Tag: Abuse of dominant position

Who Would Have Thought ?!?!

Apple has allowed developers to take payments outside the App Store !! Voluntarily without a Judgement or Order or any other form of legislation coercing them !! Who would have thought this day would come. 🙂 Atleast I admittedly didn’t.

It’s part of a settlement of course, so perhaps they saw the writing on the wall that the happy music was about to stop. But it still is a big stand down from Apple, a company known to steadfastly contest all suits and claims challenging its walled off ecosystem.

To quote from the report itself:

“The company is “clarifying that developers can use communications, such as email, to share information about payment methods outside of their iOS app,” Apple said in a statement. 

Critically for Apple, the settlement excludes more significant App Store changes that were sought by some outside developers and legislators. The company is still requiring developers to sell their apps — as well as in-app items and subscriptions — using Apple’s payment system, which takes between 15% and 30% in commissions. Apple reduced the cut to 15% for all developers that generate $1 million or less annually last year. On Thursday, it committed to continuing that policy for the next three years.

The settlement also doesn’t require Apple to allow third-party app stores or the so-called sideloading of software. And the company doesn’t have to further reduce its revenue share.” 

According to another report, “Apple also will set up a USD 100 million fund that will pay thousands of app developers covered in the lawsuit sums ranging from USD 250 to USD 30,000. App developers will get more flexibility to set different prices within their apps, expanding the options from about 100 to 500 choices.”

But the stand down doesn’t end here, shifting to news closer to home, South Korea’s National Assembly passed a bill last Tuesday requiring Google and Apple to open their app stores to alternative payment systems in South Korea. The move will definitely have a negative affect on the commissions on digital sales for both companies. Essentially, its an amendment to the Telecommunications Business Act, with the Korea Communications Commission, the Country’s media regulator, with the powers to enforce it.

And now right at home, we even have a Complaint having been filed before the C.C.I. as well !!

The big question – will these lead to reduced prices for consumers in the long run. My personal opinion – No. They’ll remain stagnant. Almost ninety percent of the Apps on both the stores are anyways free. The last ten percent, which comprise of paid as well as in App purchases, have not shown a trend of keeping costs low even when they were alternatives available to having to pay Google or Apple. The best example is Netflix, which has in fact been raising rates over time. Simply put, there are other factors besides an App Store/Play Store commission which determine pricing.

The Best of “Big Tech” (Part – II)

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Following our previous post from yesterday, listed below is the next set of links. Happy reading !!

Rowland Manthorpe, Google’s Nemesis: Meet the British Couple who took on a Giant, Won… and Cost it £2.1 billion (Wired)

Rahul Matthan, Google’s Play Store Policy isn’t Simply About Toll Charges (Mint)

Manish Singh, Indian Startups Explore Alliance and Alternative App Store to Fight Google’s ‘Monopoly’ (TechCrunch)

Prasid Banerjee, CCI Seeks Investigation on Allegations against Google for Play Billing, Pre-Installation of Google Pay on Android Phones (Mint)

R. Jagannathan, Marx Misread Capitalism but We Must not fall into the Same Trap (Mint)

Kelvin Chan, EU Files Antitrust Charges Against Amazon Over Use of Data (AP)

Katie Canales, Apple was Just Slapped with a Lawsuit that Accuses the Company of Monopolizing the Mobile-Gaming Market by Blocking Apps like Xbox Game Pass and Google Stadia (Business Insider)

AP, Google to Pay $1 Billion Over 3 Years for News Content (Times of India)

Marcy Gordon, For Big Tech, Biden Brings a New Era but no Ease in Scrutiny (AP)

The Best of “Big Tech” (Part – I)

1_q0d3YtCWwrN5D_HQ2iE5sQThe past two months were inundated with articles and opinions on “Big Tech”, to the point that with literally everybody fulminating on their respective (and often repetitive and generic) opinions, I got completely put off from writing any of my own. 

Things seemed to have cooled down for sometime though, with a new administration about to take over in the U.S. and the mundane grunt work of investigations underway elsewhere including India, and I thought why not put out a list of the best and most prominent news events and opinions concerning Big Tech ? So listed below, in no particular Order, are in my personal opinion, some must read reports, write ups and op-eds on all that’s been going on since “Big Tech” became the next giant problem to tackle after Climate Change and Inequality. I may or may not agree with everything that’s been written in these, but its always important to read and attempt to understand views contrary to your own as well. 

