Legal Analysis of Google’s AdWords Programme and its Conflict with Indian Competition Law (An Update)

Please click here to see an update on the previous post.

The Domination of Sport

Two of the complaints presently before the Commission are those filed against Hockey India by several Hockey Olympians as well as a group of chess players who have separately approached the Competition Commission of India (CCI) over the abuse of dominant positions by the respective authorities overlooking their sports in India.

Hockey India, which holds the sole mandate to govern and conduct all activities for hockey in India warned players that if they participated in the World Series Hockey (WSH) proposed by the Indian Hockey Federation, they would lose their position in the national team.

Interestingly, there is little to go by precedent on this specific issue, i.e., whether a sports regulatory body abuses its dominant position by imposing certain restrictive conditions upon the players affiliated to it, and therefore the Commission could end up conducting some pioneering research and analysis in this field. while there have been cases on the legality of exclusivity arrangements in the sports sectors regarding sports equipment and sportswear ( See American needle v. NFL), the closest dispute to the present issue arose in the EU in the withdrawn preliminary reference in the Oulmers Case, which involved issues relating to the right of clubs to be compensated by national federations for the release of their players for international games and tournaments. It was initiated by a complaint lodged by ASOBAL (the Spanish Handball League) before the European Commission in March 2009. The complainant argued that by precluding the payment of a compensation to clubs the regulations governing the release of players restricted competition were contrary to both articles 101 and 102 TFEU. The European Commission took an interest in the case and started a preliminary investigation which was only put to an end pursuant to an agreement between ASOBAL and the European Handball Federation.

It will be interesting to see how the Commission handles this complaint.

Google and its Anti – Trust Woes (Again !!)

Google has once again courted trouble, literally speaking, against itself in the competition sector with matchmaking portal BharatMatrimony.com having filed a complaint against Google in the Competition Commission of India, citing discriminatory trade practices related to its AdWords program.

The issue arising out of the complainant is the same one which was raised against Google earlier in Eximcorp India Pvt. Ltd. v. Google India Pvt. Ltd. (Case no. 68/2010) before the Commission. The commission in its previous decision had concluded that there was no prima – facie evidence to make out a case for further investigation by the Director General into the matter.

Doesn’t look like Google’s Anti – Trust woes are ending anytime soon !!

Google’s Anti-Trust Woes: An Update

Google CEO Eric Schmidt testified yesterday before eight members of the Antitrust, Competition and Consumer Rights Subcommittee of the Senate Committee on the Judiciary claiming that Google had fully complied with U.S. anti-trust laws.

The written testimony can be found here.

Why the Complaint filed against Apple Inc. before the CCI shall fail ??

It’s certainly not ethical to comment upon the matter which is presently sub-judice (even if you’re not a party to the suit), but honestly, I just couldn’t help it!! 😛 Partly because I was skeptical of the recent complaint which has been filed before CCI against Apple Inc. for its allegedly abusive market practices of allowing its iPhone to be bundled with only two service providers, namely, Aircel and Bharti Airtel. However, while the audacity of an individual to go up against a Transnational Corporation is to be admired, I must say, with a comparatively high degree of confidence, that the complaint shall most probably be dismissed on the following grounds:

1. According to reports by Bar & Bench and Legallyindia, the complaint has been filed under Section 4 of the Competition Act. (Abuse of Dominant position). However, there is no evidence to show that Apple Inc. even has a dominant position in the relevant market (India). Let alone abuse it. According to data on Fonearena.com for the year 2009 (unfortunately, the latest I could find), and quote:

“Over 100 million mobile phones were sold in India in 2009 according to a research firm IDC India. What’s surprising is that Nokia still has a lion’s share of the mobile sales at 54.1%. Samsung Mobiles has 9.7 % share and LG has 6.4 %…. There were more than 28 new handset brands which started selling handsets in 2009 and these new players account for over 12.3% of handset sales which is quite significant…..The local players account for 17.5 % of sales now. These include Micromax, Karbonn Mobiles, Spice Mobiles Ltd, Videocon Industries Ltd and Lava International Ltd.”

Therefore, effectively, it is only Nokia according to this data which stands any chance of abusing its dominant position. Assuming there has been a change in these numbers in the year 2010 till date, there is no reason to believe that the change could have been substantial enough so as to suddenly allow Apple Inc. to dominate the market as per its whims and fancies.

