GS Paper II

News Excerpt:

The US Justice Department, along with several states, sued Google for allegedly securing its dominance by paying companies like Apple and Samsung billions of dollars each year to ensure Google’s search engine was the default option on smartphones and web browsers.

More details about the News:

• The US Court found that Google had violated antitrust laws to preserve its monopoly over “general search services” and “general search text ads,” which are the ads displayed at the top of search results pages.
• Most users access a general search engine through a browser (like Apple’s Safari) or a search widget that comes preloaded on a mobile device.
• Those search access points are preset with a ‘default’ search engine. The default is extremely valuable real estate. Because many users simply stick to searching with the default, Google receives billions of queries every day through those access points.

The impact of Google's dominance 

• The US Court emphasized that Google’s position as the default General Search Engine (GSE) has created a scale that deters competitors from emerging in the same space. 
• Barrier for New Entrants
• The new entrant would have to overcome entry barriers to create a GSE of comparable quality to Google. These barriers include high capital costs, access to distribution channels, and brand recognition.
• It would also need to develop an ad platform that could monetize searches on par with Google.
• It would have to compensate for any revenue shortfall that might arise either from reduced query volume (since some users would stick with Google) or from inferior ad monetization (as fewer users could mean fewer advertisers and less profitable ad auctions, regardless of the quality of its ad delivery).

In Indian Context 

• On the same day as the US ruling, the Alliance of Digital India Foundation (ADIF) lodged a complaint alleging that Google had engaged in anti-competitive behavior in the online advertising market.
• In October 2022, the Competition Commission of India (CCI), which handles disputes related to practices that may harm competition in Indian markets, imposed a fine of Rs 1,337.76 crores on Google.
• The CCI ruled that Google’s mandatory pre-installation of its Mobile Suite (Google Search, YouTube, Gmail, etc.) on Android devices, with no option to uninstall these apps, constituted an abuse of its dominant position in the market.
• Following this ruling, Google announced that it would allow Indian users to select a default search engine of their choice.
• The market conditions for default browsers in India could present a different scenario. For example, according to a report by CyberMedia Research, Xiaomi currently holds the largest market share (19.3%) in the Indian mobile phone market. However, Xiaomi phones come with the Opera browser and search function pre-installed, not Google.

The Competition Bill’s Approach

• In March 2024, India’s Ministry of Corporate Affairs released the Draft Competition Bill, which aims to prevent tech companies of Google’s scale—referred to as Systemically Significant Digital Enterprises (SSDEs)—from engaging in anti-competitive practices.
• The Bill imposes restrictions on SSDEs, including prohibiting them from favoring their own products and services and from using or sharing users’ personal data without consent.
• However, big tech companies have expressed concerns that the Bill imposes significant compliance burdens that could shift their focus away from innovation and research, forcing them to preemptively ensure they do not engage in anti-competitive practices.
• This Bill will also target some Indian tech companies like Zomato, Swiggy, or BigBasket. It will harm the innovation which is going on domestically.