting from the significant investment required to develop sophisticated algorithm as well as to reach a sufficient scale of search queries” as well as “network effects,” CCI stated.
- The market for online advertisement in India: Noting that Google “appears to be a preferred service provider to publishers wanting to offer search and advertising services on their websites,” CCI said that it is prima facie satisfied that Google occupies a significant position in the market for online digital advertising intermediation services.
- The market for publishing of news content in India
How has Google abused its dominance?
When deciding on what action to take, CCI doesn’t just look at dominance in the relevant markets but also abuse of dominance. DNPA laid out the following allegations to establish abuse of dominance in the relevant markets:
- Google imposes unfair and discriminatory conditions on news publishers: DNPA alleged that news publishers are not informed or given any data pertaining to the amount of revenue earned by Google by providing advertisements on the websites of the publishers. Google only gives “a small chunk of revenue” generated from these in “an arbitrary manner, without disclosing any basis for calculation of such revenue,” DNPA noted. The terms of the agreements entered between Google and news publishes are “unilaterally and arbitrarily dictated” by Google and publishers have “no other option but accept the terms” as they have no bargaining power, DNPA added. Furthermore, Google uses snippets of the content created by news publishers without fairly compensating the use of this content. All this amounts to a violation of Section 4(2)(a)(i) of the Competition Act, DNPA submitted.
- CCI analysis: “The instant information highlights the alleged bargaining power imbalance that flows from the alleged position enjoyed by Google as a necessary trading partner for digital news publishers in accessing online audience as well as in generating digital ad revenue. The case also brings forth the issue of alleged lack of transparency and information asymmetry in the ad tech services provided by Google, which does not allow publishers to optimize the yield on their ad inventory,” CCI observed. It prima facie appears that news publishers have no choice but to accept the terms and conditions imposed by Google and this “alleged unilateral and non-transparent determination and sharing of ad revenues appears to be an imposition of an unfair condition on publishers,” which is prima facie violation of Section 4(2)(a) of the Act, CCI noted.
- Google’s practices discourage innovation and are detrimental to the interests of consumers and the industry: DNPA alleged that Google discourages innovation and technical development of the services provided by news publishers by depriving them of fair value for their content. This is “detrimental and prejudicial to the interests of the consumers as well as the journalism industry,” DNPA submitted. These actions are in violation of Section 4(2)(b)(ii) of the Competition Act, DNPA submitted.
- CCI analysis: “The alleged opacity on critical aspects such as data and audience management practices, or generation and sharing of revenue with publishers, exacerbates the information asymmetry and is prima facie prejudicial to the interest of publishers, which, in turn, may affect the quality of their services and innovation, to consumer detriment,” CCI noted.
- Google uses its dominance in one relevant market to enter or protect another relevant market: Google engages in the following practices that are in violation of Section 4(2)(e) of the Competition Act:
- Google’s influence in the news space: DNPA submitted that Google has entered into the news aggregation genre by launching Google News, Google News Showcase, and other services that have steadily grown Google’s influence in the news space by using its dominance in other relevant markets. This has been made possible by Google’s ability to dictate what a viewer sees first and also uses advanced algorithms to create tailor-made news as per the viewing history of each viewer, DNPA explained.
- Zero-click searches: Zero-click searches are queries that are resolved on the search page without the user having to go into the target website. Search searchers have surged from 50 percent in June 2019 to 65 percent between January and December 2020, DNPA submitted. Google is able to extract value from zero-click searches by displaying advertisements, while publishers lose out on traffic, DNPA submitted.
- CCI analysis: “The issue of scraping and displaying news snippets and leads by Google on its search platform without compensating the content creators also assumes particular significance in view of the increasing zero-click searches. […] Google continues to earn revenue directly/indirectly in such cases even though news publishers may not be able to do so until the user clicks on the search links. It needs to be examined whether the use of snippets by Google is a result of a bargaining power imbalance between Google on the one hand and news publishers on the other and whether it affects the referral traffic to news publisher websites, and thus, their monetization abilities,” CCI observed.
- Accelerated Mobile Pages (AMP): Google “gives publishers no choice but to implement Accelerated Mobile Pages (AMP) standard or lose critical placement in mobile search, resulting in reduced traffic,” DNPA submitted. “It has been further averred that, for AMP articles, Google restricts paywall options unless publishers rebuild their paywall options and their meters for AMP. The only alternate to the AMP system is for publishers to subscribe with Google, which benefits Google, to the detriment of the publishers,” DNPA added.
- CCI analysis: “As alleged, for AMP articles, Google restricts paywall options unless publishers rebuild their paywall options and their meters for AMP, which may amount to an unfair imposition on publishers. These aspects would be suitably examined during investigation,” CCI noted.
- Google’s practices result in denial of market access: Because news publishers are not paid fair value for their content and are subject to “unilateral, arbitrary and unfair decisions” of Google, they suffer a loss of advertising revenues, resulting in a denial of market access to news publishers in the digital advertising space, DNPA submitted. This is a violation of Section 4(2)(c) of the Competition Act, DNPA added.
- CCI analysis: The DG can appropriately examine these allegations during the investigation, CCI noted.
What are the grounds for the complaint filed by DNPA?
- News publications spend sizeable amounts of money to provide credible news: News publications have “invested and continue to invest a sizeable amount of money to train their journalists and other officials, hire reporters and invest in production to provide credible news,” DNPA submitted.
- Accelerated shift to digital channels: “The web of digitally consumed news has expanded rapidly, starting from websites, e-mailed newsletters and text messages, to complex data and algorithm-driven curation and dissemination of news through smartphones and social media,” DNPA stated. “The pandemic has accelerated the transition,” DNPA added
- The increasing dependence of news publishers on digital advertising: News publishers make two-thirds of their revenue from advertisements and have had to shift their dependence from print to digital advertising because of the shift in advertisers’ demand, DNPA submitted.
- More than 50 percent of traffic to news websites is routed through Google: DNPA claimed that 50 percent of the total traffic on news websites comes from online search engines where Google is the dominant player. Google further gets to decide which news websites get discovered by way of its algorithms, DNPA added. CCI corroborated this claim stating that “discoverability for news publishers appears to be dependent on search results from Google” and also that “selling of advertising space on their respective websites by the news publishers primarily relies on traffic generated by Google.”
- News publishers only make 51 percent of advertising revenue despite providing the audience: “It is the content produced by news media companies that create the context for the audience to interface with the advertiser; however, online search engines (Google) end up leveraging the revenue/returns much more than publishers,” DNPA submitted. Publishers only receive 51 percent of the advertisement spend by the advertisers, DNPA claimed.
- Google has monopolistic power in search and advertising: Not only does Google have search, but they also play a strong role in the digital advertising markets, which allow them to earn a major share of the revenue from the advertising space, DNPA stated. This power allows Google to unilaterally decide how much amount that news publishers get for the content created by them, DNPA said.
- International precedents: DNPA also pointed towards precedents set in Australia, France, European Union to assert the anti-competitive practices being carried out by Google as well as the outcomes reached there. In Australia and France, new rules have been enacted in favour of news publishers, which the Commission took notice of. “Google has been asked to enter into fair/good-faith negotiation with news publishers for paid licensing of content to address the bargaining power imbalance between the two and the resultant imposition of unfair conditions by Google,” CCI noted.
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