GOOSLE INVESTIGATION- IS GOOD EVIL?

TABLE OF CONTENTS

INTRODUCTION.. 3 EU INVESTIGATIONS: THE ALLEGATIONS. 3 1st Allegation – Search Results Manipulation. 4 2nd Allegation – Targeting Specific Rivals. 4 3rd Allegation – Exclusive Advertising Agreements. 5 FACTS. 5 Unknown Algorithm.. 5 Market Share. 6 Law Applicable. 7 Indian Law Position. 8 Deciding upon the Liability of Google: The Arguments. 9 Reasons why Google should be held liable for Anti Competitive Practices. 9 Reasons why Google should NOT be held liable for Anti Competitive Practices. 11 Conclusion. 13 Bibliography. 14

INTRODUCTION The subject of the paper deals with the current investigations going on against Google initiated for its controversial behaviour in realm of internet search engines and advertising. The aim of this paper is to bring out the reasons for the ongoing investigations against Google. The paper will examine the facts which are present regarding Google and analyse it in relation to the allegations against it. The paper will be presented in form of arguments making out a case against Google and for it. For the purpose of this paper, the researchers will be looking at the issue from the EU law position; moreover the researchers will also be comparing the issue from an Indian

that Google has ranked certain websites lower in their search engine.[5] . however to gather momentum. The EU notice also clearly stated that mere service of notice does not indicate that the EU Commission has proof of such infringements. The investigations started when the services like ejuris. The paper will not focus on or predict the conclusion of the investigations. 1st Allegation – Search Results Manipulation The alleged infringements against Google can be put in three points. in the opinion of the researchers it was only cautious of the EU Commission to state a caveat in the notice. this in turn could have a negative impact on the company’s market share and on the economy of the EU and US which are just coming out of a recession. the EU Commission served a notice upon Google and initiated antitrust proceedings. but was happening worldwide. it only means that allegations of such magnitude deserve a unbiased and thorough investigation. Such a massive move demanded a through probe and on a larger scale. Furthermore.fr from France complained to the French authorities that Google was actively hampering the competition in order to abuse its position in the market. in case of Air tickets it has been alleged that Google ranks certain providers lower than others. For instances. and enhance its ability to further push down the search rankings of websites owned by competing companies. therefore they are liable under EU Antitrust and Indian Competition Law Regime. On 30th November 2010. Upon receiving several complaints on behalf of EU member nations and the fact that non member nations were also receiving such complaints[3] showed that this phenomenon was not particular to a region.[4] The probable reason for saying this in a notice is the fact that a company as huge as Google being under investigations would not reflect well on the company. The researchers start the paper on the hypothesis that “Google has abused its dominant position as a service provider in the European and Indian markets. the researchers will look at certain statistics which are indicative of Google’s position in the world market and specifically EU markets. firstly. etc also received similar complaints. Keeping in mind the public interest. the ITA acquisition by Google is supposed to give it further control over the travel search market. The paper will examine only the case investigation in European Union and as per the Indian law. Subsequently.perspective. Germany. the European Union decided to take up the investigations on behalf of all the member nations.[1] The Complaint taken up by French authorities being investigated when other countries such as United States. Google quite obviously denies this.” EU INVESTIGATIONS: THE ALLEGATIONS The allegations against Google are in the nature that Google has been indulging in antitrust and anti competitive practices. In order to arrive at its arguments. especially when it has its own competing products in the same market. The allegations were being levelled against Google from rival search engines since September of 2010[2]. and also promotes websites which advertise with Google. the allegations took a while.

