Google Is Not Feeling Lucky In India Anymore

Google has worked hard at crafting a positive sentiment for itself in India, one of its largest markets. Advertisements for its search products tug at the heartstrings of emotions underpinning India. The company is pitching in to have a social impact and it also helps PR when some of its top executives have native roots. But none of that helped the Internet search major last week when the monopoly watchdog, the Competition Commission of India (CCI), fined Google close to $170,000 for not co-operating with an antitrust investigation.

Searching for evidence
The charge against Google is a serious one. It is alleged that the company abuses its near-monopoly in search to distort how search rankings appear and the working of the bidding-based advertising model, built on top of its search.

Acting on a complaint made two years ago by a public interest group, as well as a local matrimonial website, the CCI had launched an investigation into how Google was conducting its business in India. In 2012, it concluded in a finding that it had prima facie evidence of wrongdoing.

All you have to do is conduct a search on Google and you will find that it is not the first time the company has ranked high on the radar of antitrust watchdogs. The US Federal Trade Commission (FTC), in a highly opaque decision last year, ended a 19-month probe into similar allegations about Google.

The common bugbear seems to be that when a user types in a search query on Google, rather than the site prioritizing the search results of companies that have paid good money to feature prominently on the results page, Google uses the excuse of its user interface to direct traffic to a growing portfolio of its own sites.

In the US, Google was able to argue successfully that there was nothing sinister about this practice – it was merely trying to make search more effective and it could not practise reverse discrimination on its own websites. Rather grudgingly, and after extracting some minor concessions, the FTC seems to have backed off.

It was in Europe, though, that Google came closest to being indicted – narrowly avoiding a $5 billion fine when it managed to strike a deal with the EU regulators under which other search engine results would also feature prominently along with its own.

In the past, the EU had been particularly hard on tech companies, slapping Microsoft (one of the complainants in the Google case) with a $2.7 billion fine for its own antitrust violations. Chip-maker Intel was slapped with a $1.3 billion fine in 2009, which resulted in a drawn-out appeals procedure.

Time has been Google’s friend, though, and in the three years that the EU took to back the search giant into a corner, the company had made money hand over fist, including the revenues earned off mobile, courtesy the Android.

Angst over Android
Android may be given away for free by Google but it comes with strings attached. Guess what ‘search’ powers Android phones and guess which phone you need to have if you’d like to access Google’s YouTube service seamlessly.

With the Internet moving to the mobile across the board, the next antitrust battleground for Google is Android. The CCI will be keenly watching how the EU decides on a separate complaint filed by Microsoft and Nokia (now practically one company), alleging malpractices relating to Android licensing.

The Indian watchdog already has the mobile operating system under scrutiny and in a country where Android phones are the preferred choice of 9 out of 10 Indian smartphone users, the ramifications of any EU judgement could be massive.

Interestingly, the Indian media called for a CCI investigation into the recent acquisition of WhatsApp by Facebook as monopolies in the mobile domain are now becoming quite apparent.

The India fix
Traditionally, India has not witnessed antitrust actions of the seismic variety like the break-up of AT&T in the US. In fact, the CCI is largely seen as a bit of a toothless tiger with a wide-ranging remit that includes trying to fix onion cartels when India’s middle-class begins to get teary over high prices.

Increasingly, though, it seems to be warming up to its role as a competition watchdog and in 2013, imposed fines cumulating to $340 million on a variety of entities including State-owned mining firms, a leading private airline and the body that runs Indian cricket.

Internet companies that perceive they have been hard done by Google are now resorting to their own treaties and agreements to ensure that the search giant does not make a killing by letting its customers get into bidding wars over search advertising that ultimately prove counter-productive for them.

Meanwhile, the search for a worthy competitor to Google yields no results.