When the MNC decided to test the patience of CCI and received a backlash
Well the Competition Commission of India, CCI recently proved to the world that it has an iron tooth. CCI has been known to take tough stance on numerous occasions but the notable one is of Google being fined RS. 135.86 Crores for its search biasness.
It all started in 2012 when two organizations levelled allegations against the search engine for being biased for benefits. These sites were BharatMatrimony.com and CUTS.
Later, Flipkart, Facebook and Make my trip websites too joined the battle after investigation team.found MNC to be abusing the platform for generation of revenue. After much deliberation, the business watchdog reached the conclusion that the abuse of dominant position was unforgivable. And as punishment, it decided to impose 5 percent fine on the average revenue from the nation in last 3 years.
Flipkart went on to allege that the reason for its dominance in Google search pages is only due to the amount the company contributes to the Google as part of the Social media marketing initiative. (See image).
The possible wrongs:
- It was petitioned that Google abused its dominant position to benefit its clients.
- Manipulation of services (search results) to suit the client and self needs.
- Deliberately suppressing the competition through the above said search bias.
- Unfair promotion and leveraging of own services and reduction of traffic to other sites.
- Prohibited advertisement related to Google trademarks.
- Restriction on client movement (selection choices) by imposing high switchover costs.
- Further, Google was found to be blending its services with even general web searches.
- Allows bidding on trademarks.
- Further, Google provides link to other such commercial sites which leads to it’s special search results page. (A case of unfair imposition). This also hampers the customer service as they are stuck to just Google search pages.
- It has also leveraged its dominant position for further strengthening of its market position.
Other nations preview:
Google is not only facing a negative stance with indian Government but also with nations like:
- South Korea
It is worth mentioning that in case of Russia, the MNC was ready for a settlement with its Anti Monopoly Services at 7.85 million dollars. It also coughed 2.7 billion dollars at EU for similar reasons. The European commission went on to add that the market dominant strategies were used to provide an illegal Advancement to the products and customers. It was also found to hamper customer perception of products in case of comparative purchase behavior.
Indian Inc. reaction:
The landmark verdict initially pegged that 5 percent of the profits for organization are a marginal statement. But when compared to the fines imposed by the other nations, the amount is huge.
Indian startups have mixed bag of opinion on the issue:
- Paytm founder underlined that the Google already stands at a better position and is indirectly hampering the profits and proliferation of the startups.
- Similarly, Rahul Khanna, investment major of Urban Clap and Big basket, sounded the need to bring a level playing field for all service providers.
Thus, we ask a question: Is Google at Fault in its earning strategies?
Do share your opinion on the issue in the comments section below.
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(All images source: Economic Times)