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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

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

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

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

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

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

which is also connected to Google. 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.[24] By the fact that the rival companies have hardly any market share. . and now it is a possibility that Facebook Mail might become major player in this very market. Thus. which makes a thorough investigation even more essential. wherein Hotmail. unlike other businesses. Google Inc is a “vertically integrated empire. 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. We must remember that there are several factors which might cast a huge doubt on Google’s practices. Right from searching the product. the internet is closest to a free market where only the best and most useful products and services survive. 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. This behavior of Google may be termed as anti competitive. a product from a non descript country might do as well as any other company. For example in case of social networks. Thus. as per the Indian or the EU competition law regime. it has a lot of control over the consumer.[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. The first and foremost amongst them all is that unlike other industries. which completely revolutionised the market initially with the products it offered. which gave way to Gmail. The internet is such that even established companies often have to face defeat in their endeavours of creating successful products. which has now given way to Facebook. Other similar examples would be of Email services. Hence the allegations against Google mandate a serious enquiry. is its ability to affect the market. and then it gave way to Yahoo/AOL’s email services. Myspace which was owned by Microsoft gave way to Orkut which was owned by Google. advertising or buying it. unlike the real world industries.” this means that search of one product leads to discovery of another product. 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. It is indeed true that the internet. Of course there is no presumption of guilt due to such dominant position. in ways that might be detrimental to other companies and even anti competitive and might just lead to the abuse of its dominant position. Thus. Also financial soundness is not a determinant of success on the virtual world. 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. apart from its dominant Position resultant of its market share. even in the technology sector. and the barriers to entry are a lot lower.of Google’s Search.

only to be overtaken by other companies providing better goods and services. but unsettling Google’s dominance. but Google overtook it with its cutting edge search engine. 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. even the search engine industry used to be dominated by AltaVista in the 90s. modifying organic search results to favour some and against some would not be the best of strategies to use.[29] Thus. would like to see themselves playing a bigger role in this market. 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. Apple and Facebook. Google should never be allowed to abuse its dominant position. 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. which cannot be delivered by tampering with organic search results. such as Microsoft. especially Google Search have changed the face of the internet (and possibly the world). given the large amount of revenue involved in online search and advertising business. who have relatively deep pockets. and are using the anti-trust action to gain traction for their own search engine. Furthermore.[27] The future is still very uncertain and it is very possible for another competitor. The researchers believe that Google’s revolutionary products. . As a matter of fact.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. as used to be done in the 90s by several search engine service providers. just when Google bought DoubleClick.[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. The third argument is the one which is advanced by Google itself.[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.[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. but using it legitimately should not be looked down upon. many big players. 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. wherein it states that the popularity of websites in its search rankings are more about proper search engine optimization (SEO) than anything else. including Bing and possibly even Facebook to over shadow Google’s search engine in the coming years. However. in view of investigation into its alleged anti competitive activities.

Therefore.wsj. available at www. Antitrust Suit Filed Against Google Available at www.com/press/ita/saying. 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. available at blogs. Bibliography Articles Greg Sterling .reuters.com/2009/03/googles-market-share-in-your-country. it is prudent in public interest to investigate its processes in a much better manner. as was done in the Microsoft case.com/the_thread/techbeat/archives/2009/02/antitrust_suit. available at www. to avoid any further suspicion or possibility of anti competitive behaviour.blogspot. Available at searchengineland. Available at www.com/admitting-role-in-google-anti-trust-complaintsmicrosoft-complains-of-google-lock-in-37009 Google and Anti Trust: Engine Trouble.com/article/idUSTRE61Q02H20100227 Google Defends itself against Anti trust Regulation.html .html As Google Grows so do the Anti Trust Issues. this must not become an opportunity for rival companies to tarnish Google’s image in the garb of their so called public spirited actions.jhtml? articleID=217800685&pgno=3&queryText=&isPrev= Facts about Google’s acquisition of ITA Software.blogspot. On the other hand. it might be prudent to make provisions for regular review of the same.com/law/2009/05/08/asgoogle-grows-so-to-do-the-antitrust-issues Committed to competing fairly. we are also of the opinion that given the clear indicators as to Google’s dominance in world search and internet advertising markets.html googlesystem. However.com/news/internet/google/showArticle.economist.html. Admitting Role In Google Anti-Trust Complaints Microsoft Complains Of Google “Lock In”. Available at www.com/2010/02/committed-to-competing-fairly.com/node/17629823 Microsoft says Google’s Acts Raise Anti trust Issues.google. 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.businessweek.informationweek. available at googlepolicyeurope.

