Google’s AdWords programme is the primary revenue earning service for the internet giant, with Google claiming in its unaudited 2011 financial results that it earned more than thirty billion from the same. Yet the service has been barraged with controversy across the world. This post shall try to determine whether there is any substance in the allegations leveled against the internet giant of violating competition laws across various jurisdictions and whether there is a solution available to Google without banning the software all together.

Previous Litigation

In India, Google has had two complaints filed against it before the CCI alleging anti-competitive practices and abuse of dominant position related to the Adwords service till date. Most recently, marriage portal BharatMatrimony.com filed a complaint against Google before the Competition Commission of India, citing discriminatory trade practices related to its AdWords program. Before this, similar issues were raised against Google in  Eximcorp India Pvt. Ltd. v. Google India Pvt. Ltd. (Case no. 68/2010) before the Commission.  The Commission in its decision had concluded that there was no prima – facie evidence to make out a case for further investigation by the Director General into the matter. Crossing over to the American continent, in the Unites States, in 2009, tradecomet.com filed a complaint alleging that Google manipulates its auctions on its AdWords program to favour certain advertisers like business.com over others, again violating anti – trust laws.

A Broad Analysis

The fundamental problem with the service seems to be that it grants too much discretion to the service provider without introducing an “appropriate” level of transparency in favour of the customer, i.e., the ones who pay for their advertisements to be published alongside search results. While the discretion is perhaps unavoidable, lack of transparency is not. Favouring search results of a particular customer over another (as the complainants claim) is without a doubt in violation of Section 3 of the Act and it would certainly result in a violation of Section 4 when considers the larger ramifications of such practices (if proved) towards internet users across the country, with Google being a dominant search engine in India.

Whether Google has actually violated the Competition Act is as of now, speculative since they depend upon the facts and circumstances of the case and one will have to wait for the DG’s report and the Commissions decision. However, interestingly, there is atleast one potential scenario for abuse. Google relies on certain “keywords” according to which the advertisements are displayed beside search results. to explain it simply, the customer (advertiser) must while submitting its advertisement to Google for display enumerate certain “keywords”, which shall ensure that whenever an individual using the Google search engine types the specific word or phrase in the search box, the advertisement shall automatically be generated beside the search result. However, Google does not seem to provide any legal guidelines to the users of the AdWords service on the scope of the words which can be used as “keywords”. Therefore, there is ample opportunity for an advertiser to gain illegally at the cost of his competitor.

Always Coca-Cola ?

For example, lets say Pepsi advertises through AdWords on the search engine and as a “keyword” uses Cocacola/Coke. hence, what it effectively manages to do is place its advertisements at the behest of its arch competitor, Cocacola. Not only may such an action, on a related issue, result in a potential trademark violation, but it may also be interpreted as an abuse of dominant position against Google since the company could not possible justify that it was acting merely as an intermediary and that it is not aware of the content being posted as advertisements on search results, even though Google’s terms of service require the advertisers themselves to indemnify Google for any third-party claim or liability arising out of the advertisers’ use of the AdWords program. Therefore, it may be interpreted that Google acted in collusion with the advertiser in order to bring down the advertisers competitor by endorsing the practices of the advertiser through its own programme (it even has a service that will suggest competitive keywords). It may also be interpreted, depending upon the facts and circumstances of the case (sad how often we have to use this phrase in competition law), as an anti-competitive agreement between the advertiser and Google.

However, what does work for the company is that the conclusions of these disputes are generally going in its favour. The tradecomet.com suit was recently dismissed and so was the appeal. The first complaint by Eximcorp was also dismissed and Bharatmatrimony has failed to atleast publicly elaborate upon its grievances. So for now, Google can comfortably ride the waves of success..for now.