Experts warn of more scrutiny for tech firms

Business Standard, May 15, 2014

The rise of technology usage by individuals and businesses could lead to greater scrutiny of tech firms for anti-competitive practices, according to experts.

On Tuesday, India`s anti-trust watchdog, Competition Commission of India (CCI), issued a notification saying it would launch an investigation into the practices followed byGoogle India while running its online advertising programme, AdWords.

This is the third such matter relating to Google`s AdWords to come under the lens of CCI in the recent past. According to the allegations made by Vishal Gupta, promoter of three firms dealing in remote technology support (RTS) business, Google tried to scuttle his business operations by suspending their AdWords account. The suspension was done without notice and on the charges that it violated the User Safety Policy of Google, which Gupta has termed as “vague” and “unclear”. Google has, however, justified the suspension claiming that threats to users were originating with third-party remote tech support companies, including Gupta`s, which were engaging in unscrupulous practices such as credit card fraud, installation of malware, etc.

Gupta has also alleged in his complaint that “GoogleInc. launched a Remote Tech Support operation in the name of `Google Helpout`, which is a clear alternative” to his business. Mahesh Uppal, director of Com First India, which deals with technology and telecom regulatory affairs, said these issues are real and one can expect both genuine and frivolous complaints in this area. “It is possible for conflict of interest to arise, but it is not fair to paint any side with a wide brush.”

There are concerns of this kind in many parts of the world and Google is at the centre of many of such issues, Uppal added. Google has often been criticised for blocking ads of various agencies in different countries for alleged breach of its user policies.

Early last year, it also amended its AdWords programme after its antitrust settlement with the US Federal Trade Commission (FTC) allowing ad campaigns to be exported to its rival`s ad networks.

“I expect many more such cases in the future,” said Uppal. “The business of companies such as Google transcends many sectors – sometimes it adds to their revenues, at other times it eats into them – so given the dynamic nature of such ad supported business, many of such cases will emerge.”

He added that new frameworks – both relating to law enforcement and competition will need to be worked out. “This is a challenge of our times.” In the past, advocacy group CUTS International had filed a complaint alleging anti-competitive and discriminatory practices, followed by complaints by matrimonial website

Recently, the CCI had imposed a fine of Rs 1 crore on Google for its alleged failure to cooperate with the investigations. In its order, the CCI said: “On a careful perusal of the allegations, the Commission is of the opinion that an investigation would be required to determine the nature and extent of problems that have prompted Google to take actions against the RTS industry and whether or not the termination was legitimate action.”

It has also said that Google`s practices mostly stem from its indisputable dominance in the online search market. “Therefore, Google`s practices toward AdWords customers such as the RTS firms in this case need to be investigated under section 4 of the Act.”

In April, Business Standard had reported how India`s competition regulator had become one of the world`s most active scrutinisers of technology companies, joining the rank of agencies such as the Federal Trade Commission, the European Commission and the Korea Fair Trade Commission.

The commission`s zeal to probe technology companies could be due to the number of complaints it receives, Ashok Chawla, the commission`s chairman, had then said.

“These companies are often present on a different platform and use newer marketing strategies. We are trying to upgrade ourselves to be able to handle such cases,” Chawla added.

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