Google Faces Antitrust Complaint In India For Potential Unethical Practices

International Business Times, June 11, 2012

Google was targeted for unethical and anti-competitive business practices once again when a non-profit organization working on public interest issues filed a complaint against the search engine giant with the anti-trust body, Competition Commission of India (CCI), Friday. This comes at a time when Google India is already facing a formal probe on a similar complaint filed by an Indian matrimonial site.

The complaint is intended to investigate whether Google has been using its market power in the search engine and online advertising market to “affect” the growth of the Indian search, advertising and related markets and to monitor acquisitions made by Google in India primarily to tackle competition, said Consumer Unity and Trust Society (CUTS) in a Preliminary Information Report (PIL) submitted to the CCI.

“Given the size of the Internet economy and its exponential growth trajectories, it is pertinent to look at the competitive market structure and its conducts overall and also the dynamics between small scale enterprises and large enterprises in India, in specific,” Udai Singh Mehta, Associate Director of CUTS International, told the International Business Times.

“The Indian Internet economy represents approximately 5 percent of GDP, and is projected that in absolute figures it will reach approximately Rs.11 trillion market by 2016. Had internet been a sector, it would have been the eighth largest sector in India, larger than mining and utilities,” said Mehta, adding that “any unfair practice of Advertising Service Providers will have major repercussions on small scale customers which can create favorable conditions for market monopolization and possibilities of abuse.”

The CCI launched an investigation against Google in April after Chennai-based Consim India Pvt Ltd that owns the matrimonial site Bharat Matrimony had alleged that the Internet giant abused its market dominance and indulged in unfair trade practices. The findings are expected to be ready in three to four months.

A query sent to Google on the latest antitrust complaint has not been answered.

Google has been facing investigations from the European Union anti-trust authority since November 2010, after complaints arose that it had abused its position to crush competition. This is an accusation that Microsoft has often had to deal with in the past. Ever since the investigation was underway, Google’s Executive Chairman Eric Schmidt has been campaigning to highlight how Europe has benefited from Google.

The U.S. Federal Trade Commission is also investigating the technology that empowers Google to control 66 percent of the US search market, followed by Bing with 15 percent market share and Yahoo with 14 percent.

Mehta said the merit of the case against Google is that it “should not abuse its market power,” an argument that is “in line with what is happening in Korea, Australia, EU, etc.”

Google, however, denies having a monopoly in Search, saying that competition is just one click away. It also argues that despite being “very successful” in search advertising, “most large advertisers tend to advertise in lots of different places. Furthermore, advertisers are constantly shifting their ad dollars among different types of media.”

Mergers, though “usual practice in business” should be monitored for anti-competitive intents before giving them a clean chit, said Mehta. “But abuse of dominance can’t be accepted in business as usual practice and that’s not a feature of competitive market.”

“Regulation can remove some of the transparency problems which are plaguing the Internet market,” he said, adding that “more information, if not full-information, is always good for a competitive economy.”

Google has always denied the allegation of being a “black-box,” saying that it “provides transparency, through webmaster central site, blog, diagnostic tools, support forum and YouTube channel.”

Like almost all the other antitrust complaints against Google, the case filed by CUTS raises the question whether government regulation in Internet enterprises is viable. “Yes, it is very much possible,” said Mehta, but added that the case was not intended to treat Google as a utility.

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