CCI Dismisses Allegations of Unfair Business Practices in Search Advertising Against Google

On July 12, 2018, CCI dismissed two separate information filed against Google for contravention of the provisions of Section 4 of the Competition Act.[1] Mr. Vishal Gupta (‘Informant 1’) and Albion Infotel Limited (‘Informant 2’) are engaged in providing remote tech support services (‘RTS services’), and use Google’s advertising platform (‘AdWords’) for reaching out to their consumers. As part of the sign-up process on AdWords, the advertisers are required to sign a standard document agreement (‘AdWords Service Agreement’) with Google.

It was Informant 1’s allegation that the bidding process of AdWords was opaque. Google’s ‘User Safety Policy’ was ambiguous with a potential of discriminatory treatment. Further, Google had suspended Informant 1’s AdWords account to help launch its own rival service, Google Helpout (‘Helpouts’). Informant 1 alleged that such practices amounted to denial of market access. Informant 2 raised similar allegations against AdWords, Google’s User Safety Policy, and the process of termination of Informant 2’s AdWords account.

Based on the information, CCI formed a prima facie opinion of infringement and directed the DG to cause an investigation, delineating the relevant market as ‘the market for online search advertising in India’ (‘Initial Order’). Google filed an application with CCI seeking a recall of the Initial Order on the ground that CCI lacked jurisdiction and had incorrectly delineated the relevant market as the Informants advertised their RTS services to consumers based outside India, therefore, negating any concern of AAEC in India (‘Recall Application’). The Recall Application was dismissed by CCI, and thereafter Google approached the Hon’ble High Court of Delhi (‘DHC’) under a writ petition. The DHC remanded the matter to CCI, ordering the Recall Application to be considered afresh by CCI. In response to the DHC’s order, CCI considered the Review Application, and consequently dismissed it again, directing the DG to continue its investigation.

In its report, the DG concluded that Google enjoyed a position of strength in the relevant market, allowing it to operate independent of prevailing competitive forces. The DG further submitted that Google had abused its dominant position in the relevant market in violation of the provisions of Section 4(2)(a)(i) of the Competition Act for the following two reasons: (i) opaqueness and lack of transparency in assigning a quality score in the bidding process in AdWords; and (ii) one-sided terms and conditions provided in clause 11 read with clause 4 of the AdWords Advertisement Terms 2013 (‘2013 Terms’). However, the DG found that the suspension of the informants’ accounts was justified.

In its response, Google agreed with the DG’s findings pertaining to the suspension of the informants’ accounts. As for the DG’s finding on contravention of the Competition Act, Google submitted that these clauses were not unfair or discriminatory, and that they were ubiquitous across the industry. Moreover, it claimed that the DG had failed to show any anti-competitive effect arising out of these clauses.

In its analysis, CCI demarcated the three issues that survived for its consideration: (i) whether the AdWords accounts of the Informants were suspended by Google in an unfair or discriminatory manner amounting to abuse of dominance? (‘Issue 1’); (ii) whether Google imposed unfair conditions on its advertisers and whether this amounted to an abuse of dominance? (‘Issue 2’); and (iii) whether the bidding process of AdWords can be characterized as extremely opaque and non-transparent? (‘Issue 3’)

On Issue 1, CCI found Google’s termination of the Informants’ account fair and justifiable. It took note of over a thousand instances of various AdWords policy violations by the Informants, which included abuse of third-party trademarks, incorrect display of uniform resource locator (‘URL’), and use of multiple URLs to cause confusion among the users. Moreover, CCI found that Google had a well-established appeal process for advertisers whose accounts are under suspension. Furthermore, CCI found no merit in the allegation dealing with termination of the informants’ accounts and the launch of Helpouts, since the Helpouts was not a substitute for RTS services.

On Issue 2, CCI noted that clause 11 of the 2013 Terms instead of being discriminatory, was in fact beneficial in protecting consumers from harm. It noted that not having the ability to suspend or terminate accounts would render a platform like Google unable to deal with advertisers that harm consumers. CCI also noted that the clause was in compliance with local laws concerning prohibition of certain advertisements. Moreover, CCI held that clauses such as Clause11 are ubiquitous across the industry, and are not one-sided. In the present case itself, both advertisers and Google are free to terminate the relationship, and there are no ongoing advertising obligations on the advertisers.

On Issue 3, CCI held that there was no merit in the DG’s finding that the ‘Quality Score’ given by Google to the advertisers was opaque and susceptible to manipulation. CCI reasserted its finding in Matrimony.com/CUTS v. Google LLC[2], where it had held that Google provides sufficient data to advertisers on the performance of their advertisements. Based on the above reasoning, CCI concluded that no case for any abuse of dominance was made out against Google, and dismissed the information.

There was also a dissent note, signed by a single member of CCI, which took the view that CCI ought not to have passed a final order, but should have referred the case back to the DG for further investigation on certain aspects such as the reasons for termination of AdWords account of other RTS services providers, and possibility of remote access through Helpouts.

[1] Case Nos. 6 & 46 of 2014.
[2] Case Nos. 7 & 30 of 2012.

Published In:Inter Alia Special Edition Competition Law September 2018 [ English
Date: September 20, 2018