[11] This defence shall be dealt with later in the paper. Google will not display certain websites. 3rd Allegation – Exclusive Advertising Agreements The third allegation against Google is that it imposes exclusivity obligations on its advertising and distributing partners. This segment. Unknown Algorithm The Google search engine is based on an unknown algorithm which is responsible for the search results being displayed. there are few facts which have come into light with respect to the allegations. we shall discuss these facts which have a great bearing on the outcome of the Google Investigations. However. there are certain facts which have been in the public domain for a while now. also termed as white listing is not known. this is possibly a speculation as there is no conclusive proof of the same. irrespective of the fact that they might be relevant to the search query put in by the user. However.[8] The reason for blacklisting or listing only specific websites. Google’s defence regarding manipulation is heavily reliant upon the unknown algorithm. Market Share . it has been alleged that Google unfairly targets websites owned and controlled by its major rivals especially Microsoft. FACTS As on this date.[6] 2nd Allegation – Targeting Specific Rivals Secondly.The notice for investigation issued by the EU states that Google has been meting out unfavourable treatment to the vertical search service providers in Google’s unpaid and sponsored search results in addition to giving preferential treatment to its own services. This is accompanied by supposed restriction on “advertisers as to the portability of campaign data to competing online advertising platforms”. and websites acquired by Microsoft see a marked drop in their rankings. However. the results which are displayed will be such that the Microsoft owned websites or products would rank lower in the search. especially web services depends on a successful Google online advertising campaign. Hence while searching a particular item. despite the fact that they might be more relevant. and the success of several products. this algorithm is unknown in the public domain[10]. hence the decision of listing websites solely depends on Google.[7] The effect of this is that when a person or customer searches something using the Google search engine.[9] The results of its exclusive advertising agreements is to shut out other competitors and this behavior of the company leads to anti competitive practices. The allegation is of the search results being manipulated is a function of the algorithm. This is especially because Google is by far the biggest player with regards to online advertising. This is coupled with the allegation that certain websites are blacklisted by Google and of which the customer is not aware.

in India. Figure 1 The above numbers represent statistics of Google’s market share in online search engines. from the Microsoft family. 54 of European Economic Area Agreement. With regard to statistics on advertising. The following chart will show the extent of Google’s market share.[16] Figure 2 Law Applicable The EU law has issued the notice as per Art. Article also defines abuse.[15] The comparatively recent entrant Bing. Google has the majority share when compared to its esteemed competition Microsoft and Yahoo. is a minority player with a tiny market share of 3%. Google has the largest share in the global market. the researchers will not deal with these laws as they are mere procedures. We see in Figure 2 that Google owns maximum amount and has about 77% share in the online advertising sector. this shows that prima facie being in dominant position is not a problem. which has been one of the oldest service providers. 2 (1) of Commission Regulation No. The researchers will focus on Art.The market share of Google in the world market and in the affected area is large in number. and we see that as a single entity. we see that while examining a consolidated market as opposed to fragmented markets of each product. which states: “Any abuse by one or more undertakings of a dominant position within the territory covered by . the market share of Google is relatively less but nevertheless little above 80%. however. nevertheless abusing it could get one in trouble. for the purpose of this paper. Yahoo owns about 20% of the market share and is rapidly losing its share to Google. While in Germany. however. it can be arguably said that Google has India’s largest market share. [12]However. 11 (6) of Council Regulation no. 1/2003 and Art. France and UK Google is clearly a majority with more than 90% share in global market. 102 in Treaty on the Functioning of EU.[13] As a single entity. The aforesaid Art 102 states that dominant position must not be abused.[14] This is closely followed by Yahoo. Art. not only in field of advertising but also in terms of search engines. both of which provide for the initiation of proceedings. what is seen is that Bing is coming up very slowly and has tremendous potential for growth. 773/2004.

abuse of such dominant position is prohibited[17] under the law for the simple reason that it is anti competitive. The Article further enumerates the scope of the term “abuse”. in particular.” Art. applying dissimilar conditions to equivalent transactions with other trading parties. 52 would apply when an entity is in dominant position and is abusing such dominant position. b) c) thereby limiting production. by their nature or according to commercial usage. Indian Law Position Sec 4 of the Indian Competition Act 2002 if for prohibition of abuse of dominant position. in India. itself. is not a prohibited or anti competitive. but for ascertaining whether an entity is in dominant position. Sec 4(2) in detail lists out when an enterprise is said to abuse the dominant position. one has to refer to second explanation of Sec 4 (2) which says that – “(a) “dominant position” means a position of strength. Undertakings by the entity when are incompatible with the EEA. operate independently of competitive forces prevailing in the relevant market. or ii. placing them at a competitive disadvantage. which enables it to— i. markets or technical development to the prejudice of consumers.this Agreement or in a substantial part of it shall be prohibited as incompatible with the functioning of this Agreement in so far as it may affect trade between Contracting Parties. The section reiterates the earlier position that being in dominant position. in the relevant market. enjoyed by an enterprise. then EU Commission would have the power to investigate such dealings. have no connection with the subject of such contracts. Such abuse may. the section carves out the requirements of this section. 1. affect its competitors or consumers or the relevant market in its favour” The Competition Commission is empowered to inquire into any alleged contravention of . consist in: a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions. d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which. the nature of abuse must be such that it extends over different geographical territories because if it is specific only to one or two nation then domestic laws would apply. However.

