The Competition Commission of India (CCI) has initiated an investigation against Google, based upon a complaint filed by the Digital News Publishers Association. The investigation is India’s first inquiry into the relationship of digital platforms and news publishers. A similar investigation was completed in Australia which resulted in parliamentary legislation in the form of the News Media Bargaining Code. The Code has been hailed and criticised in equal measure. The crux of these competition law inquiries is that news publishers feel that they are unfairly remunerated by Google and Facebook for indexing links to news stories on their platforms. It is argued by news publishers that Google and Facebook ‘free rides’ on their content and due to their market dominance, publishers have no choice but to accept the terms decided by Google. The CCI order is restricted to inquiring about the practices of Google as opposed to the Australian inquiry which also extended to Facebook. After relying on its previous order in the Google search bias case, the CCI concluded that Google is dominant in both the relevant markets, i.e., the Market for Online General Web Search Services and Market for Online Search Advertising Services in India. It then proceeded to assess whether Google had abused its dominance.
In this article, I will critically examine the prima facie findings of the CCI and examine whether a case for abuse of dominance is made out. Although, most of my arguments also extend to the News Media Bargaining Code in Australia, the scope of this article is restricted to the recent developments in India.
Assessment of abuse of dominance
There were three main arguments which the CCI relied on to hold that Google prima facie violated Section 4 of the Competition Act (“Act”).
The CCI noted that news publishers are in an unequal bargaining position with Google. In its analysis, the CCI has noted that Google as a news aggregator is responsible for referring majority of the traffic received by news publishers. Once the user visits the publisher’s webpage through Google, publishers are able to earn revenues through advertisements. Here too, Google plays an important role in the ad-tech value chain by connecting the suppliers of advertising space (news publishers) to potential advertisers. With the growing expansion of online advertising and concomitant decline of traditional modes of advertising relied on by newspapers, news publishers are heavily dependent on digital ad revenue. It was noted by the CCI, that Google unilaterally determines the terms of advertisement revenue sharing agreements. Additionally, there is no way for news publishers to verify the total advertisement revenue generated by their webpages. The CCI held such practices to be prima facie violative of Section 4(2)(a) of the Act. It held that “the alleged opacity on critical aspects such as data and audience management practices, or generation and sharing of revenue with publishers, exacerbates the information asymmetry and is prima facie prejudicial to the interest of publishers, which, in turn, may affect the quality of their services and innovation, to consumer detriment.”
Secondly, the CCI order highlighted that Google does not pay publishers for the use of ‘snippets’ in search engine results. ‘Snippets’ are the small amounts of text underneath a link which provide ‘context to the hyperlink and an indication of the contents of the relevant website to the user, so that the user can evaluate the relevance of the website to their search query’. Users may not visit the webpage because their query might be satisfied by the snippet. Since Google does not compensate news publishers for snippets and publishers don’t earn revenue until a user actually visits their webpage, the CCI held this to be prima facie violative of Section 4(2)(a) of the Act.
Lastly, the CCI order noted that Google prioritises its Accelerate Mobile Pages (AMP) standard in search results. In this way, publishers are incentivised to create their webpages in accordance with the AMP standard or risk losing critical placement on Google Search. The CCI held that this may amount to an unfair imposition on publishers.
There was also a key public policy theme running throughout the CCI order. Due to the critical role performed by an independent media in a democracy, it was felt necessary by the CCI to ensure that news publishers were not unfairly remunerated and exploited by the dominant Google.
Critical examination of the CCI’s claims
The aversion in the CCI order that news publishers have no way to verify the advertisement revenue that their webpages generate is factually dubious. This is because Google’s Ad Manager offers publishers the opportunity to directly sell their advertisement space to advertisers after directly negotiating with them. The question of verification does not arise when using Ad Manager as the publisher itself is deciding the price of its advertisement space. The CCI order does not mention a specific advertisement service offered by Google that does not let publishers verify information about revenue on their websites. However, even in the more automated advertisement service, AdSense, where Google is responsible for connecting the publisher to the advertiser, the publisher is allowed to set a minimum bid price and the advertisement space is sold to the highest bidder in a real-time auction. Moreover, Google Analytics provides a plethora of data regarding the number of readers, time spent, clicks on advertisements etc., to news publishers. All in all, Google acts in a transparent manner to provide the publisher with enough options to customise their webpages and connect with advertisers on their own terms.