2. An argument may be raised that the relevant market in this case would in fact, not be the regular handset market, but rather, the narrower Smartphone market. However, it is doubtful whether the Commission shall accept such an argument. But to create no prejudices, a good authoritative lawyer could convince the Commission on this point.

3. What the Complainant has alleged in his/her Complaint is in fact a case of “tie-in arrangements”, “exclusive supply agreements” and “refusal to deal” under Section 3. Therefore, one fails to understand exactly why the complainant has alleged a violation of Section 4. Advice to Complainant: Get yourself a better lawyer!!

4. Arguendo, assuming that the complaint had alleged the violation of Section 3, it is extremely doubtful that it is violation of Section 3 as it is Apple itself which has designed the iPhone and all its applications and services. Apple Inc. controls the entire process of the manufacturing and distribution of the iPhone, and all applications can only be accessed and downloaded via the iStore because they are designed by Apple Inc. itself. Those that are designed by individuals other than Apple must also be added to the iStore database as Apple products run on a separate platform (Macintosh), Apple has traditionally always kept a “closed system”, as it is called in tech jargon to try and maintain the exclusivity of its products. (In fact, this is the primary reason why one finds far fewer virus programs attacking Mac PC’s and Smartphone’s, another shot in the arm for Apple).

5. Lastly, in both the above cases, Apple Inc. has not in any manner prevented its competitors from continuing their business. There is no evidence to show that any of its policies results in denial of market access in any manner to any other handset manufacturer which would not qualify as regular competition. In fact, market indicators clearly show that presently, there exists robust and healthy competition in the Mobile Market in India.

As regards the iPad, I shall reserve my opinion as I was unable to find any conclusive survey on the market share of Apple in the Tablet market in India.

Google and its Anti – Trust Woes

On 31^st march, 2011, Microsoft Corporation filed a formal complaint with the European anti – trust regulators about Google’s abuse of dominant position in the European internet market and against various anti – competitive practices engaged by it in the relevant market.

This is isn’t exactly the first time Google has been accused of violating anti – trust laws around the globe. In fact, Microsoft along with two other rivals had only last year lodged another complaint with the EU, a matter currently under investigation. Over and above this, in March this year, a U.S. District court found an agreement between Google and the Authors Guild and Association of American Publishers for the scanning and digital redistribution of books in its ebookstore to be in violation of U.S. anti – trust laws and asked the parties to renegotiate the agreement. Then again, in 2009, tradecomet.com filed a complaint alleging that Google manipulates its auctions on its “adwords” program to favour certain advertisers like business.com over others, again violating anti – trust laws. And before that, in 2008, the U.S. department of justice launched an investigation into the two-week test agreement between Yahoo Inc. and Google to deliver relevant Web advertising from Google Inc. alongside its own search results. And this list is by no means exhaustive.

The question is, why Google?? According to Susan Wojcicki, Senior Vice President of Product Management and Vice President of Engineering at Google, writing on the company blog:

“Given our success and the disruptive nature of our business, it’s entirely understandable that we’ve caused unease among other companies and caught the attention of regulators.”

Till a large extent she is right. But a few of these complaints and suits have raised some very genuine and relevant questions against certain trade practices followed by Google Inc.

In fact, even in India, a complaint was registered against Google before the CCI on, again, its “adwords” program. In Eximcorp India Pvt. Ltd. v. Google India Pvt. Ltd. (Case no. 68/2010), the complainant/informant, a subscriber to the above mentioned service, alleged that the business practices of Google for such service were discriminatory in nature, and an abuse of dominant position. It also alleged that the bidding process introduced by Google to place advertisements on “adwords” was non-transparent. While the facts of initiation of the complaint were not directly pertaining to an issue concerning competition law, what is surprising is that the commission in a three page decision concluded that there was no prima – facie evidence to make out a case for further investigation by the Director General into the matter. The issues raised were ones directly pertaining to competition law, and one would have expected the commission to take closer look at the matter taking into consideration Google’s reputation around the world against anti – trust law. Makes one wonder whether the CCI is even aware of the various suits and complaints filed against the most dominant search engine company in the world!!