CCI leaves Google searching for answers

The article by Nirmal John was published in the Economic Times on February 13, 2018

The Competition Commission of India's (CCI) landmark ruling enforcing a Rs 135.86-crore fine on Google for "search bias" and abusing its "dominant position" is one of the more finely considered judgements in the technology industry. According to Sunil Abraham, executive director of Bengaluru-based research organisation, the Centre for Internet and Society, "CCI is returning to the roots of the competition law, where it is as important to prevent concentration of power as it is to look at how pricing affects people. The emphasis here is now also on protecting innovation and competition itself."

To begin with, according to the CCI, the rules of engagement are different for early-stage markets and mature markets.

CCI has differentiated between early-stage markets and mature markets. In an earlier judgement when two radio cab operators, FastTrack and Meru, had accused Ola of offering discounts and predatory pricing, the CCI had ruled in favour of Ola. CCI had said a lack of market maturity in the cab-hailing space was central to its decision. "At this stage, it is difficult to determine with certainty the long-term impact of this pricing strategy, as the market is yet to mature," the CCI had ruled.

The search market is different. Google is the 800-pound gorilla and pretty much the entire zoo in this market. The Google judgement, according to a lawyer who chose to remain off the record, "is based on the principle that a higher degree of responsibility is cast on Google because it has a dominant position in the market".

The nub of the argument is that Google, by the showcasing of flights in its search page, has used its role as a gateway to offer a specific service.

As the judgement notes: "Google is leveraging its strong position in various online search markets to enter into and enhance its position in ancillary markets. Not only does that cause direct harm to competitors in vertical markets, it also causes direct harm to other website owners, since their websites are moved down on SERP [search engine results page] and hence, they receive less clicks as a result of lessened traffic. Further, this also harms consumers as they no longer receive the most relevant results at the top of SERP."

But why should the consumers care? After all they are getting the cheapest price.

This is where CCI's second important point comes in. There needs to be a balance between the short-term concerns of consumers with their long-term benefits.

Even if consumers who used Google flights to find options for firming up travel plans may have saved money, the CCI has, in this instance, taken the view that what may be of immediate benefit to the consumer may not be good for them in the long term because of the distortion of the market it creates.

Apart from prices, there is another benefit that comes from Google's search aggregation. Sid Talwar of Lightbox Ventures, a Mumbai-based VC firm, brings into light an interesting paradox: Is the addition of an extra step to the search process in consumer interest? Talwar argues that the consumer may be more interested in the most efficient way to find what he is looking for, which is the import of Google's mission. By aggregating results from various sources and offering it right at the search page, it could be fulfilling a consumer need.

This is where another facet of the judgement -- the pre-eminence of product and user-interface (UI) design and its relationship with controlling user behaviour -- establishes the anti-competitive nature of Google's search results page. The manipulation of UI design has been key to the debate on anti-competitive behaviour across the world. Europe's competition commissioner Margrethe Vestager became one of the most important proponents of this idea when the European Commission fined Google a record $2.9 billion in mid-2017 for "abusing its dominance in Europe by giving prominent placement in searches to its comparison shopping service and demoting rival offerings".

As NS Nappinai, a Mumbai-based lawyer and author of Technology Laws Decoded, points out, the ruling establishes a precedent and helps the CCI build a reputation for itself as a body that shows strength in evaluating technology. "Tech companies will now have to take cognisance of abuse of their dominant position in India," she says.