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Google's anti-trust drama brews up, India chapter stirs market

02-September-2015
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Google's anti-trust drama brews up, India chapter stirs market

The Competition Commission of India (CCI) has shaken roots of the largest online search player in the world, Google, by accusing it of abusing its dominance in the search business the Indian market. Google is facing allegations that it manipulated its search results apart from imposing discriminatory conditions on advertisers, among others.

According to media reports, Flipkart, Facebook, Nokia's maps division, and MakeMyTrip.com are some of the companies that have corroborated complaints that US Internet giant in their response to queries raised by the Competition Commission of India. In wake of the responses from 30 businesses spanning search, social networks, ecommerce, travel and content sites, the CCI last week filed a report that accuses Google of abusing its dominant position to rig search outcomes, both the actual search result as well as sponsored links.

As part of its probe, 30 companies including Flipkart, Facebook, MapMyIndia, MakeMyTrip, and Nokia had submitted their responses to the CCI.

It’s not the first time

Even though it comes as a shock to many in the industry, CCI has been probing Google India for three years now, after it first received a complaint against Google back in 2011.

The allegations are similar to other accusations of illegal self-promotion in the US, Europe and other parts of the world. The search giant has until September 10 to respond to the preliminary findings in India, although that deadline could be extended.

Google is reported to be confident that it will be cleared of wrongdoing.

In April, the European Commission formally charged Google with violating EU competition law by abusing its dominance in search to gain an edge over specialist rivals. The search giant could face fines of up to $6.4 billion, or approximately 10 per cent of its global revenues.

Last week, Google filed a response to the European Commission which said the antitrust claims were incorrect and unfounded.

Google general counsel and SVP Kent Walker wrote in a blog post argued, “Improving quality isn’t anti-competitive.”

“We’ve taken seriously the concerns in the European Commission’s Statement of Objections (SO) that our innovations are anti-competitive. The response we filed shows why we believe those allegations are incorrect, and why we believe that Google increases choice for European consumers and offers valuable opportunities for businesses of all sizes,” he had said.

The India story

Google must respond to the findings by 10 September, after which it will face the seven-member CCI in hearings, which could allow the anti-trust regulator to impose restrictions on Google’s business in India or fine it up to 10 per cent of its annual revenue of $66 billion.

As per the government regulations, the report is not binding on the CCI and a final decision in this case would be taken by the commission headed by Chairman Ashok Chawla.

According to market reports, companies including Microsoft, Yahoo, Rediff, Facebook, Makemytrip, Trip Advisor, Yatra, Cleartrip, Flipkart, Network 18, GroupM, Lintas, Madison are said to have responded to CCI’s query.

While there was no official word on the content of the probe report by CCI, Google is said to be reviewing the report.

The accusations

According to market reports, the commission's report finds Google liable on two counts. First, Google's proprietary content supersedes relevance of the search by an individual. Similarly, Google Hotels gets preference over other travel portals that may have higher traffic and therefore mathematically more appropriate as first results of a search. The second is that the 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.

We reached out to some companies named in the report. Most of them declined to comment on the issue, and wanted to wait till CCI released an official statement.

MakeMyTrip in an official statement said, “CCI had requested MakeMyTrip to provide information on the type of services we procure from Google and how its pricing and policies affect our business. We answered these questions with factual information and necessary backups. We continue to work closely with Google as a partner. While this matter has not been initiated or pursued by us, we are tracking its progress closely.”

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