The CCI has incorrectly framed that publishers are in an unfair bargaining position with Google. This framing discounts the deliberate choice made by users to access news through Google which is providing Google with its relative market power. The fundamental problem encountered by news publishers is that users are not choosing to visit their webpages directly. Google is not restricting the ability of users to directly access a news webpage.
The central idea in the CCI order is that Google has stolen advertisement revenue from news publishers. Such an idea mistakenly implies that newspapers have a permanent right to advertisement revenue that cannot be diverted away by a business model that offers better value to potential advertisers. Google with its ability to provide targeted advertisement offers a much better advertisement model for advertisers.
Thus, the strong bargaining power of Google is the result of consumers and advertisers preferring a better business model for their respective needs. There is nothing unfair about Google’s strong bargaining power. Competition law is not tasked with correcting power imbalances in the market. It is important to note that Section 4 of the Act does not penalise big businesses per se. A textual reading of the provision indicates that it is only when they unfairly abuse their position that the behaviour can be categorised as anti-competitive. It is hard to characterise Google’s strong bargaining position as unfair when it has been achieved through the fairest of means: consumer choice.
Further, it may be argued that it is Google which is offering more value to news publishers in India rather than news publishers to Google. The allegations noted in the CCI order portray that Google is free riding on content generated by news publishers and is not adequately remunerating them for the use of snippets. However, Google generates a lot of financial value for news publishers in the form of referral traffic. Referral traffic refers to the number of users that visit a website from another source i.e., Google in our case. For instance, if I click on a hyperlink displayed on Facebook to open a website, it will be termed as referral traffic.
The Berlin Regional Court has held that the relationship between news publishers and Google was a ‘win-win situation’. It held that the use of snippets cannot be termed as abuse of its dominant position because of the revenue it generates for news publishers. The French Competition Authority has noted that the referral traffic to a group of publishers that had not allowed Google to display content in the form of snippets fell by 8%. This evidence is not surprising as users would prefer visiting a news site if they are familiar with its content through a snippet as opposed to a link which gives no indication of its content apart from the title. The absence of snippets diminishes the value of a news publisher to a potential advertiser as fewer users are now visiting its website, and leads to diminished advertisement revenue.
Any user of the internet would agree that they seldom directly visit a news website. In most cases, people tend to search specific news stories on a search engine like Google and then click on a news website. A useful experiment would be to study how many users would visit the news websites of new-age digital publishers like the Wire, Scroll, Print etc. or even mainstream publishers like the Hindu, Indian Express etc.; if it were not for Google indexing their links on its webpage? This is the value that Google is generating for news publishers. Even the present CCI order acknowledges that “news publishers are dependent on Google for the majority of the traffic.”
Therefore, any claims for remuneration for the use of snippets is offset by the financial value generated by Google for news publishers. Hence, there is no unfairness if Google uses snippets.
Additionally, the introduction of AMP standards for news publishers is not anti-competitive behaviour. The AMP standard enhances the overall consumer experience by eliminating pop-up ads and auto-playing videos with sounds. The loading time for such webpages is also shorter with a responsive design fit for mobile displays. It is possible for publishers to monetise their webpages even on the AMP standard similar to any other webpage. Google has also maintained that it treats AMP webpages on par with other webpages and does not preference them in search engine results. Therefore, the choice is entirely with news publishers whether to adopt the standard or not. The AMP standard by enhancing user experience leads to more referral traffic on such webpages and increases the time spent on such webpages. A study commissioned by Google has revealed that “AMP leads to a 10% increase in website traffic with a 2x increase in time spent on page”. It is inexplicable how a measure that actually enhances consumer welfare and user experience and also benefits news publishers by increasing referral traffic can be averred as unfair. Innovations that improve consumer welfare cannot be curbed by utilising competition law.