India Could Rock Google With Its Biggest Antitrust Fine Yet -- $5B USD
March 10, 2014 8:12 PM
Google has no chance to avoid fine merely by promising change, unlike in the EU, U.S.
In the U.S., Google Inc. (
) managed to
plead its case
successfully enough that the antitrust accusations regarding its search engine
only led to a small fine
. In Europe, regulators
forced it to make changes
, but it also
appears ready to escape without any major punitive fines
given its willingness to cooperate and tweak its more controversial strategies.
I. Five BILLION Dollars
But the American internet and mobile software giant isn't out of the woods yet. The world's largest search engine and mobile operating system maker's latest headache
The Competition Commission of India
(CCI), a government regulatory body of the southern Asian nation who is examining local and international complaints carefully.
[Image Source: LiveLaw.in]
The CCI says that a local matchmaking service claims it was damaged by
Google's anticompetitive tactics
The accusation is similar to that lofted against Google in past cases. The basic allegation is that Google -- which controls a majority of customer search traffic -- is overriding its own algorithms such that the best services are bumped down in the search results, making them less used and harder to find. Google in turn is said to give prominent positions to its own in-house offerings, locking customers (to an extent) in its profit loop (unless they want to go out of their way to dig into the pages of other results).
Google has come under increasing scrutiny in India after the local Muslim minority has noisily protested against the search engine
returning in the search results websites with insulting images of their Prophet Mohammed
. Some have demanded the search engine results be censored.
[Image Source: GlobalPost]
But the competition question has grown into a far more dangerous issue for Google in the region.
The Consumer Unity & Trust Society
-- aka, "CUTS International" -- also filed a similar complaint. While the efforts in Europe were
largely steered by Microsoft
), a major U.S. rival of Google, CUT Int'l is equally critical [
see this, for example
] to both companies. The UN and other global advocacy groups back it.
Indian law allows for very stiff antitrust penalties. Namely, it allows a maximum fine of 10 percent of a company's 3-year average profit. Google has brought in $49.3B USD in 3 years, so that indicates a maximum fine of nearly $5B USD.
While past settlements and negotiations suggest Google will be able to placate Indian officials, such a fine could set records previously held by the billions in fines by the EU
II. No Chance to Settle
India's Matrimony.com, says the case has some unique elements, though, which may make it more costly for Google. Comments the site's legal counsel Ferida Satarawala:
Google's unfair use of trademarks as well as its retaliatory conduct are not specifically addressed in the European settlement and are distinct theories of harm being pursued by the CCI. Therefore, this settlement is unlikely to address CCI's concerns in our case.
The complaint is current being looked into by India's
Director General of Foreign Trade
(DG). The DG is seeking input from other third parties (e.g. Microsoft) who might have a bone to pick with Google's tactics, as well. After that, the CCI will likely look to formally charge Google and pursue a fine.
Interestingly, authorities indicate Google will not be able to settle the complaints by promising to change. While it will face more fines for continuing offenses, the fines will be decided based on the court's analysis of what Google has already done. Also interesting is that the court has the power to break Google India up into "Structural Entities", forcing the company to abandon key portions of its Indian business.
Google, for its part, has long seemed resigned that it may be found eventually to have done something wrong. To that end it's set aside $750M USD in an antitrust settlement buffer, a cash reserve that thus far has remained mostly untapped.
A Google spokesperson said in a statement that they are "extending full co-operation" to the Indian authorities, pointing to past antitrust settlements.
The Financial Times
"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer
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