Salil Tripathi, Saving the News Biz from Google, Facebook (Mint) 

Cheng Leng, Keith Zhai and David Kirton, China preparing an Antitrust Investigation into Google – Sources (Reuters)

Tom Warren, Microsoft Hits Out at Apple with its New Windows App Store Policies (The Verge) 

Shivdeep Dhaliwal, Microsoft Plans to Skirt Apple Ban on Cloud Gaming Apps Via Browser – Based Service (Benzinga)

Mihir Dalal and Prasid Banerjee, Why Vocal for Local Won’t Bother Google (Mint)

Bloomberg Wire Agency Feed, E.U.’s Failure to Hit Google Where it Hurts is a Lesson for U.S. (Mint)

Ajai Sreevatsan, How Big Tech Reset will Impact India (Mint)

Aaron Holmes, Tech Giants have Skirted Regulation because of how Monopolies are defined by law. Democrats Now Want to Rewrite Those Laws (Business Insider)

Gerrit De Vynck and David McLaughlin, U.S. Antitrust Case Against Google Mimics Lawsuit that Attacked Microsoft (Business Standard – via Bloomberg)

AFP, Google Strikes Payment Deal with French Media (Economic Times)

 

The Big Bang Tech.

 

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Things in the media have become typically quiet after the initial flurry of headlines, and as usual, I was supposed to write a lengthy blog post on the antitrust actions against Big Tech , and as usual, it kept getting delayed to the extent that it has now become an exercise in futility. (Man I need to get more disciplined with my writing !! )

So to just bring this to the closure in my own head more than anything else, here is a list of the major and most informative headlines (in no particular order of importance) on the issue:

Silicon Valley pressured as Washington turns up antitrust heat

Unheard for years, smaller fished finally get a say against tech sharks.

On priority: Regulating online giants for financial viability of news business

Senator Warren urges antitrust chief to recuse himself from Google, Apple probes

Four reasons why antitrust actions will likely fail to break up Big Tech

Regulating or breaking up Big Tech: an antitrust explainer

Case No. COMP/C-3/39.740, COMP/C-3/39.775 & COMP/C-3/39.768 – The 2.42 Billion Euro Google Order.

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So it’s finally out, and boy is it big !! Well….actually….For Google(Somehow, still can’t bring myself to call it Alphabet. The word is so synonymous with the search engine since times immemorial), monetarily, it’s probably small. 2.42 Billion Euros is peanuts for the Internet behemoth. But what does matter to it is the impact this is going to enough on its products and services not just in the E.U., but throughout the world, which is why it is safe to bet that the company is going to all the way up to the E.C.J. if it has to. Fighting it out is already a forgone conclusion.

So, the following is my preliminary understanding of the Order. Please note though, that the complete text of the Order is not yet out, and so my preliminary opinion is based upon the Press Release, the Fact Sheet, and the Timeline of the case.:

 

1. The case concerns the display of products on a service called Google Shopping. Now since this service has not been rolled out in India till now, I have never personally had a chance to use it, but from what I have to come to understand (and do feel free to correct me if my understanding is wrong), the product “allows consumers to compare products and prices online and find deals from online retailers of all types, including online shops of manufacturers, platforms (such as Amazon and eBay), and other re-sellers.” (Update: Okay so I just realised that the words typed matter. They must indicate ones intent to purchase a product. So the service has been rolled out in India, but after some experimentation, the results appear to be limited.)

Google Shopping 1

 

 

 

 

 

 

 

 

Google Shopping 2

Google Shopping 3

Google Shopping 4

(Above: Google Shopping India: Personal experience on experimentation.)

2. From the above, the relevant market as per the Commission appears to be that of “shopping comparison websites/services”. The question to ask is, is there really such a definitive market in existence ?? Somehow, no matter which way one tries to describe it, it appears to be hard to cogently define it. After all, comparison of products can be done through the regular search, or they can be done through the individual websites, or they can be done through individual Applications (in the case of smartphones). Personally, I hardly used the Google results which appeared on the side. I (and perhaps many others) end up directly clicking on the “trusted/preferred” website (Amazon India, Flipkart, Ebay.in) and search directly for the product by jumping between these sites (not to mention to multiple options available on each individual website). It’s important to note that these website results do almost always come up among the top five to ten results on the first page, hence the lack of use of the Google Shopping. (See the pictures above as an example)

3. The fundamental premise of competition law, both in India as well as the E.U., is that any appreciable adverse affect on competition in the relevant market or abuse of dominance results in a harm to consumers. In the present case, however, was Google Shopping really so bad ?? Is there really an adverse affect on competition or an abuse of dominance ?? As already stated, the results which pop up under Google Shopping (which, it must be noted, are clearly differentiated),  are merely the most relevant websites where you would find the product. And consumers do appear to be have A LOT of choice in the alleged relevant market. So even if the sponsored results do pop up on the side, does it really hurt anybody at all ?? In fact, from the Press Release, it appears that even the Commission is not sure if there is any actual detrimental affect on consumers, but rather only states “Google’s comparison shopping service [sic] make[s] significant gains in traffic at the expense of its rivals and to the detriment of European consumers.” A rather vague statement, but then, that may be because it is only a Press Release.

