India's antitrust ruling against Google shows divergent global approaches
13 February 2018. By Phoebe Seers, Lewis Crofts and Matthew Newman.
Last week, India’s antitrust regulator took aim at the way Google displays its flight-booking search service, finding that the technology giant abused its market power by unfairly promoting its service to the detriment of rivals.
The Indian case appears to touch on a similar concern investigated by US and EU enforcers: namely, is Google favoring its own specialized search services? For India, it was Google Flights, for Europe, it was online shopping.
While the US Federal Trade Commission abandoned a probe into search bias in early 2013, the European Commission levied a record fine of 2.42 billion euros ($2.97 billion) on Google last year. But the EU case appears to diverge significantly from India’s.
In Europe, the antitrust watchdog reached a similar conclusion regarding Google’s shopping comparison services. But in contrast to the Competition Commission of India's approach, it has abandoned the idea of forcing Google to label its services. The EU regulator is now evaluating whether an auction system to display rival services will address its competition concerns.
The differing views and outcomes highlight the difficulties for antitrust authorities around the globe in trying to land a glove on the world’s largest search engine.
For Google, this may be a headache in knowing how to run its web services. For enforcers, this shows companies that they will get different treatment around the globe.
The Indian case
The CCI fined Google 1.36 billion rupees ($21 million) for granting its specialized flight search results “prominent display.” It ordered the company to display a “disclaimer” that these search results lead to Google’s Flights page.
The four of six CCI commissioners who backed the decision ruled against three of Google’s practices.
The authority found that the company “allocated disproportionate real estate” to its online flight-booking service that allows users to purchase airline tickets through third-party suppliers.
The decision said Google’s prominent display of its own commercial-flights service had not only confused and misled users, but had also pushed third-party services down and off the search page.
The regulator also ruled against Google's display of its universal results prior to 2010, as well as a term in its negotiated search “intermediation” agreements with publishers. In these services, Google places ads on websites such as online retailers or newspapers.
A dissenting note in the Competition Commission of India’s majority decision complicates the regulator’s decision to rule against the company.
Two commissioners complained that the CCI hadn’t proven its allegations and instead relied on “imprecise perceptions” and “second-guessing” of users’ preferences. Sudhir Mital and G.P. Mittal warned that this approach “may lead to inferior outcomes for all market participants and chill innovation.”
The commissioners said there was no evidence that users were guided solely or largely by the position at which a particular result was placed on Google’s search page, or that they found the flights unit’s prominent placement confusing or misleading.
They described Google Flights as “neither surreptitiously embedded in the free/generic search results ... nor does it affect the ranking of free search results.” Instead, they said, “it comes within a box and that it is a sponsored link is made explicit, thereby making it visually distinguishable from generic blue link results.”
They also complained that the CCI’s remedy — requiring Google to insert a disclaimer indicating that the “search flights” link led to the Google Flights page and not the results aggregated by any other third-party service provider — did not address the alleged harm caused, or likely to be caused, to third-party websites.
This outcome diverges sharply from the approach of EU enforcers. In Brussels, the European Commission abandoned an approach that focused on Google labelling its own services more clearly.
Rather, the regulator steered clear of tinkering with the display of results — after several failed attempts — and put the ball in Google’s court. It must treat all comers equally, it said, giving little guidance on how that should be done.
The dissenting commissioners in India have criticized other aspects of the CCI’s investigation, noting that officials failed to prove Google was dominant in their ruling against search intermediation agreements.
Online search intermediation is provided by Google and other search engines to web publishers to help them offer searches through a toolbar directly on their websites.
Google had inserted a clause that prevented publishers from implementing search technologies on their sites that were the “same or substantially similar” to its own.
The dissenting commissioners also pointed out that it was open to those publishers to enter into online agreements, instead of negotiated agreements that didn’t contain such a clause.
Finally, Mital and Mittal took issue with the finding against Google’s pre-2010 display of its universal results — additional media such as videos, images and maps displayed above or among organic search results.
Prior to 2010, universal results had been programmed to appear in fixed positions — first, fourth or 10th. Google has always maintained that this was because “its systems were not sufficiently advanced to conduct a relevance comparison for all positions on the result page.”
Google introduced fully-floating rankings by October 2010, and the two commissioners said that because the change came well before the CCI's antitrust proceedings were intitiated in 2012, this removed the need for any regulatory intervention and Google could not be held liable.
All regulators have different tools at their disposal and companies often operate in different ways depending on the needs and habits of consumers.
But the Indian case highlights that for the most novel kinds of conduct that stretch competition laws to their limits, both approaches and outcomes can be very different.