especially its acquisition of ITA. 19 (6) and Sec. without going into the conclusion of the same. consumer or their association or trade association and thirdly by a reference made to it by Central Government or a State Government or Statutory authority. despite the provision of an option of browser.[20] Once upon a time. in case of Google. This is provided under Sec. second on receiving complaint from an any person. however. it can suo moto take up the investigation. first. For instance. Market being an abstract term is given meaning by the statute as it is called relevant market and the Commission has to consider geographical market and product market as well. Even while determining geographical market or product market the statute lays down conditions to be considered. the user still retained considerable control over the services it chose to use using it. Android Smart phones and Chrome OS all encourage use . the company changed its policy and gave users the option to use any browser. It is also an argument that since Google’s algorithm is unknown. The list is not an exhaustive list and is an indicative of what all can be considered while determining the dominant position. the Google’s Chrome. yet.[21] However. Reasons why Google should be held liable for Anti Competitive Practices It is agreed that Google dominates the 90% share of the world market[18] in different arenas. which will give it enough control over the air ticket market because it will be able to tweak the air ticketing software being used by several major airlines. the Microsoft tried to kill the competition in the browser market by bundling in Internet Explorer for free with Windows Operating System. The power to investigate such complaints or reference finds a place in the statute itself under Sec. Microsoft related websites are often listed lowest in the Google’s search results. it is difficult to ascertain the reasons for the arrangement of the search results in a particular manner. prominent indicators of whether an enterprise enjoys dominant position. for the purpose of this paper. However after a case against Microsoft for maintaining this exclusivity. Allegation against Google has been that it places its rival companies on a lower search result scale.[19] Google also possess a direct competition to the vertical search engines. 19 (7). On the other hand. Market share. the researchers will present both the sides of the argument. this is laid down under Sec. Deciding upon the Liability of Google: The Arguments The liability of Google is not finally agreed upon by the researchers. size and resources of the enterprise are one of the few indicative. 19 (1) Sec 19 (4) gives detailed list which is to be considered while determining whether an enterprise is in dominant position.dominant position in three ways. 19 (5) of the Competition Act.

even in the technology sector. in ways that might be detrimental to other companies and even anti competitive and might just lead to the abuse of its dominant position. We must remember that there are several factors which might cast a huge doubt on Google’s practices. unlike other businesses. is its ability to affect the market. and then it gave way to Yahoo/AOL’s email services. Thus. which has now given way to Facebook. Of course there is no presumption of guilt due to such dominant position. This behavior of Google may be termed as anti competitive. unlike the real world industries. and now it is a possibility that Facebook Mail might become major player in this very market. apart from its dominant Position resultant of its market share. Reasons why Google should NOT be held liable for Anti Competitive Practices On the other side of the spectrum are arguments which are coming from several quarters as to how and why Google cannot and should not be held liable for anti competitive practices. The first and foremost amongst them all is that unlike other industries. Hence the allegations against Google mandate a serious enquiry. It is indeed true that the internet. Other similar examples would be of Email services.[24] By the fact that the rival companies have hardly any market share. Right from searching the product. Thus.of Google’s Search.” this means that search of one product leads to discovery of another product. a product from a non descript country might do as well as any other company. which gave way to Gmail. which is also connected to Google.[22] Google has been alleged to have “Exclusive agreements”[23] with advertisers which has given the company too much control over the advertisers as several restrictions are placed to maintain exclusivity. advertising or buying it. which completely revolutionised the market initially with the products it offered. Myspace which was owned by Microsoft gave way to Orkut which was owned by Google. it can be deduced that Google is in the dominant position and by its behavior it cannot be ruled out that Google might not be indulging in anti competitive practices. the internet is closest to a free market where only the best and most useful products and services survive. It must be remembered that advertisement cost indirectly is transferred to Consumers and anti competitive practices involving the same raise prices for them as well. is product quality driven with usually a very low cost of moving to other products and services. it has a lot of control over the consumer. . The internet is such that even established companies often have to face defeat in their endeavours of creating successful products. and the barriers to entry are a lot lower. Thus. Google Inc is a “vertically integrated empire. as per the Indian or the EU competition law regime. which makes a thorough investigation even more essential. Google enters the field in all areas. the seller of the product and the manufacturers and gets a benefit from each part of the transaction. An example of which is Google’s drubbing in the social network website business wherein its Orkut and Buzz service failed to match up to the popularity and utility of Facebook. Also financial soundness is not a determinant of success on the virtual world. For example in case of social networks. wherein Hotmail.