Google’s troubles in Europe are far from over. The Android Operating System and the Adsense cases are still pending, and the trend appears to be against the company. The three cases together could well become the triumvirate against what was once considered (and arguably still is), the most innovative company in the world.

And Here We Go Again….

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The European Union has launched a fresh salvo against Google, this time charging Google with abusing its dominance in Internet searches and opened a probe into its Android mobile system.

 

The E.U. Executive Commission has stated that it has found that Google “gives systematic favourable treatment” to its Google Shopping at the expense of others in its general search results.

 

Am pretty sure by the time the Google anti-trust investigation ends, one will be able to write an entire book on the company and its competition law troubles.

Indian Competition Law’s Dark Night. (A Post Script)

Just two queries to be asked in this post script to the previous post:

1. A valid contention was raised by one of the respondents on page 78 of the Order that the prices of Cement Corporation of India, a PSU, also rose along with the other respondent manufacturers. However, the DG did not take notice of this fact. A fair question. Why ??

2. Exactly why have large portions of the data published in the Order been hidden (crossed out to be specific) ?!

Any suggestions ??

Indian Competition Law’s Dark Night.

The analogy might seem stupid or funny to many, but I just couldn’t help but remember the movie Batman Begins while reading the news about the CCI’s Cement Cartel Decision. Think about it, just like the Batman, there are now those who love the CCI,  proud that someone decided to teach the big corporations a lesson, and there are those who hate the CCI, who are not only crying themselves hoarse on the injustice meted out to the Cement Manufacturers’ Association (CMA) and its affiliated companies and who will surely appeal to the COMPAT, and if required, even the Supreme Court.

While I do support the decision (a day may come when I shall become Anti- CCI, but it is not today and shall probably not come for quite some time), there are a few questions or points which do  merit consideration, just for the sake of clarification, if nothing else. They are as follows:

1.  Almost all the companies as respondents have contended that there profits actually fell for the period in consideration, and hence, no benefit actually accrued to the companies who were allegedly members of the cartel. Even assuming that this is true, the argument is irrelevant under competition law. The U.S. Supreme Court held as far back as 1927 in United States v. Trenton Potteries Co. et. al., 273 US 392 (1927) that

“the aim and he aim and result of every price-fixing agreement, if effective, is the elimination of one form of competition. The power to fix prices, whether reasonably exercised or not, involves power to control the market and to fix arbitrary and unreasonable prices….Once established, it may be maintained unchanged because of the absence of competition secured by the agreement for a price reasonable when fixed. Agreements which create such potential power may well be held to be, in themselves, unreasonable or unlawful restraints without the necessity of minute inquiry whether a particular price is reasonable or unreasonable as fixed and without placing on the government”

The decision was further affirmed in United States v. Socony-Vacuum Oil Co., 310 US 150 (1940) wherein it was observed

“Any combination which tampers with price structures is engaged in an unlawful activity. Even though the members of the price-fixing group were in no position to control the market, to the extent that they raised, lowered, or stabilized prices, they would be directly interfering with the free play of market forces.”

2. Circumstantial Evidence also seems to have become a bone of contention with every respondent contending that the circumstantial evidence is not good enough to prove a cartel. This IS a contentious issue since the use of circumstantial evidence in competition law is as of now debatable. I would prefer to let the OECD do the talking on this subject, through their excellent policy roundtable paper on the same. The key point to note is that their primarily two forms of circumstantial evidence, communication evidence and economic evidence. Of the two, communication evidence is considered to be the more important as economic evidence is often ambiguous due to the multiple interpretations available for the same. This is more than evident in the Order itself, wherein a number of respondents have relied on the affidavits and expert opinion of economic experts to substantiate their case. ( One sees to get the impression that all of them have their own opinion regarding the same !! 😀 Also, pages 156 and 157 of the Order speak on the Commissions decision of circumstantial evidence).

3. There is a prickly issue in the claim that the collection of the information was asked by the government itself, and that after the closure of the Office of Development Commissioner of Cement Industry (DCCI) in 1989, the CMA was directed by the Department of Industrial policy and Promotion to collect and submit data which was earlier collected by the DCCI. Now Section 54 clearly allows the Central Government, by notification to exempt any enterprise or class of enterprises from the provisions of the Act where that enterprise performs a sovereign function on behalf of the Central Government. Also, in case an enterprise is engaged in any activity including the activity relatable to the sovereign functions of the Government, the Central Government may grant exemption only in respect of activity relatable to the sovereign functions. The collection of such information by the CMA for the Ministry of Commerce can be interpreted as the performance of the sovereign function for the Central Government. The catch: I could not find any notification issued by the Central Government published in the Gazette which grants such an exemption to the CMA. If the respondents possess one, then good for them. It will be a very strong argument before the COMPAT.

4. I don’t see the relevant market issue ( See pages 184 and 233 of the Order) as a serious problem as long the evidence points to a general collusion. However, only further proceedings before the COMPAT help us understand this issue better.