google. Acquisitions and Anti Trust.blogspot.html.com/press/ita/saying. available at dealbook. [1] www.in/books? id=NfkonH0VcT0C&printsec=frontcover&source=gbs_atb#v=onepage&q&f=false Miscellaneous Global Digital Marketing Performance “Search Engine” Report.Page.efrontier.google.co.theregister.nytimes. The Google Story: Inside the Hottest Business. available at googlepublicpolicy. Media and Technology Success of Our Time.co.nytimes.com/2010/10/01/news/diller-google-faces-antitrust-issues-on-search-neutrality/.Google-ITA Software deal: Bad timing for Google? Available at www.” (Pan Macmillan: London. The Story of Google.html?_r=1 Round Two: Is Google a Monopoly?. available at www.com/2010/12/15/is-google-too-big-toshop.tnooz.uk/2010/12/17/google_eu/ [3] dealbook.theregister.blogspot. Google Speaks: Secrets of the World’s Greatest Billionaire Entrepreneurs books.Brin and L.com/2010/12/acquisitionsand-antitrust.pdf. available at dealbook. available at googlepublicpolicy. Gilbert.html .com/2010/12/local-search-its-all-about-best-answers.co.co.theregister.com/2010/12/21/round-twois-google-a-monopoly Books D.com/2010/12/15/is-google-too-big-to-shop and www.co. 2008) S.uk/2010/12/17/google_eu/ [2] www. Is Google too Big to Shop?. available at www. A.html Local Search: Its all about Best Answers.com/sites/default/files/Digital-Performance-Marketing-Report-Q4-20101. books. Brussels pushes harder in Google probe.nytimes.com/2010/09/20/news/google-ita-software-deal-bad-timing-for-google/ Diller: Google Faces Antitrust Issues On Search Neutrality available at www.nytimes. Vise. available at www.google.uk/2010/12/17/google_eu/ European Antitrust Inquiry Into Google Is Broadened.com/2010/12/18/technology/18google.in/books? id=15FITwV8HlIC&printsec=frontcover#v=onepage&q&f=false S.tnooz.

[11] blogs.wsj.com/2010/12/21/round-two-is-google-a-monopoly/? [25] googlepolicyeurope.blogspot.com/2010/02/committed-to-competing-fairly.com/2009/03/googles-market-share-in-your-country.cnet. [10] dealbook. [9] Supra Note 4.com/node/17629823.com/press/ita/saying.html. [24] dealbook.html . [22] The reliance on Google’s search engine is getting even more pronounced with the success of its open-source mobile platform.html [26] googlepolicyeurope.nytimes.informationweek.com/news/internet/google/showArticle.cnet.com/8301-1023_3-9993380-93.com/2009/03/googles-market-share-in-your-country.com/8301-1023_3-9993380-93.wsj. which has in no time become the most popular smart phone operating system.blogspot. [8] blogs.html.html [21] Microsoft v.jhtml? articleID=217800685&pgno=3&queryText=&isPrev= [6] Supra Note 4.tnooz.eu/rapid/pressReleasesAction.com/2010/02/committed-to-competing-fairly.com/2010/10/01/news/diller-google-faces-antitrust-issues-on-search-neutrality/ [19] www.blogspot.google.S. [13] googlesystem.blogspot. Android.economist. [7] Supra Note 4.economist.nytimes.com/2009/03/googles-market-share-in-your-country.blogspot. [12] googlesystem.html. [17] Sec 4 (1) of the Act [18] www.com/law/2009/05/08/as-google-grows-so-to-do-the-antitrust-issues/. [23] www.html [16] googlesystem.com/law/2009/05/08/as-google-grows-so-to-do-the-antitrust-issues/.com/2010/12/21/round-two-is-google-a-monopoly. [20] www.com/node/17629823. [14] news. U.html [15] news.[4]http://europa.do? reference=IP/10/1624&format=HTML&aged=0&language=EN&guiLanguage=en [5]http://www.

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