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of <h1>Google faces investigation for anti-competitive tying of ad-tech services under Sections 3(4) and 4 of Competition Act 2022</h1> <h3>Mr. Maulik Surani Versus Alphabet Inc., Google LLC, Google International LLC and Google India Private Limited</h3> Mr. Maulik Surani Versus Alphabet Inc., Google LLC, Google International LLC and Google India Private Limited - TMI 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Commission are:(a) Whether the tying of DoubleClick for Publishers (DFP) with Google's Ad Exchange (AdX) into Google Ad Manager amounts to an anti-competitive practice under Section 3(4) of the Competition Act, 2022, by foreclosing competition and limiting publisher choice.(b) Whether Google's conduct in favoring its own properties over Google Network Members constitutes abuse of dominant position under Sections 4(2)(a)(i) and 4(2)(b)(i) of the Act by imposing unfair and discriminatory conditions on publishers and restricting market growth.(c) Whether Google's Open Bidding policy, where Google acts both as auction host and participant, results in an abuse of dominance under Sections 4(2)(a)(i) and 4(2)(b)(i) by imposing unfair conditions and limiting third-party exchanges' ability to compete.(d) Whether Google's Unified Pricing Rule, functioning as a de facto price parity clause, violates Section 4(2)(a)(i) by harming publishers' pricing flexibility and restricting competition from third-party exchanges.(e) Whether Google's non-disclosure of fees and opaque revenue sharing in its AdTech tools constitutes unfair and discriminatory conduct in violation of Section 4(2)(a)(ii) of the Act.(f) Whether the imposition of exorbitant fees by Google Ad Manager on publishers, including a fee increase from 9% to over 30%, amounts to abuse of dominance under Section 4(2)(a)(ii).(g) Whether Google has leveraged its dominant position in the general web search market to enter and protect its position in the AdTech markets in violation of Section 4(2)(e) of the Act.2. ISSUE-WISE DETAILED ANALYSISMarket Definition and DominanceThe Commission, following the Informant's delineation, identified four distinct relevant markets: (i) Publisher Ad Servers for Websites and Mobile Applications in India, (ii) Ad Buying Tools for Advertisers in India, (iii) Ad Exchanges in India, and (iv) General Web Search Services. The Commission concurred prima facie that these markets are distinct and non-substitutable due to their unique functionalities and purposes.Regarding dominance, the Commission relied on its prior prima facie order which inferred Google's significant position in online digital advertising intermediation services based on its global presence. The ongoing investigation by the Director General (DG) aims to examine this dominance in detail.Tying of DFP with AdX into Google Ad Manager (Section 3(4))The Informant alleged that the tying of DFP with AdX into Google Ad Manager forecloses competition by raising barriers to entry for other exchanges and limiting publisher choice. Section 3(4) prohibits exclusive supply or tying arrangements that cause appreciable adverse effects on competition.The Commission noted that tying these products potentially limits competition by bundling services that could otherwise be accessed independently, thereby restricting market access for rival exchanges. This prima facie finding suggests a possible contravention of Section 3(4), warranting further investigation.Favoring Own Properties and Imposing Unfair Conditions (Sections 4(2)(a)(i) and 4(2)(b)(i))The Informant contended that Google consistently favored its own properties over Google Network Members, imposing unfair and discriminatory conditions on publishers and limiting market development.The Commission recognized that such conduct, if established, would amount to abuse of dominance by imposing unfair conditions and limiting competition, violating Sections 4(2)(a)(i) and 4(2)(b)(i). The dual role of Google as both platform provider and participant was highlighted as a key factor enabling such conduct.Open Bidding Policy and Dual Role Abuse (Sections 4(2)(a)(i) and 4(2)(b)(i))The Informant alleged that Google's Open Bidding policy is abusive per se because Google hosts the auction and simultaneously participates through AdX, enabling it to impose unfair and discriminatory conditions on publishers and third-party exchanges (3PX).The Commission acknowledged the potential conflict of interest inherent in this dual role, which could restrict 3PX's ability to compete and harm publishers by limiting their choice and revenue maximization. Such conduct prima facie violates the abuse of dominance provisions.Unified Pricing Rule as Price Parity Clause (Section 4(2)(a)(i))The Informant argued that Google's Unified Pricing Rule acts as a de facto price parity clause, removing publishers' flexibility to set competitive pricing and restricting 3PX competition.The Commission recognized that such price parity arrangements can suppress competition by preventing price competition and innovation. This conduct, if proven, would constitute an abuse of market power under Section 4(2)(a)(i).Opaque Fee Structures and Non-Disclosure (Section 4(2)(a)(ii))The Informant highlighted that unlike other ad tech providers, Google does not disclose fees for its services, and publishers and advertisers lack visibility into Google's revenue share across the AdTech supply chain.The Commission noted that such opacity and lack of transparency can amount to unfair and discriminatory conduct under Section 4(2)(a)(ii), as it prevents informed decision-making by publishers and advertisers.Exorbitant Fee Increase (Section 4(2)(a)(ii))The Informant pointed out a fee increase from 9% to over 30% charged by Google Ad Manager as unfair and excessive.The Commission recognized that such a steep increase in fees, if unjustified and imposed unilaterally, could constitute an abuse of dominance by imposing unfair conditions on publishers, violating Section 4(2)(a)(ii).Leveraging Dominance from General Web Search Market (Section 4(2)(e))The Informant alleged that Google leveraged its dominant position in the general web search market to enter and protect its position in the AdTech markets.The Commission acknowledged that leveraging dominance in one market to gain or protect dominance in another related market is prohibited under Section 4(2)(e) as an abuse of dominance. This aspect is subject to detailed investigation.Procedural Considerations and InvestigationThe Commission observed that the allegations substantially overlap with ongoing investigations by the DG in related cases concerning Google's ad-tech intermediation services. Therefore, the Commission decided to club the present matter with the ongoing cases and directed the DG to conduct a comprehensive investigation into the alleged practices and submit a consolidated report.3. SIGNIFICANT HOLDINGSThe Commission held that the prima facie material on record indicates potential contraventions of Sections 3(4) and 4 of the Competition Act, 2022 by Google in respect of its ad-tech intermediation services. The Commission stated:'At this stage is prima facie satisfied that, based on the global presence of Google, as adumbrated supra, it can be reasonably inferred that Google occupies a significant position in the market for online digital advertising intermediation services, as well. The investigation would bring out these aspects in detail.'The Commission accepted the Informant's market delineation and recognized the distinct nature of ad-tech intermediation tools, thereby affirming the relevant markets for assessing dominance and abuse.The Commission also preserved the principle that tying arrangements and conduct favoring own properties over competitors may foreclose competition and raise barriers to entry, potentially violating Section 3(4) and Sections 4(2)(a)(i), 4(2)(b)(i) respectively.The Commission emphasized that dual roles in auctions and price parity clauses can constitute abuses of dominance if they impose unfair, discriminatory, or exclusionary conditions harming competition and consumer welfare.Further, the Commission underscored the importance of transparency and fair fee structures in digital advertising markets, noting that opacity and exorbitant fees could amount to unfair conduct under Section 4(2)(a)(ii).Finally, the Commission recognized that leveraging dominance across related markets to entrench market power violates Section 4(2)(e).In conclusion, the Commission directed a comprehensive investigation by the DG into all alleged practices to determine whether Google's conduct violates the Competition Act, 2022.
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