This blog is written by Aryan Sharma of Institute of Law, Nirma University
INTRODUCTION
“Google it up”- a very common phrase that is now being used very frequently. Whenever you require any factual knowledge or any extract what do you do? you do what is most feasible, that is a quick Google search. According to the data, around 86.6 percent of the general searches take place through Google.[1] But how many of you start with a yahoo search or a Bing search, very few. Why is that the case? some say Google has monopolized the search engine market by substantially foreclosing the competition, but some say that this is all the result of persistent business improvement and modernization. But why is this the burning question? The US department of justice recently sued Google for creating an illegal monopoly [2]in the very relevant search engine market[3]. This action of the US justice department is followed by multiple lawsuits by nearly 40 countries [4]alleging Google of creating a monopoly and abusing its dominant position[5]. The suit is brought under Section 2 of the Sherman Antitrust Act, 1890[6] accusing Google of unlawfully creating the monopoly through anticompetitive and exclusionary practices. The US department of justice is putting a multibillion-dollar search engine deal of Google with apple at the centre of the antitrust issue. According to the justice department the deal endangered the position of several other search engines in the market. The primary focus of this article is to analyze different allegations put forth by the US justice department in the context of the antitrust laws. As well as to examine different types of agreement of Google with other manufacturers and to check whether that agreements and deal are anti-competitive.
GOOGLE’S DEAL WITH APPLE
Antitrust laws are statutes that are developed by the government to regulate the market and to safeguard consumers and small business from illegal monopoly creating practices. The act governing the antitrust laws in the US is the Sherman antitrust act, 1890.[7] The US justice department alleged Google to have been involved in a trade restricting deal with Apple. In the United States, both the cell phone carriers, as well as the manufacturers, sell the mobile phone. These particular cell phone devices have a search access point that is the default search engine. [8] Google has struck a deal in which it pays about 8 to 10 million dollars to Apple to make the Google search engine the default search engine[9]. This means if any consumer uses any iPhone or any Apple device then all the major access points lead to the default search engine i.e Google. According to the deal, Apple will make Google the default browser for safari and also use Google for Siri. Through this, Apple and other manufacturers maximizes the traffic of search results to the default Google engine hence increasing the in all revenue and leading to monopoly. This is an anti-competitive deal that monopolizes the market for Google and this exclusionary conduct eliminates the other players in the search engine market. Thus, due to these exclusionary agreements, Google nowadays acquires around 95 percent of the total search queries through cell phones.
REVENUE SHARING AGREEMENTS (RSA’S)
Google is involved in many RSA (revenue-sharing agreements with mobile phones). In these agreements, Google demands a large number of the access point where the default search engine will be Google[10]. Following that Google shares the revenue to the different mobile manufacturers based on the number of ads that the access point generates. The revenue share is very high as the significant part of the search engine market is operated through Google.
The revenue is only shared with the MADA (Mobile Application Distribution Agreement) licensees[11]. These are the lists providing the requirement for the manufacturer to install the different Google applications. These also come with an exclusive home screen setup, where the Google apps have to be on the home screen. It also ensures that it’s all search-related apps are given the premium placement on the screen and the default search engine will be Google. According to the justice department, MADA licensing and these exclusionary agreements are anti-competitive and destroys the competition in the market. But it is pertinent to note that engaging in the revenue sharing agreements is a business tactic of Google and hence as per experts there is nothing wrong in doing so. As of today, Google has RSA with most of the major Non-Google browsers other than Microsoft, Mozilla, Firefox, and opera.
ANTI FORKING AGREEMENTS
Anti forking agreements is the agreement which is very commonly used by Google to create a proper setup with the manufacturers.[12] In these agreements, the manufacturers need to make Google the default search engine and also provide various special features to the Google apps. After signing these agreements, manufacturers cannot sell their products without the preinstalled Google search apps such as Google Chrome, Google maps, etc. Google also sets strict limits on the distribution of the devices whose technical standards and design do not comply with Google. Once the manufacturer signs the anti-forking agreement there are certain requirements:
1. Take other apps - When a manufacturer opts for one of Google’s app rather than the apps which come in default and need to be mandatorily preinstalled.