especially Google Search have changed the face of the internet (and possibly the world). who have relatively deep pockets. just when Google bought DoubleClick. even the search engine industry used to be dominated by AltaVista in the 90s. but Google overtook it with its cutting edge search engine.[27] The future is still very uncertain and it is very possible for another competitor. as used to be done in the 90s by several search engine service providers. would like to see themselves playing a bigger role in this market. many big players. These conclusions cannot prove or disprove the factum of Google’s anti competitive behaviour but they do try to look at the factors which the EU competition watch dog might be looking at. The researchers believe that Google’s revolutionary products. . all major players like Yahoo and Bing are trying to get a better share of the search advertising market and that can be seen from their recent acquisitions of web advertisement firms. only to be overtaken by other companies providing better goods and services.[25] In fact Google’s dominance in search and rather the internet is solely the result of it giving better and more relevant results to its users. modifying organic search results to favour some and against some would not be the best of strategies to use. As a matter of fact. and are using the anti-trust action to gain traction for their own search engine. in view of investigation into its alleged anti competitive activities.[29] Thus. but using it legitimately should not be looked down upon. wherein it states that the popularity of websites in its search rankings are more about proper search engine optimization (SEO) than anything else. and in fact they cheekily suggest that possibly many of the companies complaining against them should possibly try working on better SEO![26] The fourth argument is the nature of the internet itself wherein different players have succeeded at different points in time.The second and a very promising argument is that as Google earns a lot more through search advertising than it does through its own services.[30] Conclusion In this paper the researchers have tried to flesh out some of the possible arguments that could be made for or against Google.[28] The fifth argument that is being used to support Google’s point of view is that allegedly the action has been pushed through by rivals like Microsoft which is trying to gain a foothold in the search business as well with its Bing! search engine. especially because it will strike at the root of its biggest business success: the Google search engine. though presently it seems to be a distant possibility. Google should never be allowed to abuse its dominant position. including Bing and possibly even Facebook to over shadow Google’s search engine in the coming years. However. given the large amount of revenue involved in online search and advertising business. Furthermore. The third argument is the one which is advanced by Google itself. such as Microsoft. but unsettling Google’s dominance. which cannot be delivered by tampering with organic search results. Apple and Facebook.

html.informationweek.html . Antitrust Suit Filed Against Google Available at www.businessweek. this must not become an opportunity for rival companies to tarnish Google’s image in the garb of their so called public spirited actions. Bibliography Articles Greg Sterling .jhtml? articleID=217800685&pgno=3&queryText=&isPrev= Facts about Google’s acquisition of ITA Software. available at www.com/press/ita/saying.html googlesystem. Therefore. Admitting Role In Google Anti-Trust Complaints Microsoft Complains Of Google “Lock In”.com/article/idUSTRE61Q02H20100227 Google Defends itself against Anti trust Regulation.com/admitting-role-in-google-anti-trust-complaintsmicrosoft-complains-of-google-lock-in-37009 Google and Anti Trust: Engine Trouble. it is prudent in public interest to investigate its processes in a much better manner. On the other hand. Available at searchengineland.com/news/internet/google/showArticle.economist.wsj. available at googlepolicyeurope. Available at www. available at blogs.html As Google Grows so do the Anti Trust Issues.com/2010/02/committed-to-competing-fairly.com/2009/03/googles-market-share-in-your-country.google. Available at www.com/law/2009/05/08/asgoogle-grows-so-to-do-the-antitrust-issues Committed to competing fairly.reuters. to avoid any further suspicion or possibility of anti competitive behaviour. and hence there is no reason to believe that Google is guilty of anti competitive practices.There is no presumption of abuse made in case of anti-competition laws being examined in this paper. we are also of the opinion that given the clear indicators as to Google’s dominance in world search and internet advertising markets.com/the_thread/techbeat/archives/2009/02/antitrust_suit.blogspot. we believe that Google should be asked to disclose its unknown algorithm to a group of experts who will examine to see whether it is being used for any anti competitive purposes and furthermore. However. it might be prudent to make provisions for regular review of the same. available at www. as was done in the Microsoft case.com/node/17629823 Microsoft says Google’s Acts Raise Anti trust Issues.blogspot.

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com/2010/02/committed-to-competing-fairly.blogspot.dpuf .html [28] www.html [30] www.reuters.blogspot.Nu1buDwr.See more at: http://legalsutra.com/node/17629823 [29] googlepublicpolicy.com/2010/12/acquisitions-and-antitrust.[27] googlepolicyeurope.economist.com/article/idUSTRE61Q02H20100227 .org/1664/google-investigations-%e2%80%93-is-googleevil/#sthash.

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