2. Undeletable feature - When certain apps of Google are preinstalled then the manufacturer under the anti forking agreement has to make the said app undeletable.
3. Screen features - These apps preinstalled under the ant forking agreement need to be given a special place on the home screen. This also comes under the MADA licenses.
The manufactures easily sign these agreements as the revenue shares that Google provides are extraordinary, compared to other search engines like Yahoo, DuckDuckgo, and Bing. Anti forking agreements are said to be anti-competitive as these agreements set Google as the default search engine. Further the placement of the Google app in the home screen and other such setups are exclusionary and create a dominant position of Google. The US justice department has alleged Google of abusing their dominant position to strike out the competitors in the market.
CONCLUSION
Google the biggest search engine in the world is sued by the US justice department under Section 2 of the Sherman Act, 1890. This deals with the penalty for creating a monopoly by the use of dominant position and also treats the monopoly creation as a felony. Different aspects of the case have been analyzed above and many allegations are put forth on Google. Includes firstly the deal with Apple which made Google the default search engine for Siri and Safari. Secondly, the revenue sharing agreements with different companies created the dominant position of Google in the market and the abuse of which is said to have occurred by the US justice department. The justice department sees many issues related to Google’s growing monopoly. The introduction of new generation devices like Alexa, smart TV, and many more, the capturing range of Google’s search engine is also expanding which could kill the competition in the market. The data taken by Google is said to breach customer privacy. Such that in the upcoming generation if there is no competition left then there will be no obstruction for Google, and thus it can abuse its dominant position and misuse the user’s data. However, it is to be noted that Google is a private company and has all rights to allure customers and to make deals that make profits for the company. While it is acknowledged that Google has various rights, however these rights should not supersede the lawful limits set by the statute. Further the financial profit-making interest of Google should not breach the rights of the customers by creating a monopoly and eliminating competition in the market. Competition plays a very vital role in any relevant market. It ensures a safeguard of the rights of people and offers them the best option available. Hence by eliminating competition the one who survives will ultimately only be the customers.
[1] J. Clement, Global market share of search engines 2010-2020, Statista (Nov 20, 2020). [2]UNITED STATES OF AMERICA et al v. GOOGLE LLC, 1:20-cv-03010 (District of Columbia) (pending). [3]Dirk Auer, what is search engine?, truth on the market, (21 October 2020), https://truthonthemarket.com/2020/10/21/what-is-a-search-engine-2/#:~:text=General%20search%20is%20a%20relevant,one%20specific%20type%20of%20search. [4]Tony Romm, Nearly 40 states sue Google alleging search manipulation, marking the third antitrust salvo against the tech giant, The Washington post, Dec. 18, 2020, https://www.washingtonpost.com/technology/2020/12/17/google-search-antitrust-lawsuit/. [5] Supra note 2. [6]Sherman Anti-Trust Act, 15 U.S.C. § 2, (1890). [7] ibid [8] Nick Statt, Google is still paying Apple billions to be the default search engine in Safari, The Verge, Jul 1, 2020, https://www.theverge.com/2020/7/1/21310591/apple-google-search-engine-safari-iphone-deal-billions-regulation-antitrust . [9]KATE DUFFY, Google paid Apple up to $12 billion for a search engine deal that disadvantaged competitors, landmark antitrust suit claims, Business Insider, OCT 21, 2020, https://www.businessinsider.in/tech/news/google-worked-as-1-company-with-apple-paying-the-iphone-maker-up-to-12-billion-for-a-search-engine-deal-that-disadvantaged-competitors-us-antitrust-suit-claims/articleshow/78790753.cms . [10]Supra note 2. [11] Robert nelson, Google’s MADA defines rules for Android device maker, May 5 2014, https://androidcommunity.com/googles-mada-defines-rules-for-android-device-makers-20140505/ . [12] Edward Longe, The DOJ Antitrust Case Against Google: A Recap, The American consumer institute of centre for citizen research, October 21, 2020, https://www.theamericanconsumer.org/2020/10/the-doj-antitrust-case-against-google-a-recap/ .
Comments